SARASWATHY JEWELLERY KOLLAM 1 Vs. STATE OF KERALA

JUDGEMENT

(1.) QUESTION raised is whether the Sales Tax Appellate tribunal was justified in sustaining the revised assessment under Section 19 of the KGST Act, demanding higher tax at compound rate from petitioner/assessee for 1999-2000. Petitioner/assessee, a jeweler who was remitting tax at compound rate under Section 7 (1) (a) of the KGST Act for five years preceding the relevant year, applied for payment of tax for this year also at compound rate under 3rd proviso to Section 7 (1) (a) which was granted by the Assessing officer in terms of the application demanding tax of Rs. 3,06,600=. This was 110 per cent of the compound tax paid for the previous year, namely 19981999. However, the Assessing Officer later noticed that the demand of tax was lower than the tax payable under 3rd proviso to Section 7 (1) (a) of the Act and he, therefore, re-assessed the petitioner/assessee which led to the dispute in appeal. Tribunal upheld the assessment holding that under the 3rd proviso to section 7 (1) (a), petitioner/assessee was liable to pay tax at 110 per cent of the tax paid at compound rate for the previous year or 110 per cent of the tax payable based on return or Accounts of the dealer for the preceding year. It is against this order that the petitioner/assessee has filed this S. T. Rev.

(2.) CONTENTION of petitioner is that 3rd proviso to section 7 (1) (a) provides for payment of compounded tax at 110 per cent of the compounded tax paid for the preceding year only. Since the controversy pertains to interpretation of 3rd proviso to Section 7 (1) (a), the said Section relevant for the year is extracted hereunder: 7. Payment of tax at compounded rates:- (1) Notwithstanding anything contained in Sub-section (1)of Section 5: (a) any dealer in gold or silver ornaments or wares may, at his opinion, instead of paying tax in accordance with the provisions of that sub-section, pay tax at one hundred and twenty per cent of the tax payable by him as conceded in the return or accounts for the immediate preceding year and where any such dealer opens new branches the compounded tax payable by him in respect of each new branch for the first year shall be twenty-five per cent of the compounded tax for the principal place of business: Explanation:- For the purpose of this clause tax payable as conceded in the return or account for the immediate preceding year means tax payable on the sales turnover under sub-section (1) of Section 5 and the tax payable on the purchase turnover under Section 5a: Provided that where during the preceding year, the dealer had not transacted business for any period the tax payable for the whole year shall be calculated proportionately on the basis of the tax payable for the period during which such dealer had transacted business: Provided further that where a dealer has paid tax under this Sub-section for the preceding year, the compounded tax to be paid by him for the succeeding year shall be one hundred and twenty per cent of such tax paid or one hundred and twenty per cent of the tax payable as per the return or accounts of the dealer for the preceding year whichever is higher: Provided also that where such dealer has paid compounded tax consecutively for a period of three years the compounded tax payable for the succeeding year shall be one hundred and fifteen per cent, and in the case of a dealer who has paid compounded tax consecutively for a period of five years the compounded tax payable for the succeeding year shall be one hundred and ten per cent of such compounded tax paid or payable by him for the immediate preceding year. Provided also that where such a dealer acquires any running business or a branch of a business with respect to gold, silver ornaments or wares during the year, the amount of compounding tax payable in respect of such business shall be calculated in accordance with the provisions of this clause as if it were an independent business, taking into account the turnover conceded in the return or accounts thereof for the previous year with respect to that business or on the basis of the quantum of compounded tax fixed for the previous year in accordance with the second and third provisos, as the case may be.