The duty of tax authorities to ensure justice for honest tax-payers and to avoid unnecessary harassment.

D. V. SHYLENDRA KUMAR, J.

( 1 ) THIS is a case which clearly reveals arbitrary and mala fide action on the part of the respondent no. 2 assessing officer.

( 2 ) THOUGH the record indicates that the assessee had, in fact, made it clear that he had opted for payment of tax by way of composition under the provisions of Section 17 (6) of the Karnataka sales Tax Act, 1957, before passing of the assessment order, though there is supporting material to this effect on the record itself, the assessing officer, nevertheless, denies the benefit of payment of tax by composition provided under Section 17 (6) of the Act and has proceeded to pass the assessment order de hors the provision.

( 3 ) THE assessment order again suffers from a total non-application of mind as while assessing to tax the turnover under the provisions of Section 5-B of the Act, the assessing officer has levied tax on the entire turnover. e. , on the entire value of the works contract itself at 10 per cent without deducting the value of such goods which were not taxable and the value of the services. On the face of it, the assessment order is also not tenable.

( 4 ) THE stand taken on behalf of the respondents is that the authorities had not received an application in form 8-AA under rule 8-B of the Rules which is a request by the assessee opting for or indicating that the assessee had opted for payment of tax by way of composition in terms of Section 17 (6) of the Act.

( 5 ) THE dispute arises in the context of computation of the tax payable by the petitioner--a registered dealer under the provisions of the Karnataka Sales Tax Act, 1957, particularly the tax payable in terms of Section 5-B of the Act, the assessee being a contractor. In respect of such assessees, under Section 17 (6) of the Act, an option is given to pay tax by opting for composition in which event, the assessee has to pay tax at the rate of 4 per cent on the entire value of the contract and if not tax at 10 per cent on only such value of the goods involved and taxable in the execution of the works contract. While, the petitioner-assessee has maintained all along that he had opted for composition and is liable to pay tax only at the rate of 4 per cent of the value of the contract, the respondent particularly, the respondent No. 2 having taken the view that the assessee had not elected to pay tax by composition by submitting form 8-AA, the liability can only be in terms of Section 5-B of the Act at 10 per cent on the value of the taxable goods involved in the execution of the works contract.

( 6 ) IN support of the petitioner's claim and plea, copies of form No. 8-AA application for composition dated April 16, 1999 (copy at annexure A) and return in form 4 dated June 8, 2001 (copy at annexure A1) are placed. While the respondents have disputed the submission of form no. 8-AA application on the premise that it is not available in their records, there is no dispute about the receipt of the return in form 4, wherein also it is indicative that the assessee had opted for composition as the assessee had filed a return and quantified the tax payable at 4 per cent composition rate at a point of time which is about two years prior to the actual order of assessment. In the assessment order though on page 1 typed portion in the preamble, it is indicated that the order is one in terms of provisions of Section 17 (6) of the Act, nevertheless, the order proceeds on the premise that it is a regular assessment and in the body of the order, it is indicated that the assessee had not furnished form No. 8-AA as required under Section 17 (6) of the Act. In the concluding portion, however, the assessing officer again refers to this aspect and indicates that the request for composition that the assessee had opted for had been brought to the notice of the assessing officer for the first time, only at the time of hearing and as the request in the prescribed form was not available on record, the assessment was being final

Click Here to Read the rest of this document