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Issues: (i) Whether a dealer opting to pay tax at the compounded rate under the Kerala Value Added Tax Act is bound to remit to the Government tax collected at a rate higher than the rate permitted under the special compounding provision even if the aggregate tax collected is less than the compounded tax payable. (ii) Whether Section 30 of the Kerala Value Added Tax Act can be relied on to justify collection of tax at the rates specified in Section 6 by a dealer who is otherwise paying tax under Section 8(f).
Issue (i): Whether a dealer opting to pay tax at the compounded rate under the Kerala Value Added Tax Act is bound to remit to the Government tax collected at a rate higher than the rate permitted under the special compounding provision even if the aggregate tax collected is less than the compounded tax payable.
Analysis: The special provision governing bullion, ornaments and similar goods permits collection only at the prescribed rate and requires excess tax so collected during the year to be paid over to the Government if the collection exceeds the tax payable for the year. The expression used in the provision refers to tax collected in accordance with the permitted rate. A collection made at a rate different from the rate expressly permitted does not fall within that expression, and the Tribunal's view that no remittance was required merely because the total tax collected was less than the compounded tax payable was inconsistent with the statutory text.
Conclusion: The assessee is bound to pay over the impermissibly collected amount to the Government, and the Tribunal's contrary finding is unsustainable.
Issue (ii): Whether Section 30 of the Kerala Value Added Tax Act can be relied on to justify collection of tax at the rates specified in Section 6 by a dealer who is otherwise paying tax under Section 8(f).
Analysis: The general power of collection under Section 30 applies to registered dealers collecting tax at the rates specified in Section 6, but it does not override the special regime under Section 8(f). Even where Section 30 is invoked, the provision contains no equivalent safeguard to the special proviso attached to Section 8(f), and therefore it cannot be used to legitimise collection beyond the rate permitted under the compounding scheme.
Conclusion: Section 30 does not assist the assessees, and the collections made beyond the permitted rate remain exigible.
Final Conclusion: The common order of the Appellate Tribunal was set aside and the revisions were allowed, with the questions of law answered in favour of the Revenue.
Ratio Decidendi: Where a special taxing provision permits collection only at a prescribed rate and directs remittance of amounts collected beyond that permitted scheme, the dealer cannot avoid liability by showing that the aggregate tax collected is below the tax ultimately payable under the composition scheme.
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