ASSISTANT COMMISSIONER, KVAT Vs. JOHN JACOB

JUDGEMENT

(1.) Aggrieved by the judgment of the learned Single Judge, the respondent has filed this appeal.

(2.) The respondent is an assessee under the Kerala Value Added Tax Act, 2003 (the "KVAT Act") engaged in the trading of ceramic and vitrified tiles, rubber processing chemicals, and kiln-burnt roofing tiles. During the 20142015 and 20152016 fiscal years, the respondent imported kiln-burnt roofing tiles from China and cleared them through Customs under HSN code 6905 1000. In doing so, the respondent declared that these imported items attracted KVAT at a rate of 14.5% while paying the required advance tax.

(3.) Subsequently, the respondent filed returns under the KVAT Act treating the imported items as falling under Entry 18(1)(c) of the Third Schedule to the Act, thereby assessing them at a lower rate of 5%. Alleging that this 5% tax payment was improper, the appellant initiated assessment proceedings for the years 201415 and 201516 under Sec. 25(1). After considering a detailed objection filed by the respondent, the assessment was finalized by Ext.P2 proceedings, which fixed the tax liability at the higher rate of 14.5%. Following this, separate notices were issued under Sec. 67 of the KVAT Act proposing to impose a penalty on the grounds that the respondent had attempted to evade tax through misclassification. Although the respondent filed a detailed objection against this proposal, the penalties were ultimately confirmed by Ext.P5 and Ext.P5(a) orders, which the respondent subsequently impugned in the Writ Petition.