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 22ND DAY OF NOVEMBER 2011/1ST AGRAHAYANA 1933 OTRV.No. 76 of 2011 ================== TAVAT.325/2010 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM REVISION PETITIONER/APPELLANT./ASSESSEE ========================================== SHRI.C.K.PRADEEP KUMAR PROPRIETOR NAMANS KOVVALPALLY KANHANGAD KASARAGOD DISTRICT. BY ADV.SRI.T.M.SREEDHARAN (SR.) SMT.NISHA JOHN SRI.V.P.NARAYANAN SMT.BOBY M.SEKHAR RESPONDENT/RESPONDENT/REVENUE ================================ 1 STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT SECRETARIAT THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. BOBBY JOHN THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 22-11-2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OTRV.No. 76 of 2011 APPENDIX REVISION PETITIONER'S ANNEXURES: ANNEXURE A : TRUE COPY OF THE ASSESSMENT ORDER NO. TIN 32130622034/2006-07 DATED 29.2.2008 PASSED BY THE CTO (AUDIT ASSESSMENT)KASARAGOD ANNEXURE B : TRUE COPY OF THE ORDER IN VATA NO. 283/2008 DATED 3.11.2009 OF THE DEPUTY COMMISSIONER (APPEALS)II. KOZHIKODE ANNEXURE C : TRUE COPY OF THE ORDER IN TAVAT NO. 325/2010 DATED 30.12.2010 PASSED BY THE APPELLATE TRIBUNAL ANNEXURE D : TRUE COPY OF MEMORANDUM OF APPEAL DATED 22.6.2010 SUBMITTED BY THE PETITIONER ANNEXURE E : TRUE COPY OF THE INSPECTION REPORT DATED 20.7.2006 RESPONDENTS' ANNEXURES: NIL //TRUE COPY// P.A. TO JUDGE jma C.N. RAMACHANDRAN NAIR, & K. VINOD CHANDRAN, JJ ---------------------------------------------------- OT Rev. No. 76 of 2011 ---------------------------------------------------- Dated this the 22nd day of November, 2011 J U D G M E N T C.N. Ramachandran Nair , J Heard the learned Senior Counsel Sri.T.M.Sreedharan appearing for the petitioner and the learned Government Pleader for the State. 2. The main question raised is whether the Tribunal is justified in denying input tax credit during the year 2006-07 for the period during which the petitioner remained unregistered. Admittedly, petitioner applied for registration only on 18.7.2006 and so much so, for purchase made up to the said date, petitioner is not entitled to claim input tax credit as mandatory requirement for the said benefit is his registration under the KVAT Act which the petitioner did not have. So much so, this issue is rightly decided by the Tribunal against the petitioner. 2. The next question though not seen decided by the Tribunal is against interest levied on the petitioner for the tax collected and remitted by him probably for the reason that he OT RV. No.76/2011 : 2 : did not have a registration. Counsel for the petitioner referred to the proviso to section 16(2) of the KVAT Act introduced by the Finance Act, 2009, with effect from 1.4.2009 by which for the purpose of section 6(5) and section 8 of the Act, registration shall be deemed to be granted with effect from the date of commencement of business, irrespective of the date of filing application for registration. By virtue of this proviso the collection and remittance of tax for the period prior to the date of application for registration should be treated as sufficient compliance with the requirements of the Act to avoid payment of interest. The learned Government Pleader pointed out that the above proviso is prospective in nature. However, we feel default interest cannot be charged on the petitioner for collection and remittance of tax on the sales turnover merely because application for registration was delayed. We, therefore, direct the Assessing Officer to reconsider the interest levy and if interest is levied only because of delay in registration he will rectify the assessment and charge interest only for actual period of default. In other words, denial of input credit is upheld, but, interest will be charged only for actual period of delay in payment and not for the reason that during the period OT RV. No.76/2011 : 3 : of collection and remittance of tax petitioner was not registered. In view of our above findings there is no scope for forfeiture of collected tax for the reason that petitioner was not a registered dealer up to 18.7.2006. The Assessing Officer will revise the assessment by denying input tax credit but by revoking forfeiture and by adjusting tax collected and remitted towards the tax due and then demand interest only for actual period of delay in payment if any. 3. However, if input tax credit was availed by the petitioner, necessarily on account of the reversal of the same, there will be demand and on that amount interest is chargeable for the period of default. OTRV is allowed to the above extent. Sd/- C.N. RAMACHANDRAN NAIR(Judge) Sd/ K. VINOD CHANDRAN(Judge) jma //true copy// P.A to judge