Hi-Lite Projects Pvt. Ltd. Vs State of Kerala (Kerala High Court)
Conclusion: Assessee was entitled to avail a lower 4% tax rate under the Kerala Value Added Tax (KVAT) Act instead of the higher 6% rate, imposed along with Penalty as merely because the 8F declarations showed the name of assessee as consignee, the nature of the transactions itself couldn’t be changed to an interstate transaction for the purposes of denying assessee the benefit of the concessional rate of tax under Section 8(a)(ii).
Held: In the instant case, assessee -company had opted to pay tax under the compounding scheme at a concessional rate of 3% under Section 8(a)(ii) of the KVAT Act. The company had canceled its CST registration effective from March 31, 2014, and argued that it had not imported any goods from other states or countries for incorporation in its works contracts. However, the intelligence officer found that certain consignments of taxable goods had reached the company through interstate transactions, leading to the imposition of a higher tax rate of 6% and a penalty. Assessee contested the penalty, producing documents to show that the local supplier had already paid the applicable 4% KVAT on the goods. Revisional Authority remitted the matter back to the original authority for further examination, but the intelligence officer again imposed the penalty, citing the presence of the company’s name and TIN number in the 8F Forms generated for interstate sales. First Appellate Authority ruled in favor of assessee noting that the transactions had suffered tax under the KVAT Act and that the company was entitled to the concessional rate. However, Appellate Tribunal reversed this decision, holding that the interstate nature of the transactions required the higher tax rate. On appeal before High Court. It was held that the taxable goods received by assessee suffered tax at the rate applicable under the KVAT Act. There was no revenue loss as far as the State s concerned since the State had received the tax due in respect of the said goods at the rate applicable to transactions carried on intra-state, although their case was that it was an inter-state transaction. Merely because the 8F declarations showed the name of assessee as consignee, the nature of the transactions itself couldn’t be changed to an interstate transaction for the purposes of denying assessee the benefit of the concessional rate of tax under Section 8(a)(ii).
