Kerala VAT:- Eligibility to pay tax on Works Contract

2016-VIL-89-KER
CYRIL JACOB VELLAPPALLY JACOB VELLAPPALLY AND CO. Vs COMMERCIAL TAX OFFICER (WC), KOTTAYAM
Kerala Value Added Tax Act – Section 8(a)(i) – works contract – Eligibility to pay VAT on works contract at compounded rates – requirements for cancellation of registration under the CST Act – Effect of subsequent amendment
HELD – assessment year 2005-06 the amendment to Section 8(a)(i) having come into force in the middle of the assessment year, and it being almost impossible on account of the statutory provisions of Section 7(5) of the CST Act, to get a cancellation of the certificate of registration in 2005-06 itself, it would be unfair on the part of the revenue to insist on the higher rate of compounded tax under Section 8(a)(ii) of the Act on the works contracts executed
The orders of penalty imposed on this ground also cannot be legally sustained. – Demand of differential tax and penalty set aside – Cancellation of the CST registration before the commencement of the assessment year 2006-07
HELD – petitioners had ample time during the assessment year 2005-06 itself to ensure that they were duly qualified for exercising their option under Section 8(a)(i) – The petitioners having not chosen to do so, and having opted for payment of tax at the lower rate of compounded tax under Section 8 (a)(i), when they were not entitled for the same – the Assessing officers finding that the petitioners are not entitled to the rate of tax under Section 8(a)(i) of the Act, cannot be said to be illegal – Assessee petition partly allowed