Document Fragment View

Matching Fragments

The petitioner is a registered dealer under the KVAT Act, engaged in the business of production of granite metal and M- sand. In connection with the said business, the petitioner had installed at his unit primary as well as secondary crushers. Over and above the said machinery, the petitioner had also installed an Auto Sand Machine for the purposes of producing M-sand. For the purposes of assessment under the KVAT Act, the petitioner opted for payment of tax on compounded basis in terms of S.8 of the KVAT Act, and the revenue authorities accepted his application for the same. The petitioner accordingly filed returns and paid tax as contemplated under S. 8 of the KVAT Act.

3. Faced with Ext.P1 proposal for the imposition of a huge penalty, the petitioner approached the 1st respondent with a proposal for compounding the offence in terms of S. 74 of the KVAT Act, the provisions of which read as follows:

"74. Composition of offences.-(1) The assessing authority or other officer or authority authorised by the Government in this behalf may accept from any person who has committed or is reasonably suspected of having committed an offence against this Act, other than those specified under clause
(b) in other cases, a sum of money not exceeding ten thousand rupees.

Provided that the Commissioner may by order authorize any officer to compound the offence under this section on payment of a reduced amount.

(2) On payment of such amount under sub-

section (1), no further penal or prosecution proceedings shall be taken against such person, in respect of that offence."

4. It is relevant to note that, in the meanwhile, there were several writ petitions filed before this Court challenging the demand of the revenue authorities for payment of tax on Vertical Shaft Impactor (VSI) machines, that were used by dealers engaged in the business of production of granite metal, for production of M- sand. The contention of the dealers in the said writ petitions was essentially that, inasmuch as the statutory provision under S. 8 of the KVAT Act envisaged the payment of compounded rate based on machines of specified description used in the respective premises, and the VSI machine was not a machine that was specified under the statute, the said machine could not be reckoned for the purposes of determining the rate of tax to be paid on compounded basis. Taking note of the pendency of the said writ petitions, and anticipating a favourable verdict in the matter from this Court, the petitioner, while preferring Ext.P5 application for compounding the offence, qualified the same with a request to reduce the compounding fee payable to 60% of the compounding fee that was payable in respect of cone crushers, inasmuch as the said rate was stipulated under the statute, as amended by the Finance Act, 2014, and with a further stipulation that, in the event of this Court finding in favour of the assessees in the writ petitions referred to above, the compounding fee would be refunded with interest. While, initially, the 1st respondent did not consider the request of the petitioner favourably, on the petitioner re-iterating its request before the 1st respondent, the latter deviated from his earlier proposal and proposed a computation of compounding fee at 60% of the maximum compounding fee payable for the cone crusher, for the Auto sand machine, and another 60% for the VSI machine, for the year 2013-14. This proposal was then put to the petitioner, who then put in a compounding application, admitting the offence and seeking departmental composition. The said application was accepted by the 1st respondent and he proceeded to pass Ext.P8 order, fixing the tax and compounding fee payable at Rs. 8,00,000/- each and noticing that the petitioner had already paid these amounts on 23.01.2015.

6. I have heard the learned Senior Counsel Sri. K. Srikumar for the petitioner and the learned Government Pleader for the respondents. Learned Senior Counsel would vehemently canvass for the proposition that, in the instant case, the compounding proposal put forth on behalf of the petitioner, subject to certain stipulations, had been accepted by the 1st respondent and accordingly, the petitioner was entitled to reap the benefits that flowed from a declaration, of the legal position with regard to liability for penalty, in the judgment dated 06.03.2015 rendered in WP (C) No. 2873/2014 and connected cases. In the alternative, he would submit that the offence itself was not compounded in the absence of payment of the balance tax amounts by the petitioner. To substantiate his contentions, he would place reliance on the decisions in Chandrahasan v. State of Kerala [1994 KHC 328], Assistant Commercial Tax Officer (intelligence) v. N.N.Jariwala [1992 (86) VST 229 (Kar)] and State of Karnataka v. Veerchand [1992 (87) VST 138 (Kar-FB)]. It is also contended that, even if it is assumed that the offence was compounded in terms of S.74 of the KVAT Act, in as much as it was not in dispute that the provisions of the proviso to S. 74 (1)(a) was attracted in the instant case, the maximum compounding fee that could have been collected from the petitioner in terms of the statute was only Rs. 2 Lakhs.