The Kerala High Court, recently held that the additional works which were not declared by the dealer can assessed under the normal provisions under Section 6(1) of the Kerala Value Added Tax Act.
Justice Jayasankar Nambiar, while dismissing a writ petition filed by M/s Venad Designers And Contractors (P) Ltd, had clarified that the benefit of compounding can only be given in respect of the works that were opted for by the petitioner.
The petitioner-Company, in the instant case, had compounded the offence of suppression that was detected against him. They were aggrieved by the order of the Commercial tax Officer (Works Contract) whereby the Officer adopted the rate of tax of 14.5%, in respect of those works that were not declared in the compounding application.
It was contended on behalf of the petitioner-Company that once they 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 per cent.
The bench noted that 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.
The bench noted that the petitioner did not give details of all the works that he undertook during the year in question while in the declaration filed before the authorities so as to enable them to determine the total value of the works in respect of which he was opting to pay tax on compounded basis.
The single Judge said that “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.”
Read the full text of the Judgment below.
