STATE OF KERALA Vs. P. P. ALPHONSA

JUDGEMENT

(1.) The question raised in the revision filed by the State is whether the respondent-assessee is liable to pay sales tax for the year 2002-03 at compounded rate under section 7(1)(a) of the Kerala General Sales Tax Act, 1963 at 200 per cent of the tax payable as conceded in the return or accounts for 2001-02 which was higher than the tax paid at compounded rate for that year. We heard Special Government Pleader appearing for the petitioner and Sri. S. Anil Kumar appearing for the respondent-assessee. The case of the Revenue is that during the assessment year 2001-02 the respondent-assessee paid tax at compounded rate under section 7(1)(a). However the tax payable by them under the return filed and according to the accounts under section 5(1) as well as under section 5A was higher than the tax payable at compounded rate and so much so under section 7(1)(a) as amended with effect from 2002-03 the respondent is liable to pay 200 per cent of the tax payable under section 5(1) and 5A for the year 2001-02. The respondent's case was that since tax was paid at compounded rate for 2001-02 which is substitute for tax payable under section 5(1) as well as under section 5A, the liability to pay tax at compounded rate for 2002-03 is only at 200 per cent of the tax paid under compounded scheme for the preceding year, viz., 2001-02. It is seen that both the first appellate authority as well as the Tribunal allowed the respondent's claim by referring to the single Bench decision of this court in Prakash Jewellery v. State of Kerala,2004 12 KTR 543 (Ker). However Special Government Pleader pointed out that this court has not in the said decision considered the scope of the main clause 7(1)(a) introduced with effect from 2002-03 and the court was only considering the scope of the amendment made from 150 per cent to 200 per cent of the compounded rate and also whether the amendment made with retrospective effect was valid. In another decision, this court held that liability under section 5A is also covered by the scheme of payment at compounded rate. We find force in this contention because a situation of tax payable under section 5(1) and 5A for the preceding year in excess of the tax paid at compounded rate has come up for decision only now.

(2.) On going through section 7(1)(a) as amended with effect from April 1, 2002 we notice that a dealer in gold Jewellery who opts for payment of tax at compounded rate for the year 2002-03 has to pay 200 per cent of the tax paid for the preceding year 2001-02 or tax payable under sections 5(1) and 5A for that year whichever is higher. Admittedly the tax paid by the respondent at compounded rate under section 7(1)(a) for the year 2001-02 is less than the tax payable under sections 5(1) and 5A as per returns filed and accounts maintained for that year. The provision under section 7(1)(a) is to compare the amount of tax paid for 2001-02 and the tax payable under section 5(1) and 5A as per the return filed and the accounts maintained and to pay the tax at compounding rate of 200 per cent on the higher of these two amounts. There is no dispute that tax paid by the respondent for the year 2001-02 at compounded rate under section 7(1)(a) was lesser than tax payable under sections 5(1) and 5A as per the return filed and accounts maintained. So much so by virtue of this express provision the respondent was liable to pay tax for the year 2002-03 under the compounded rate under section 7(1)(a) at 200 per cent of the tax payable under sections 5(1) and 5A based on the return filed for 2001-02. Accordingly the sales tax revision is allowed reversing the order of the Tribunal and the first appellate authority and by restoring the order of the assessing officer. Since the same principle is applicable for all succeeding years, revision for subsequent year 2004-05 is also allowed reversing the orders of the Tribunal and the first appellate authority and by restoring the order of the assessing officer.