2017 (1) TMI 1716 – KERALA HIGH COURT – TMI – Compounding rate of tax – bar attached hotel of and below two star – section 7 of the Kerala General Sales Tax Act, 1963 – whether the assessee would be able to opt as between Clauses (a) and (b) of S. 7(1)(i)? – HELD THAT:- When Clause (b) of S. 7(1)(i) applies, the amount of tax is a pre-determined amount. That is dependent upon the turnover of the three previous consecutive years. Therefore, even when assessee proceeds to seek payment of tax at compounded rate under S. 7(1) for a particular year, he would be guided by books of accounts which are in that person's possession itself. Hence, no fresh assessment as known to law is required. There are no jurisdictional error in either the assessing authority having required the assessee to pay the differential in terms of S. 7 or the Accountant General's office or the squad of that office having prompted the assessing authority to proceed to make demand for the remaining amount. A
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ORDER T.B. Radhakrishnan, J. 1. These revisions are by an assessee who is eligible to pay tax at compounded rate under S. 7 of the Kerala General Sales Tax Act, 1963, 'Act', for short. It is also not in dispute that the assessee is one who has a bar attached hotel of and below two star. This means that if he opts under S. 7 for payment of tax at compounded rate, he would be governed by S. 7(1)(i), which provision has two Clauses – (a) and (b), which operate in alternative. Clause (a) or (b) would apply depending upon which would bring home to the Revenue through the compounded scheme, higher revenue as tax. The assessee applied for payment of tax at compounded rate. That application was not rejected. Obviously therefore, the learned counsel for the assessee is justified in saying that the compounding as was offered, was accepted. But, in the same breath, the assessee would contend through its learned counsel that what has been offered is not merely the option to pa
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ssment), Kerala Anr. (2014 (71) VST 110 (SC) : 2014 KHC 5346), Raju Jacob v. Sales Tax Officer (2006 (1) KLT 788 : 2006 KHC 246), Koothattukulam Liquors v. Deputy Commissioner of Sales Tax (2015) 12 SCC 794) and Annie George, Proprietrix v. The State of Kerala (2007 (1) KLT SN 4 (C. No. 6) : 2006 KHC 1701) do not go away from the principle that we have stated herein to that effect. While Koothattukulam Liquors (supra) dealt with a case of payment of tax at compounded rate on the basis of excise duty component, other decisions, particularly Bhima Jewellery (supra), deal with the quality of the contract of compounding and specifically state that compounding option once exercised results in the crystallisation of a bilateral contract as between the assessee and the State, that tied down both of them to be regulated by compounding mechanism, the situation to which they get tied down by that process is that the assessee cannot be compelled by the State to submit itself to regular assessme
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nder S. 7 does not stand. 2. Be that as it may, we have also considered yet another submission. The plea of the assessee through its learned counsel is that the assessee had voluntarily made an option and the assessing authority had accepted tax from him. He, therefore, tries to build up a plea somewhere in the realm of what could be thought of, too remotely, as exchequer. We notice this to say that the crucial further argument is that the Accountant General's office had made an audit of the office, and in the course of the audit, the Accountant General's squad had pointed out that the assessee had not paid the entire amounts due under S. 7(1) of the Act. The learned counsel for the assessee says that the statutory assessing authority under the Act has acted on the promptings of the extraneous authority, namely, the Accountant General's office, and therefore, the whole action taken against the assessee is unfounded and without jurisdiction. We are unable to countenance t
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that when the Accountant General's audit squad had pointed out the deficiency and deficit in the payment of taxes payable under S. 7(1) by the assessee, a notice was issued by the assessing authority calling upon the assessee to pay the balance amount. After such notice, a reply was delivered by the assessee. That was considered and thereafter, an order was issued apparently under S. 7. Calling it as an assessment order or a notice demanding payment, in law and in fiscal jurisprudence, it makes no difference because all that has been asked for is requiring the payment of amounts which are due to be paid merely by operation of law and not on the basis of any assessment de novo or of the accounts of the assessee. We say this because, when Clause (b) of S. 7(1)(i) applies, the amount of tax is a pre-determined amount. That is dependent upon the turnover of the three previous consecutive years. Therefore, even when assessee proceeds to seek payment of tax at compounded rate under S. 7(
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