M/S D Carnival Foods & Beverages ... vs State Of Kerala
2021 Latest Caselaw 7202 Ker

                    IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                     PRESENT

                      THE HONOURABLE MR.JUSTICE S.V.BHATTI

                                        &

                 THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS

           TUESDAY, THE 02ND DAY OF MARCH 2021 / 11TH PHALGUNA, 1942

                               OT.Rev.No.57 OF 2018

 AGAINST THE ORDER/JUDGMENT IN TAVAT 281/2016 DATED 26-12-2017 OF KERALA VAT
                      APPELLATE TRIBUNAL, ERNAKULAM


REVISION PETITIONER/S:

                 M/S D CARNIVAL FOODS & BEVERAGES PVT.LTD.,
                 DHE PUTTU, 34/138L (1), NEAR BYEPASS, EDAPPALLY,REPRESENTED BY
                 K.K CHANDRASEKHARAN, MANAGING DIRECTOR.

                 BY ADVS.
                 SRI.P.S.SOMAN
                 SMT.T.RADHAMONY

RESPONDENT/S:

                 STATE OF KERALA
                 REPRESENTED BY SECRETARY, TAXES DEPARTMENT,SECRETARIAT,
                 THIRUVANANTHAPURAM.

                 BY SR.GOVERNMENT PLEADER MOHAMMED RAFIQ

OTHER PRESENT:

                 SR GP MOHAMMED RAFIQ

     THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 02.03.2021, THE
COURT ON THE SAME DAY PASSED THE FOLLOWING:
 O.T.(Rev.) No. 57/2018
                                       -2-




                                  ORDER

Dated this the 2nd day of March 2021 Bechu Kurian Thomas, J.

This revision relates to cancellation of compounding tax

permitted for the year 2014-15, and the consequential best

judgment assessment carried out by the assessing officer.

2. The questions of law raised for consideration are as

follows:

"A. Whether on the facts and in the circumstances of the case, has not the Appellate Tribunal erred in allowing the appeal filed by the Respondent?

B. Has not the Appellate Tribunal erred in holding that the Petitioner defaulted in the payment of tax under Section 6(2) attracting Rule 11(6) even though tax under section 6(2) has been remitted before initiation of proceedings leading to Annexue-A order?

C. Is not Rule 11(6) of the KVAT Rules unconstitutional since it exceeded the rule making power of the Government considering the fact that there is no substantive provision in Section 8(c)(i) of O.T.(Rev.) No. 57/2018

the KVAT Act which empower the assessing authority to cancel the compounding permission issued under Section 8(c)(i)? D. Is not the Tribunal went wrong in holding that for the mere violation of the condition contained in the compounding order, the permission can be cancelled overlooking the reasons for such violation?"

3. The assessee is running a restaurant by name and style

'Dhe Puttu'. He was granted permission for payment of tax at

compounded rates under Section 8(c)(i) of the Kerala Value Added

Tax Act 2003 (for short 'the Act'). For the year 2014-15 permission

granted for payment of compounded tax was cancelled by the

assessing officer for the reason that the inspection revealed

undisclosed purchase of chicken and failed to remit purchase tax for

meat purchased from unregistered dealers. The assessee admitted

the mistake and compounded the same by remitting compounding

fee under Section 74 of the Act and revised the return also.

However, the Assessing Authority cancelled the permission for

paying tax at the compounded rates invoking Rule 11(6) of the KVAT

Rules 2005. Though the first appeal was allowed in favour of the O.T.(Rev.) No. 57/2018

assessee, the department appealed to the Tribunal. In second

appeal, the Tribunal held that the cancellation of permission was

justified since the same was in exercise of the powers under Rule

11(6) of KVAT Rules.

4. The learned counsel for the assessee, Adv.P S Soman,

submitted that the cancellation of permission for compounding, on

the basis of an omission to enter the purchases made, does not

warrant cancellation of the compounding permission already

granted under Section 8(c)(i) of the KVAT Act.

5. The learned Senior Government Pleader Sri. Mohammed

Rafiq points out that the issue has already been decided by this

Court in M/s. Thakkaram Restaurant vs. State of Kerala1.

6. On a perusal of the said judgment it is seen that the

cancellation of payment of compounded tax under Section 8(c)(i)

has been upheld by this Court; holding that pursuant to such a

cancellation, regular assessment can be resorted to by the assessing

officer. The learned Counsel for the assessee after perusing the 1 Order dated 25.11.2020 in O.T.Rev. No.121/2020 and connected case O.T.(Rev.) No. 57/2018

above said judgment fairly conceded that the matter is already

covered by the said judgment.

7. In the decision referred to above, it was held that:

"3. On the first question the Tribunal relied on Rule 11(6) of the Kerala Value Added Tax Rules, 2005 (for short "KVAT Rules") to find that any failure to pay tax under Section 6(2) would entail cancellation of the permission granted under Section 8(c). The finding based on the statutory provision is unassailable and the first question has to be answered in favour of the Revenue and against the assessee."

Since the issue involved in this case is identical, we find no

reason not to follow the said judgment and accordingly, this

revision is dismissed.

Sd/-

S.V.BHATTI

JUDGE

Sd/-

BECHU KURIAN THOMAS

JUDGE

jjj O.T.(Rev.) No. 57/2018

APPENDIX PETITIONER'S/S EXHIBITS:

ANNEXURE A COPY OF THE ORDER CANCELING THE PERMISSION FOR COMPOUNDING GRANTED FOR THE YEAR 2014-15 ISSUED BY THE COMMERCIAL TAX OFFICER 1ST CIRCLE, KALAMASSERY AT KAKKANAD.

ANNEXURE B COPY OF APPELLATE ORDER ISSUED BY THE DEPUTY COMMISSIONER (APPEALS)-II, COMMERCIAL TAXES, ERNAKULAM FOR THE YEAR 2014-15.

ANNEXURE C COPY OF APPEAL FILED BY THE RESPONDENT BEFORE THE APPELLATE TRIBUNAL, ERNAKULAM.

ANNEXURE D COPY OF THE HEARING NOTE FILED BY THE PETITIONER BEFORE THE APPELLATE TRIBUNAL.

ANNEXURE E COPY OF ORDER ISSUED BY THE KERALA VALUE ADDED TAX, APPELLATE TRIBUNAL, ERNAKULAM.