VETTATHIL AGENCIES Vs. COMMERCIAL TAX OFFICER

JUDGEMENT

(1.) This writ petition is filed challenging Exts.P5 and P5(a) assessment orders under KVAT Act, 2003 for the assessment years 2009-10 and 2010-11 completed under Section 25(1) of the Act. Though the impugned orders are appealable, according to the petitioner, the matter requires adjudication by this Court on account of a legal issue involved in the matter.

(2.) Petitioner is engaged in the trading of cement who purchases cement from manufacturer's local depot and is sold to retailers within the State. According to the petitioner, the suppliers allowed discount under various schemes to buyers based on the purchases, which was a common practice in the trade. Such discounts are often allowed subsequently by way of credit notes and not at the time of raising the tax invoice. According to the petitioner, the turnover discount, target discount, additional discount, special discount etc are allowable deductions from sale price or purchase price as the case may be provided the value of goods paid by buyer is the amount less such discount.

(3.) The assessing authority had issued notice under 25(1) of the VAT Act observing that the sales turnover of goods is below the cost of purchase. Accordingly, assessments were finalised for the years 2009-10 and 2010-11. Petitioner filed WP(C) Nos. 27088/2014 and 34773/2015 before this Court. Writ petitions were allowed as per common judgment dated 2/12/2015. The matter was remitted back. According to the petitioner, further notices were issued for the very same years as Exts.P3 and P3(a). Petitioner filed reply stating that the proposal is against the specific guidelines prescribed by this Court. It was contended that the measure of tax prescribed under KVAT Act is on aggregate amount for which goods are sold. Tax can be levied only based on law stated in the statute and not on accounting principles. Exts.P5 and P5(a) are the orders passed pursuant to the same. According to the petitioner, the finding that the goods were sold at a price lower than the cost of purchase price and therefore Explanation VII to Section 2(lii) of KVAT Act, 2003 is applicable, is illegal. According to the petitioner, the notice itself is against law as contained in the 5th proviso to Section 11(3) which prohibits assessment on turnover when supplier had paid tax on such turnover and the proposal is made ignoring the certificates issued by the suppliers showing payment of tax on amount allowed in credit notices. Exts.P4 and P4(a) are the objections filed and according to the petitioner, it is ignoring the objections that the impugned orders are passed.