THALIATH AND CYRILS JEWELLERS Vs. SALES TAX OFFICER

JUDGEMENT

(1.) Petitioner is challenging Ext.P2 order whereunder the Deputy Commissioner of Commercial Taxes in exercise of powers under Section 35 of the KGST Act has set aside the petitioner's sales tax assessment for the year 1996-97 at compounded rate of tax on the ground that petitioner was not entitled to the benefit of compounding under Section 7(1)(a) of the KGST Act. Even though statutory appeal is provided against the impugned order under the Act, petitioner filed this O.P, because the matter involves interpretation of scope of Section 7(1) (a), In any case after keeping the O.P. pending for over five years, there is no justification for this Court to send back the petitioner for pursuing statutory remedy. In the circumstances. I proceed to decide the case on merits. I heard counsel appearing for the petitioner, and Government Pleader appearing for the respondents.

(2.) Since the issue involved is scope of Section 7(1)(a) of the Act prior to its amendment the said section applicable for the relevant year is extracted hereunder with the proviso introduced with effect from 1.4.1998:

(3.) Petitioner admittedly commenced business on 27.11.1995 that is during the fag end of the financial year 1995-96. However, petitioner applied for payment of tax at compounded rate for 1996-97 at 150% per cent of the tax payable during the previous year, i.e., 1995-96 as provided under Section 7(1)(a) of the Act. It is seen from Ext Pl assessment order that the assessing officer accepted the petitioner's claim and completed assessment for 1996-97 by taking average daily tax liability for the 125 days' business carried on for the year 1995-96 and then by multiplying it by 365. The Deputy Commissioner however vide Ext.P2 order held that the petitioner having not carried on business for a full year in any of the preceding three years, prior to the relevant year, i.e., ] 996-97, petitioner was not entitled to the benefit of compounding under Section 7(1)(a) of the Act. Counsel for the petitioner contended that Section 7(1)(a) does not require that a dealer should carry on business for the whole year in any of the three years preceding the year in which compounding was claimed. He has specifically referred to the proviso introduced to Section 7(1)(a) by Act 14 of 1998 with effect from 1.4.1998 and contended that requirement of minimum three years' business for payment of tax at compounded rate is applicable only from 1998-99 onwards and the Deputy Commissioner went wrong in applying the amended provision for the year 1996-97. Government Pleader on the other hand contended that Section 7(1)(a) prior to the introduction of the proviso makes it clear that the assessee should have carried on business for three years preceding the year in which compounding was claimed, and according to him, the amendment is only clarificatory.