Suppressed turnover cannot get compounding benefit, and Section 25AA operates prospectively, not on completed VAT proceedings.

Suppressed taxable turnover cannot be brought within the compounding benefit under the Kerala Value Added Tax Act when inspection reveals undisclosed receipts and the dealer cannot disprove suppression with books of account; the suppressed portion remains outside the compounded rate, especially where penalty consequences follow. Section 25AA, inserted by the Kerala Finance Act, 2019 with effect from 01.04.2019, operates prospectively and does not reopen assessments or penalty proceedings already concluded before its insertion. The article therefore states that completed VAT proceedings are not affected by the amendment, and the revisional challenge based on retrospective application fails.

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Issues: (i) Whether a dealer granted compounding permission under Section 8 of the Kerala Value Added Tax Act, 2003 can claim compounding rate for turnover later found to have been suppressed on inspection; (ii) Whether Section 25AA of the Kerala Value Added Tax Act, 2003, inserted by the Kerala Finance Act, 2019, applies retrospectively to completed assessments or penalty proceedings concluded before its insertion.

Issue (i): Whether a dealer granted compounding permission under Section 8 of the Kerala Value Added Tax Act, 2003 can claim compounding rate for turnover later found to have been suppressed on inspection.

Analysis: The dealer had filed returns showing contract receipts lower than the actual receipts and the suppression was detected during inspection. The dealer was unable to produce books of account to disprove the detected suppression. Once suppressed receipts are unearthed, the benefit of compounding cannot be extended to amounts which ought to have been disclosed in the returns, especially when the suppression formed the basis for penalty under Section 67(1) of the Act.

Conclusion: The claim to apply the compounded rate to the suppressed turnover was rejected.

Issue (ii): Whether Section 25AA of the Kerala Value Added Tax Act, 2003, inserted by the Kerala Finance Act, 2019, applies retrospectively to completed assessments or penalty proceedings concluded before its insertion.

Analysis: Section 25AA was introduced with effect from 01.04.2019 and was held to be prospective in operation. It was intended to govern pending or reopened assessments and not assessments already completed before its insertion. Completed proceedings under the repealed VAT regime could not be reopened by invoking the amended provision.

Conclusion: Section 25AA was held inapplicable to the completed proceedings and the contention based on retrospective application was rejected.

Final Conclusion: The revisional order was found to suffer from no illegality or impropriety, and the revision was not liable to succeed.

Ratio Decidendi: A dealer who has suppressed taxable turnover cannot claim the benefit of compounding for the suppressed portion once the suppression is detected, and an amendment introducing a new assessment discipline applies prospectively unless the statute clearly provides otherwise.

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