While upholding the order of the VAT Tribunal, the Kerala High Court has held that the dealer is eligible for the input tax credit during the transition period since the cancellation of registration has not been published in the news paper and no notice in Form No.5 B was served on the dealer as per the Kerala Value Added Tax Act.
The respondent, Raseena is a dealer registered under the KVAT Act. On 20.2.2014, the assessee through a letter informed that she has intended to close the business with effect from 31.12.2013 since she has entered into a new partnership firm under the name and style ‘Fidha Trading’ with the same door number. Along with the letter, registration certificate was also enclosed. Acting on the same, the application was allowed and the registration was cancelled with effect from 31.12.2013.Later, the department levied penalty on the dealer by holding that though the registration was cancelled with effect from 31.1.2014, the business was continued by her business till 26.2.2014 and she did not file monthly return for the month of January 2014 upto 26.2.2014. This was an intention to evade payment of tax.
On appeal, the VAT Tribunal allowed input tax credit claim of the assessee.
A dvision bench of Justice S.V.Bhatti& Justice Basant Balaji observed that at the most the canellation can be effective only from 26.2.2014, the date on which the fresh registration of the partnership form was allowed.
Dismissing the appeal filed by the VAT department, the Court said “According to him, only six days is the period in which there was no registration either for the erstwhile concerned or the present partnership firm. It is true that the registration once cancelled has to be published in two leading daily newspapers at least and the dealer should be informed as per notice in Form No.5 B. Then only the cancellation of registration shall be effective. The respondent does not have a case that prior to 20.2.2014 such an exercise was done. In the absence of the said exercise, we are of the view that the Tribunal was right in entering into a finding that the respondent is entitled to input tax credit. The legal position emerging out is that the respondent was not having any registration from 20.2.2014 to 26.2.2013 and hence, the finding of the Intelligence Officer as well as the First Appellate Authority was interfered by the Tribunal to that extent. Though factuallywe are not in agreement with the case projected by the respondent in legal principle, we are of the view that the order of the Tribunal is in order.”
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