IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 26TH NOVEMBER 2008 / 5TH AGRAHAYANA 1930 ST.Rev..No. 206 of 2007 ------------------------------- TA.417/2004 of S.T.A.TRIBUNAL,ADDL.BENCH,KOZHIKODE .................... PETITIONER/APPELLANT/RESPONDENT/REVENUE: ------------------------------------------------------------------------ STATE OF KERALA, REPRESENTED BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY G.P. SRI. MUHAMMED RAFIQ RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: --------------------------------------------------------------------------- M/S.NOBLE INDUSTRIES, KALLUVALAPPU P.O, PUTHUR, KANNUR - 670 692. ADV. SRI.K.P.HAREENDRAN THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 26/11/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L. DATTU, C.J. & A.K. BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T. Rev. No. 206 of 2007 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 26th day of November, 2008 Order H.L. Dattu, C. J: The Revenue has called in question the legality or otherwise of the orders passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A.No.417 of 2004 dated 24th April 2006. By the impugned order the Tribunal has confirmed the orders passed by the Appellate Assistant Commissioner in STA.No.46/2004 dated 27/5/2004 and has set aside the orders passed by the Additional Sales Tax Officer-I, Kuthuparamba dated 9/10/2003. 2. The assessee is engaged in the production of granite metal using mechanized granite crusher. For the assessment year 2001-02, the assessee had applied for permission to pay the tax at the compounded rate as provided under section 7 of the Kerala General Sales Tax Act (the Act, for short) with reference to its mechanized granite crushing unit, of size 16 X 9. 3. Nowhere in the revision petition it is stated by the Revenue that the permission sought for by the assessee for payment of tax at the compounded rate as envisaged under Section 7 of the Act had been accepted by the assessing authority and was informed to the assessee. 4. For the relevant assessment year 2001-02 up to 23rd July 2001, the rate of tax payable under Section 7 of the Act, if an assessee is permitted to pay the tax under the compounded rate, was only a sum of Rs.30,000/-. By Finance Act 2001, the compounding fee was increased from Rs.30,000/- to Rs.90,000/- with effect from 24/07/2001. Immediately after introduction of the Bill, the assessee had filed an application before the assessing authority, inter alia, requesting him to permit the assessee to withdraw the application filed by it to pay tax at the compounded rate and had further requested the assessing authority to complete the assessment for the year 2001-02 by regular assessment under Section 17 of the Act. The assessing authority has passed an order for the assessment year 2001-02 dated 9/10/2003 directing the assessee to pay tax at the compounded rate as envisaged in the Finance Act 2001. 5. Aggrieved by the order so passed by the assessing authority, the assessee had filed an appeal before the first appellate authority. The first appellate authority has granted relief to the assessee. 6. The State had carried the matter before the Tribunal, being aggrieved by the orders passed by the first appellate authority. The Tribunal by its detailed and well considered order, has rejected the Revenue's appeal and has confirmed the orders passed by the first appellate authority. It is the correctness or otherwise of the order passed by the Tribunal is the subject matter of this revision petition filed by the State under Section 41 of the Act. 7. The revenue has framed the following questions of law for our consideration and decision: “A. Whether the Appellate Tribunal is right in law in holding that the assessee is not liable to pay the enhanced compounded rate of tax introduced in the midst of the assessment year? B. Whether the Appellate Authority and the Tribunal are right in law in ordering completion of regular assessment permitting the assessee to retract from the compounding method of assessment voluntarily opted by the assessee? c. Is not an assessee bound to pay the compounded rate of tax with reference to the rate prevailing during the currency of the year? Can an assessee claim avoidance of the enhanced rate stating that he has already opted for compounding before the introduction of the enhancement?” 8. From the facts noticed by the first appellate authority and the Tribunal, one thing that is evident is that the assessee had only filed his application before the assessing authority for permission to pay the tax at the compounded rate as envisaged under Section 7 of the Act. It is not stated anywhere in the orders passed either by the first appellate authority or the Tribunal or even in the revision petition filed by the State, that, permission had been granted by the assessing authority to pay the tax at the compounded rate. Even before the assessment could be completed, since there was no permission granted by the assessing authority for payment of the tax at the compounded rate, the assesee has withdrawn his application filed for payment of tax at the compounded rate and had requested the assessing authority to complete the assessment for the assessment year 2001-02 by way of regular assessment as envisaged under Section 17 of the Act. For the reasons best known, the assessing authority has rejected the request of the assessee. The error committed by the assessing authority is now rectified by the first appellate authority and that order has been confirmed by the Tribunal. 9. In the instant case, the assessee has not withdrawn his earlier request for payment of tax at the compounded rate as provided under Section 7 of the Act. It is no doubt true, that, he had filed an application to pay the tax at the compounded rate and it appears to us that the said application was ever considered by the assessing authority and a formal order as required under the Rules was passed by the assessing authority, and therefore, the assessee was entitled to withdraw his earlier application, since no order was passed on the request made by the assessee. Therefore, it is not a case where the assessing authority has accepted the request of the assessee for payment of tax at the compounded rate and later it was withdrawn, but a case where orders were not passed on the application filed by the assessee for payment of tax at the compounded rate. Therefore, in the present case, we need not have to decide whether the assessee can withdraw his application which has already culminated into order, in view of the orders passed by the assessing authority. This issue, we will keep it open, to be agitated in an appropriate proceedings. In the peculiar facts and circumstances of the case, we are of the opinion that neither the first appellate authority nor the Tribunal has committed any error which would call for our interference in a petition under Section 41 of the Act. Therefore while rejecting the revision petition, we answer the question of law raised by the Revenue against the Revenue and in favour of the assessee. Ordered accordingly. H.L. DATTU Chief Justice A.K. BASHEER Judge an/dk.