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Judgment
The petitioner has approached this Court aggrieved by Ext.P9
proceedings, issued under the Kerala Value Added Tax Act. By the
said order, the petitioner was allowed to compound an offence on
payment of Rs.8,00,000/- by way of compounding fee, and a tax
amount quantified at Rs. 8,36,070/-. In the writ petition, it is the
case of the petitioner that, while he had chosen to compound the
offence, of suppression of details regarding the works for which he
had opted for compounding, the respondents erred in adopting the
rate of tax of 14.5%, in respect of those works that were not
declared in the compounding application, while passing the
impugned order. According to the petitioner, once he had chosen
to pay tax on compounded basis, in respect of all works that he had
undertaken for the year, even without making a declaration with
regard to the said works, the rate of tax adopted could not have
been more than 3% for the year in question.
The learned Government Pleader would rely on the decision
of the Division Bench of this Court in Silver Line Villas &
Apartments Pvt. Ltd. v. State of Kerala [2017(2)KLT 770] to
contend that, once the assessee makes an application for permission
to pay tax at compounded rates for a particular works contract, and
permission is granted with respect to that particular contract, it
would only mean that all the individual components of such works
contract would be included in such permission, and that it would not
be then incumbent upon the assessee to make separate applications
with respect to individual components of such works contract. The
decision is relied upon to contend that, inasmuch as in the instant
case, the assessee had not declared the various contracts for which
he was opting to pay tax on compounded basis, he could not obtain
the benefit of compounding, in respect of those works which he had
not declared before the department.
I have heard the learned counsel for the petitioner and the
learned Government Pleader for the respondents.
On a consideration of the facts and circumstances of the
case and the submissions made across the bar, I find that, it is not in
dispute that the petitioner had compounded the offence of
suppression that was detected against him. Through the act of
compounding the offence, the petitioner had virtually admitted that
he had suppressed details of the contracts that he had undertaken
during the assessment year in question. In the declaration, that was
filed before the Tax Authorities for the purposes of exercising the
option to pay the tax on compounded basis, the petitioner did not
give details of all the works that he undertook during the year in
question, so as to enable the respondents to determine the total
value of the works in respect of which he was opting to pay tax on
compounded basis. The additional works, which were carried out by
the petitioner, over and in relation to works that he had actually
declared before the authorities, came to the knowledge of the
department, only through an investigation carried out by them.
Under the said circumstances, I am of the view that, in respect of
the said additional works, which were not declared by the petitioner,
the liability to tax would have to be discharged in accordance with
the normal provisions under Section 6(1) of the KVAT Act. The
benefit of compounding can only be given in respect of the works
that were opted for by the petitioner. I, therefore, find no reason to
interfere with Ext.P9 order passed by the respondents in the instant
case. The writ petition in its challenge against Ext.P9 order,
therefore fails, and is accordingly, dismissed.