THAKKARAM RESTURANT Vs. STATE OF KERALA

JUDGEMENT

(1.) The revisions relate to the cancellation of compounding as permitted in the year 2014-15 and the consequential best judgment assessment carried out. The questions of law raised are re-framed as follows in the respective revisions.

(2.) The facts in brief are that the assessee running a restaurant applied for and was granted compounding under Section 8(c)(i) of the Kerala Value Added Tax Act,2003 (for short "KVAT Act". An inspection conducted by the Intelligence Squad revealed undisclosed purchase of chicken amounting to Rs.10,34,210/-. The Assessee paid the compounding fee with respect to the penalty proceedings and filed a revised return including the tax and interest payable there at. The Assessing Officer canceled the compounding permission and carried out best judgment assessment. On best judgment equal amount was added for direct expenses and 50% for other ingredients. Gross profit was computed @ 20%. The First Appellate Authority made some modifications and the Tribunal additionally deleted the further addition at 50% after sustaining the addition on direct expenses. The assessee is in revision.

(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.