SASI Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) Challenge in this Writ Petition is against Ext.P6 notice issued under Section 66(3) of the Kerala Value Added Tax Act, 2003 (KVAT Act). Through the said notice, the 1st respondent had intimated the petitioner about proposal to revise Ext.P5 permission already granted under Section 8(b) read with Rule 11(2)(i) of the KVAT Act and Rules. The petitioner is running a Granite crushing industrial unit 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 Ext.Pl was allowed as per Ext.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 installments of Rs. 6,313/- each. In Ext.P6 notice it is mentioned that on a subsequent verification of records and on enquiry conducted by the 1st 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 view of the provisions contained in the Finance Act, 2009. Being a mistake apparent on the face of record it was ought to be rectified. Through Ext.P6, the petitioner was called upon to submit objections if any against the proposal.

(2.) For a better appreciation of the dispute involved, it will be beneficial to examine the relevant provisions. Section 8(b) of the KVAT Act as it stood till the year 2008-2009 is extracted below,

(3.) There is no dispute with respect to the fact that the size of machinery which is being 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 @ Rs. 1,60,000/- is also not in dispute. It is evident that Ext.P5 order permitting compounding at Rs. 25,000/- was issued only on Ext.P4 circular which in turn was issued based on Ext.P7 Finance Bill. But when Finance Act 2009 dated 28.7.2009 was introduced, the 2nd proviso to Section 8(b) is incorporated only as follows: