Kerala HC Deletes Order since provision denying Composition Scheme to dealer making inter-State purchase of packing materials was introduced subsequently [Read Judgment]

While hearing the case of M/s Golden Fork Restaurant and Catering Co.(p) Ltd Vs. Commercial Tax Officer, High Court of Kerala recently deleted the order passed by the department since the provisions under section 8(c) of the Kerala Value Added Tax was not permitted to a dealer who making inter-state purchase of goods other than capital goods or packing materials in the composition scheme, but the same was introduced only in the subsequent year.

The assessee in the instant case, engaged in the business of restaurant and catering, availed of the compounding facility as provided under Section 8(c) of the act for dealers in cooked food and beverages and had been paying tax at the compounded rate.

During the course of assessment proceedings, the Assessing Officer found that the assessee has made the inter-state purchase of packing material and raw materials which were not disclosed in the said provisions and accordingly the AO issued notice for cancellation of compounding for the relevant assessment year. Before the Court, the revenue also submitted that on going through the orders it is evident that the petitioner was intimated the proposal and the petitioner had failed to turn up for hearing as specified in the notices.

After perusing the available materials on records, Justice K.Vinod Chandran observed that it is a clear fact that provisions of section 8(c) of the act were not permitted to a dealer to made inter-state purchase of goods other than capital goods or packing materials in the composition scheme, but it was introduced only in the assessment year 2014. While considering the fact it is not possible to cancel the compounding facility which was provided to the assessee earlier without verifying the facts deeply.

The court further observed that it is not clear as to whether there was the failure on the part of the assessee to appear but the orders show that the notices were issued and the hearing was proposed. Therefore while disposing of the writ petition the Court ordered that the assessee would be present by himself with solid proofs before the AO on the specified date for a deep verification.