RAMAKRISHNA PILLAI Vs. MUHAMMED KUNJU

JUDGEMENT

(1.) The case of the petitioner, in brief, is as follows.

(2.) The petitioner is a registered dealer in gold and silver ornaments under the Kerala General Sales Tax Act, 1963. The petitioner filed return for the assessment year 2002-03. He submitted exhibit P4 application for compounding in form 21 on April 2, 2002. According to him, it was done, thinking that the rate of tax applicable was only one hundred and twenty per cent. There was an amendment by way of exhibit PI erratum. According to the petitioner, he was not aware of the same. However, before granting permission in terms of Rule 30 of the Kerala General Sales Tax Rules, 1963, the petitioner came to know that the enhanced rate of two hundred per cent will be demanded from him based on exhibit PI erratum. As the enhanced rate was not in the contemplation of the petitioner, it is the case of the petitioner that he withdrew the option by exhibit P5 dated April 29, 2002. It is his further case that tax under Section 5 of the Act has been paid as per returns. There was no objection noted by the assessing authority at that time. No provisional demand for tax was also made. Exhibit P7 notice dated March 10, 2003 was issued demanding advance tax under Section for the month of March, which was paid. The petitioner filed exhibit P8 annual returns and paid the tax under Section 5 of the Act. However, by exhibit P9 series, the assessment was completed for the year 2002-03 on the basis that the petitioner is liable to pay the amount payable as if it were a case of compounding. Accordingly, tax has been calculated as Rs. 14,25,132 being two hundred per cent of the tax liability for the assessment year 2001-02. The petitioner challenges exhibit P9 and seeks to quash exhibit P9 series.

(3.) I heard Dr. K.B. Muhammed Kutty, learned Senior Counsel appearing for the petitioner and also the learned Government Pleader. The Senior Counsel for the petitioner points out that this is a case where the petitioner had filed the application for compounding for the assessment year 2002-03 on April 3, 2002 under the belief that tax liability is limited to 120 per cent for the previous year. Upon coming to know that there was an amendment under which the liability was enhanced to two hundred per cent, he decided to withdraw the application for compounding. Accordingly, exhibit P5 was filed on April 29, 2002. He would submit that the law is that once compounding is permitted by way of an order under Rule 30 of the KGST Rules, it cannot be withdrawn as it was a bilateral contract from which one party cannot unilaterally resile. He would submit that, that stage has not been reached and even before granting permission under Rule 30 of the Rules, the petitioner has decided to withdraw the application. Rule 30 of the KGST Rules, which is relevant, is extracted hereunder: