IMPORTANT POINT
The court upheld the Tribunal's decision allowing a concessional tax rate, confirming that the conditions for a higher tax rate were not met due to the return of goods and lack of CST registration.

ORDER :

Dr. A.K.Jayasankaran Nambiar, J.

As all these OT Revision petitions involve a common issue pertaining to the eligibility of the respondent assessee for the benefit of the concessional rate of tax under Section 8(a)(ii) of the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act'), 2003 in the four quarters of 2015-2016, they are taken up together for consideration and disposed by this common judgment.

2. The brief facts necessary for the disposal of the OT Revision petitions are as follows:-

The respondent assessee is a works contractor, who had opted to pay tax on compounded basis in terms of Section 8(a)(ii) of the KVAT Act @ 4% of the contract value. Pursuant to the returns filed by the assessee on that basis, the assessing authority verified the accounts of the assessee for the said year and while perusing the said accounts found that the assessee had effected interstate purchases of goods, purportedly for incorporation into the works contracts. Finding that this dis-entitled the assessee to claim the concessional rate of 4% under Section 8(a)(ii) of the KVAT Act and that the assessee was liable to pay tax at the rate of 7% in accordance with the provisions of Section 8(a)(i) of the KVAT Act, the assessing authority completed the assessment by directing the assessee to pay tax at the rate of 7% on the contract value.

3. In an appeal preferred by the assessee the First Appellate Authority concurred with the views of the assessing authority and dismissed the appeal. In a further appeal before the Appellate Tribunal, however, the assessee produced documents to show that the items imported were basically items that had been ordered for the previous year, and which had been supplied belatedly by the supplier. It was also pointed out before the Tribunal that the assessee did not have a CST registration during the relevant year and further, the supplier of the imported item had been asked to take back the imported goods since the assessee had no use for the same as the period of the contract for which the items were ordered had long since expired. The Appellate Tribunal, after considering the said contentions of the assessee and verifying the material produced to show that the imported items had since been returned without incorporating any part of it in the works contracts undertaken for the assessment year 2015-16, found that the conditions required for attracting the higher rate of tax of 7% under Section 8(a)(i) of the KVAT Act were not satisfied in the instant case. The Appellate Tribunal therefore allowed the appeal preferred by the assessee after finding that the assessee had proved that the goods imported were not incorporated in the works contracts for the year 2015-16 and that the goods were actually returned to the supplier.

4. The revenue is before us in these OT. Revision petitions impugning the aforesaid order of the Tribunal by raising the following questions of law: .

1. Whether the Tribunal is right in holding that the conditions under S.8(a)(i) of the KVAT Act that import of any goods into the State or Country 'for incorporation in the works contract' stands not proved?

2. Whether the Tribunal is right in finding that the respondent/appellant proved that the goods imported were not incorporated in the works contract for the year 2015-16 and the goods were returned to the supplier?

5. We have heard Smt. Resmitha Ramachandran, the learned Government Pleader for the petitioner and Sri. Philip Vettickattu, the learned counsel appearing for the respondent assessee.

6. On a consideration of the rival submissions, we are of the view that while it may be a fact that in the absence of any material to suggest the actual return of the imported goods, the revenue may have been justified in presuming that the goods imported were in fact for incorporation in the works contract, and in such a situation would have been justified in insisting on the assessee discharging the tax liability @ of 7% on the contract va