IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN TUESDAY, THE 15TH DAY OF NOVEMBER 2011/24TH KARTHIKA 1933 OTRV.No. 34 of 2011 ( ) ======================= TA(VAT) NO.84/2010 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM REVISION PETITIONER/APPELLANT: ====================== 1 M/S.SUNNY JACOB JEWELLERS SASTRI ROAD KOTTAYAM REP.BY THE MANAGING PARTNER SUNNY JACOB BY ADV.SRI.C.K.THANU PILLAI RESPONDENT/RESPONDENT ============= THE STATE OF KERALA BY G.P. SRI.BOBBY JOHN THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 15-11-2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE I: TRUE COPY OF ORDER NO.3205052 7355 DT.10.3.2008 ISSUED BY THE COMMERCIAL TAX OFFICER, FIRST CIRCLE, KOTTAYAM. ANNEXURE II: TRUE COPY OF ORDER NO.KVATA.185/08 DT.14.10.2009 ISSUED BY THE DEPUTY COMMISSIONER (APPEAL) KOLLAM. ANNEXURE III: TRUE COPY OF APPEAL MEMORANDUM IN FORM, NO.31 DT.15.2.2010 FILED BEFORE THE TRIBUNAL. ANNEXURE IV: TRUE COPY OF ORDER NO.T.A.(KVT) 84/2010 DT.30.8.2010 ISSUED BY THE TRIBUNAL. ANNEXURE V: TRUE COPY OF RETURN FOR 2007-08 DT.31.4.2008 OF SRI.SUNNY JACOB M/S.DONA GOLD, SUBMITTED TO THE COMMERCIAL TAX OFFICER, FIRST CIRCLE, KOTTAYAM. TRUE COPY P.S. TO JUDGE C.R. C.N.RAMACHANDRAN NAIR & K.VINOD CHANDRAN, JJ. .................................................................... O.T. Rev. No.34 of 2011 .................................................................... Dated this the 15th day of November, 2011. JUDGMENT Ramachandran Nair, J. The question raised is whether the demand of tax from the petitioner at compounded rate for the whole year 2007-2008 is justified or not. We have heard counsel for the petitioner and Government Pleader for respondents. 2. The facts leading to the controversy are the following. The petitioner was a partnership firm engaged in business in gold and silver. Under Section 8(f) of the KVAT Act the petitioner applied for payment of sales tax at compounded rate which was allowed by the Assessing Officer. As a result of the same, the petitioner was remitting annual tax demanded under compounding scheme on a monthly basis at the rate of Rs.99,690/- per month. However, the petitioner firm was converted into a proprietorship business whereunder the Managing Partner took over the business from 28.12.2007 onwards. The petitioner, therefore, claimed that no tax at compounded rate could be O.T. Rev. 34/2011 2 demanded from it for the remaining period of the year i.e. from 28.12.2007 onwards. The Assessing Officer, however, made an income escaping assessment and demanded tax for the whole year including the remaining period wherein the business was said to be carried on by the Managing Partner. 2. After hearing counsel for the petitioner and Government Pleader and after going through the orders of the Tribunal, what we notice is that the petitioner or the partners have not complied with the provisions of the Act and Rules in regard to dissolution of the firm and conversion of the business into proprietorship business. Intimation under Rules 91 and 92 of the KVAT Rules were not furnished. The clear finding of the Tribunal is that the tax at compounded rate under Section 8(f) of the Act is for the year as a whole and that again is depending on the maximum tax payable or paid for any of the three preceding years. When the scheme of compounding is with reference to the yearly tax payable, we do not think proportionate reduction is called for, for any period within an year. Even though counsel for the appellant has relied on Rule 12(7) of the KVAT Rules, what we notice O.T. Rev. 34/2011 3 is that the same provides for continuation of business and change over of pattern of payment of tax from compounded rate to payment under Section 6(1) of the Act. Here again, the Rule does not specify whether such change over is permissible within an year or not. In any case in this case we find that the partners or the firm had not intimated even conversion of the partnership business into proprietorship business. It is also to be noted that there is no separate demand of tax on the proprietor from the date of conversion till the end of the financial year. So much so, there is no duplicity in demand of tax. We, therefore, do not find any ground to interfere with the orders of the Tribunal. Accordingly O.T. Revision case is dismissed. Sd/- C.N.RAMACHANDRAN NAIR Judge Sd/- K.VINOD CHANDRAN Judge True copy P.S. to Judge pms