2024-VIL-277-KER
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VAT High Court Cases

Kerala Value Added Tax Act, 2003 - Payment of tax at the compounded rates on production of granite metals and/or manufactured sand with the aid of mechanized machines – Imposition of penalty for the mis-declaration of the maximum capacity of the vertical/horizontal shaft Impactors – HELD – the proviso to Section 8(b) of the KVAT Act, 2003 makes it clear that where the vertical/horizontal shaft impactor machines are used along with other machines in the factory of the assessee dealer, the payment of compounded tax will only be in an amount equivalent to 60% of the rate of compounded tax for the vertical/horizontal shaft impactor machines, in addition to the tax on the crushing machines available in the factory. In the instant case, appellants-dealers had mis-declared the production capacity of the machines and declared a lower production capacity based on their experience of having been able to produce only a lesser amount of goods using the machines in question - the action of the dealers was wholly illegal in that the scheme of the Act makes it clear that it is only the production capacity of the machine, as declared by the manufacturer of the machine, that is relevant for the purposes of determining the tax liability in respect of those machines. If it was the case of the dealers that the actual production capacity was less than the total production capacity declared by the manufacturer, it was open to them to resort to the normal assessment procedure contemplated under Section 6 of the KVAT Act. This not having been done, and the dealers in question having opted for payment of tax on compounded basis, it was not open to them to take a stand contrary to the express provisions of the statute while determining their tax liability - no reason to interfere with the orders impugned in the Revision Petitions/Writ Petition for the said orders have correctly interpreted the statutory provision – notwithstanding that there was a mis-declaration of the production capacity of the machines in question, the assessees had reasonably believed that it was the actual production capacity of the machines that had to be taken for the purposes of payment of compounded tax. In view of the genuine belief of the assessee in this regard the imposition of the maximum penalty of twice the tax sought to be evaded by the assessee, is not justified – the penalty imposed is reduced to the actual amount of compounded tax, that was found to have been evaded and not twice the said amount. The Intelligence Officer shall pass a revised order of penalty in respect of these assesees showing the reduced amount of penalty, for the record - Revision Petitions and Writ Appeals are partly allowed
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