STATE OF KERALA Vs. HOTEL SAMUDRA

JUDGEMENT

(1.) Both these S.T.Revisions are connected and petitioner in both is the State Government. The S.T.Revisions are filed under Section 41 of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as the 'Act'). The respondent assessee is a bar attached Hotel at Sreekantapuram which, according to the learned counsel for the assessee, is located in the Panchayath area. For the year 2010-2011, the respondent assessee opted for payment of tax at compounded rate under Section 7(1) of the Act. Permission was granted by the assessing authority as per order dated 14.09.2010. There is no dispute that assessee had paid tax up to August 2010 at compounded rate. Thereafter, the assessee sought for withdrawal of permission to pay tax at compounded rate. The reason given was that the Excise Commissioner had cancelled its licence and resultantly, there was no purchase or sales during the period from September 2010 to December 2010. The Assessing Officer rejected the request of the assessee and demanded turnover tax for the months of September to December 2010 at compounded rate. The First Appellate Authority confirmed the order. The Tribunal however took the view that the assessee is not liable to pay tax at compounded rate in view of the fact that there was no purchase or sales during the months in question and granted relief. It is accordingly that the State, being aggrieved by the order of the Tribunal, has filed these two revisions.

(2.) We heard the learned Government Pleader and the learned counsel for the respondent.

(3.) According to the learned Government Pleader, the question is covered by the judgment in Falcon Rock Products Vs. Sales Tax Officer, 2001 121 STC 224 which decision has been distinguished by the Tribunal. The Tribunal took the view that it is not applicable. The learned counsel for the respondent supported the order of the Tribunal. According to the respondent, since there was no purchase or sales during the months in question, as correctly found by the Tribunal, the assessee cannot be liable to pay tax at the compounded rate for those months. In order to appreciate the contentions, it is necessary to advert to the provisions under Section 7 as far as it is relevant for the purposes of the case, which reads as follows: