KVAT Works Contract – Compounding Rate

2016-VIL-306-KER
M/s FEDERAL HOUSE CONSTRUCTION CO-OPERATIVE SOCIETY LTD Vs CTO (WORKS CONTRACT)
Kerala Value Added Tax Act, 2003 – Assessment – Work Contact – Compounding rate – validity of notice under Section 25(1), when the return is not rejected under Section 22 of the Act within the prescribed period under KVAT Rule 35
HELD – when a fact situation gives rise to a situation warranting interference under Section 25(1), Section 22 cannot control Section 25. Section 25 is an independent power available to the Department to consider and take action in respect of escaped assessment, under assessment etc – merely because the authorities did not invoke Section 22 within the prescribed period it does not preclude them from invoking Section 25, if the facts give rise to an eventuality as provided therein
In order to invoke Section 8 (a) of the Act, option is to be exercised by the works contractor. Option can be exercised only on compliance of the statutory format. In so far as the petitioner did not comply with such procedure, the Department was justified in acting accordingly as if petitioner had not opted for payment of tax at compounded rate – it is admitted that the society purchased and constructed Flat with the fund received as advance from the prospective buyers and subsequently transferred the property by registration after collecting balance amount
The society and the members are having separate legal entity hence the Society is liable to pay tax as per the KVAT Act – if at all there is a contention contrary to the same or with regard to the factual aspect, it is for the petitioner to agitate the same in a proper appeal – writ petition dismissed