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The facts projected in this Writ Petition (Civil) are as follows: -

That the petitioner was running a jewellery and was an assessee under the Kerala Value Added Tax Act, 2003 (KVAT Act) on the roles of the 1st respondent Assistant Commissioner (Assessment), State Goods & Services Tax (GST) Department, Special Circle, Palakkad, and that the petitioner had opted to pay tax at the compounded rates for the year 2016-17. It is further stated that the monthly tax payable was satisfied for the months of April to June, 2016. Further it is averred that as on 30.6.2016, the petitioner had in fact closed his business and this was duly intimated to the 1 st respondent and the registration under the KVAT Act was also got cancelled. That however, by the impugned Ext.P-3 proceedings as per order No. 32091082132/2016-17 dated 29.11.2016 issued by the 1 st respondent, as per which the 1st respondent has now demanded compounded tax for the periods from July, 2016 to March 2017, as according to the 1 st respondent, the compounding tax has to be paid for the year concerned irrespective of the closure of the business. That this W.P.(C)34910/19 - : 3 :-

after due intimation the registration was also got cancelled. The specific stand of the 1st respondent appears to be that the compounding tax has to be paid by an assessee like the petitioner for the year concerned, irrespective as to the closure of the business. In Ext.P-4 W.P.(C).No.11326/2017, this Court dealt with a case of a trader, who was an assessee under the Value Added Tax Act, who was engaged in the business of trade in jewellery and for all the assessment years from 2006-2007 upto 31.3.2010 (assessment year 2009-2010), the assessee was paying tax on the compounded basis under Sec.8 of the KVAT Act and further that on 31.3.2010, the assessee therein had closed the branch concerned at Thiruvalla and this was duly intimated to the respondents and after the commencement of the assessment year 2010-2011, the assessee had functioned only through his head office at Kottayam branch and it was an admitted fact that Thiruvalla branch after its closure on 31.3.2010, had never done any business thereafter. At the said relevant time, the provision in Sec. 8(f) of the KVAT Act, provides as follows:

W.P.(C)34910/19 - : 8 :-

This Court in para 5 of the said judgment in Kairali Jewellery's case supra has held that payment of tax under Section 8(f) of the KVAT Act, in respect of the category of dealers enumerated therein, is in lieu of payment of tax in terms of Sec.6 of the KVAT Act and, therefore, it follows, that an assessee opting to pay tax on compounded basis must necessarily accept the statutory mandate for payment of tax in accordance with the formula prescribed in Sec. 8(f) and cannot choose to pay tax on a different basis. The pointed issue considered by this Court in that decision was as to whether or not the assessee therein is obliged to pay tax on compounded basis in respect of the newly opened branch for the whole year or only for that portion of the year, when it had actually functioned as a business entity. This Court held that the interpretator of Sec.8 must clearly bear in mind the mandate of Article 265 of the Constitution of India, which stipulates that there can be no levy or collection of tax, except in accordance with law. It was noted that as per the charging section contained in Sec. 6 of the KVAT Act, there can be a levy of tax under the Act only when the taxable event of sale or purchase of goods occurs and in other words, there cannot be a levy of tax under the KVAT Act, either actual or notional, for the period when the assessee W.P.(C)34910/19 - : 9 :-

follows:

"5. On a consideration of the facts and circumstances of the case and the submissions made across the Bar, I find that the payment of tax under Section 8(f) of the KVAT Act, in respect of the category of dealers enumerated therein, is in lieu of payment of tax in terms of Section 6 of the KVAT Act. It follows, therefore, that an assessee opting to pay tax on compounded basis must necessarily accept the statutory mandate for payment of tax in accordance with the formula prescribed in Section 8(f) and cannot choose to pay tax on a different basis. The issue that arises in the instant case, however, is whether or not the petitioner herein is obliged to pay tax on compounded basis, in respect of the newly opened branch, for the whole year or only for that portion of the year when it was functioning as a business entity. The provisions of S.8(f) do not expressly provide for such a situation. In my view, an interpretation of the statutory provision must bear in mind the mandate of Article 265 of our Constitution which states that there can be no levy or collection of tax except in accordance with law. As per the charging section under the KVAT Act (Section 6), there can be a levy of tax under the Act only when the taxable event of sale or purchase of goods occurs. In other words, there cannot be a levy of tax under the Act, either actual or notional, for the period when the assessee did not occasion a taxable event. In the instant case, although the petitioner had exercised his option to pay tax on compounded basis, in lieu of the regular method of payment of tax under the Act, the assessment and consequential collection of tax from him could only have been for the period during which he carried on a business of sale or purchase of goods, that attracted the levy of tax, in his newly opened branch. Thus, while he opted to pay tax in respect of the principal place of business, in accordance with the formula under Section 8(f), and the tax liability in respect of the branch that was opened during the year had to be worked out on the basis of the tax paid in respect of the principal place of business, the levy of tax had to be confined to the period during which the branch existed for carrying on the business.