TaxTMI 
TaxTMI 
2010 (2) TMI 1071
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....t and he is a registered dealer under the provisions of the KVAT Act. The petitioner opted for compounding under section 8(b) of the Act and application submitted in this regard in form 1D evidenced from exhibit P1 was allowed as per exhibit P5 proceedings issued in form 4DA, fixing compounded tax payable for the year 2009-10 as Rs. 25,250, which includes tax amount of Rs. 25,000 and cess of Rs. 250. The said amount was permitted to be remitted in quarterly instalments of Rs. 6,313 each. In exhibit P6 notice it is mentioned that on a subsequent verification of records and on enquiry conducted by the first respondent, it is noticed that there was mistake in fixing compounding rate and the same ought to have been fixed at Rs. 1,50,000, in vie....
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....ve. Through the Finance Bill, 2009, copy of which is produced as exhibit P7, the State Government proposed amendments to section 8(b) reducing the rate of tax for compounding. As per the said proposal, section 8(b) was sought to be amended as follows: (b) Any dealer producing granite metals with the aid of mechanized crushing machine may, at his option, instead of paying tax in accordance with the provisions of the said sections, pay tax at the following rates, namely: (i) for each crushing machine of size not exceeding 30.48 cm x 22.86 cm = Rs. 40,000 per annum. (ii) for each crushing machine of size exceeding 30.48 cm x 22.86 cm but not exceeding 40.64 cm x 25.40 cm = Rs. 1,50,000 per annum. (iii) for each crushing machine ....
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.... used by the petitioner is falling within the category mentioned as item (ii) of section 8(b), i. e, machine having size exceeding 30.48 cm. x 22.86 cm., but not exceeding 40.46 cm. x 25.40 cm. It is also an admitted case that during the previous year the rate of compounding with respect to the machinery in question was Rs. 1,60,000. The fact that the petitioner had opted for compounding during the previous year and had paid tax at Rs. 1,60,000 is also not in dispute. It is evident that exhibit P5 order permitting compounding at Rs. 25,000 was issued only based on exhibit P4 circular which in turn was issued based on exhibit P7 Finance Bill. But when the Finance Act, 2009 dated July 28, 2009 was introduced, the second proviso to section 8(b....
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....T 1. In that case, the view taken by the Kerala High Court, holding that even though the amendment made to clause (b) of sub-section (i) of section 7 of the Kerala General Sales Tax Act, 1963 came into effect only on July 23rd, it is applicable for the whole year of 2001-02, was set aside and the matter was remanded for "de novo" consideration to examine the question as to whether imposition of a different tariff in the middle of the year could be given effect in the absence of proper machinery for computing tax liability, and also expressing doubt as to whether section 43 of the KGST Act could be invoked by the department in cases where an alternate mode of taxation under section 7 for paying compounded tax is followed. In the case at h....
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....the compounding rate, which happened to be refixed based on the proposals contained in the Finance Bill and based on clarifications issued through the circular. But the proposal contained in the Finance Bill was never incorporated into the statute. Hence the provisions contained in the Finance Act, through which amendment was brought into section 8(b), there is absolutely no enhancement effected with respect to the rate of tax, in prejudice to the interest of the petitioner. Under the above circumstances, the further question mooted for consideration is as to whether the rate fixed and permitted through an order of compounding can be rectified, enhancing such rate, during midway of the financial year. It is to be noticed that the rate pe....
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....books at any point of time, it cannot be said that those proposals were having any statutory force. Hence exhibit P4 cannot be termed as a circular issued in interpretation or in clarification of any of the provisions contained in the relevant statute. In the case at hand it is evident that, the decision taken based on the proposals contained in the Finance Bill which was instructed to be implemented through exhibit P4 circular, stands in contradiction to the statute which stood prior to the amendment and after the amendment. Therefore it is evident that the petitioner could not, as a matter of right, claim benefit of the proposals contained in the Finance Bill nor the benefit of exhibit P4 circular issued providing operational instructi....