PALLITHARA JEWELLERS Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) The writ petition is filed with the following prayers;

(2.) Brief facts of the case are as follows; The petitioner, a partnership firm, engaged in the manufacture and sale of gold jewellery under the name and style, "Pallithara Jewellers", is a registered dealer on the rolls of the first respondent. The petitioner opted for payment of tax at compounded rate as per Sec. 8(f) of the Kerala Value Added Tax Act, 2003 (for short, "the KVAT Act") for the assessment year 2013-14 and was paying tax accordingly. Ext.P1 compounding application of the petitioner was accepted by the first respondent. The petitioner also filed annual return for the year 2013-14 along with the Trading, Profit & Loss A/c and the audit report in Form 13 along with Form 13A. While so, the petitioner was served with Ext.P4 notice proposing to reject the book of accounts and to assess the petitioner under Sec. 25 of the KVAT Act. On receipt of Ext.P4 notice dtd. 18/1/2016, the petitioner filed Ext.P5 reply dtd. 3/2/2016, stating that the compounding was already allowed and the tax is being paid at the compounded rate under Sec. 8 of the KVAT Act. Thereafter, the petitioner was served with Ext.P6 notice dtd. 18/2/2016, stating that the second respondent - Deputy Commissioner, Kannur - cancelled the compounding order. The petitioner was also asked to appear for a hearing on 25/2/2016 before the first respondent. It is aggrieved by Exts.P4 and P6, the petitioner has come up before this Court.

(3.) The first respondent filed a counter affidavit, wherein it is admitted that the petitioner filed Ext.P1 application before the assessing authority for payment of tax at the compounding rate for the year 2013-14. It is contended that on completion of the audit of accounts as prescribed under the KVAT Act, the petitioner filed audit report in Form No.13 and 13A, and on verification of the audit report, it was found that the petitioner has income under the head "other", which has to be assessed under the provisions of the KVAT Act and accordingly, Ext.P4 notice under Sec. 25(1) of the KVAT Act was issued to the petitioner. It is further contended that as per Ext.P6, the petitioner was intimated about the permission granted by the second respondent to cancel the compounding order for 2013-14 and the petitioner was also afforded a chance of hearing on 25/2/2016 and hence, there is no violation of natural justice in this case and the reason for the proposed cancellation of compounding order was clearly explained as per the pre-assessment notice dtd. 18/1/2016. It is further contended that even though an amount of Rs.1,39,82,082.00 was shown as "other income" in the Trading, Profit & Loss A/c, this turnover was not reported in the self assessed returns filed by the petitioner and the assessing authority has good and sufficient reasons for cancellation of permission to pay tax at the compounding rate. According to the first respondent, the action of the assessing authority is strictly in accordance with the provisions under the KVAT Act.