SANNIDHAN BAR AND RESTAURANT Vs. STATE OF KERALA

JUDGEMENT

(1.) question raised in the S. T. Revision filed by the petitioner is whether the Tribunal was justified in sustaining a rectification order issued by the assessing officer under section 43 of the Kerala General Sales Tax Act whereunder original assessment on the turnover tax liability of the petitioner under section 7 of the Act was modified to cover entire purchase value of liquor sold during the relevant assessment year. We have heard counsel appearing for the revision petitioner and Government Pleader for the respondent.

(2.) The petitioner was running a bar hotel during the assessment year 2005-06. Admittedly the petitioner was liable to pay turnover tax on the sales turnover of liquor under section 5(2) of the Act. However, by virtue of section 7 introduced by the Kerala Sales Tax (Amendment) Act, 2005, the petitioner instead of paying turnover tax on the sales turnover under section 5(2) could settle liability at the compounded rate as provided under section 7 introduced by the above Act, which is 140 per cent of the purchase turnover of liquor. Section 7, interpretation of which being the issue raised in the revision petition, is extracted hereunder for easy reference :

(3.) While completing the assessment the petitioner offered to remit tax at 140 per cent of the purchase price of the liquor made during the relevant assessment year 2005-06. Even though the assessing officer originally accepted the return and made assessment, he later noticed the mistake crept in the assessment because the purchase price conceded by the petitioner did not include opening stock, which was also sold in the assessment year in question. It is the admitted position that the assessee has excluded closing stock of the year for the purpose of payment of turnover tax at compounded rate under section 7 of the Act. The assessing officer rectified the assessment by invoking the powers under section 43 by taking into account the actual purchase turnover of liquor sold in the relevant year which includes opening stock but by excluding closing stock. Rectified order was contested before the lower authorities by the petitioner contending that rectification carried out under section 43 is without jurisdiction and even if rectification is possible, the assessment on the merits by the assessing officer is incorrect.