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HIGH COURT OF KERALA
AMIT RAWAL, J
M/S.BABY MARINE EASTERN EXPORTS – Appellant
Versus
THE COMMISSIONER, STATE GOODS AND SERVICE TAX DEPARTMENT – Respondent
WP(C)/41368/2017
Taxation - KVAT - 42(2), 25(1) - The court held that under Section 42(2) of the KVAT Act, dealers have the right to file revised returns due to audit detected discrepancies, quashing the rejection of such a request by the assessing officer.
Fact of the Case:
The petitioner sought to quash a notice and an order rejecting their application to file revised VAT returns due to discrepancies identified during an audit, asserting their statutory right to amend returns.
Finding of the Court:
The court found that the rejection of the revised returns was not justified since Section 42(2) of the KVAT Act grants dealers the right to amend their returns based on audit objections.
Issues: Whether the rejection of the petitioner's request to file revised returns was justified under the KVAT Act in light of audit discrepancies.
Ratio Decidendi: The right to file revised returns under Section 42(2) of the KVAT Act is supported by audit findings, and the court emphasized the necessity for authorities to consider such requests fairly.
Final Decision: The court quashed the order rejecting the revised returns and kept the proceedings under abeyance until acceptance of the revised filings.
JUDGMENT
Petitioner in this case has sought indulgence of this Court under Article 226 of the Constitution of India seeking to quash Ext.P4 notice dated 10.10.2019 and Ext.P7 order dated 21.12.2018 rejecting the application dated 22.1.2018 for granting permission for filing revised returns. Petitioner is engaged in the business of purchase of prawns, squids, fish etc. process the same and export to foreign countries. According to the petitioner, petitioner is duly registered under the Kerala Value Added Tax Act, 2003 and Central Sales Tax Act. For the months of April 2015 to March 2016 KVAT monthly returns were filed by petitioner, however, pursuant to the statutory mandated audit process under Section 42 of the KVAT Act, 2003 certain discrepancies were noticed. As a result thereof petitioner submitted a request for revision of KVAT monthly returns for the for the financial year April 2015 to March 2016. During the pendency of the aforementioned application, respondent also issued Ext.P4 impugned notice under Section 25 (1) of the KVAT Act, 2003 and as per Ext.P4 the request for revised return was rejected.
2. Learned Counsel for the petitioner submitted the matter is purely covered by the Division Bench of this Court in writ appeal No.2541/2017 and various other judgments as the Officer cannot reject revised returns, but for the situation when there is an audit objection. According to petitioner, the mistakes in the returns are with reference to the audited figures and therefore, petitioner has a statutory right and duty to file revised returns.
3. Learned Government Pleader submitted that the notice under Section 25 (1) cannot be quashed as the petitioner has a remedy to file reply and take action in accordance with law. It is also submitted that as far as Ext.P7 is concerned, in view of the judgment cited above, it cannot withstand judicial scrutiny of this Court.
4. Having heard learned Counsel for the parties I am of the view that Section 42 (2)of the KVAT Act, which is extracted herein below, enables the parties to file returns on account of any omission or mistakes in the annual returns on the basis of the audit objection.
“ Section 42 (2) : Where any dealer detects any omission or mistake in the annual return submitted by him with reference to the audited figures, he shall file revised annual return rectifying the mistake or mission along with the audit certificate. Where as a result of such revision, the tax liability, increases, the revised return shall be accompanied by proof of payment of such tax, interest due thereon under sub-section (5) of section 31 and penal interest, calculated at twice the rate specified under sub-specified under sub-section (5) of section 31.”
5. It is not a matter of dispute that, along with request petitioner had not enclosed the copy of the certificate of the audit objection. On a perusal of Ext.P7, reasons assigned in Paragraph 1 therein, appears that the Assessing Officer had taken request of the petitioner primarily under the provisions of 21 (2) provided the limitation for correction of omission is two months. Petitioner never requested for filing of the returns invoking the provisions of Section 22, which only deals with the filing of defective returns. The applicability of the judgment cited above has not been disputed by the learned Government Pleader. In such circumstances, I am of the view, the reasons assigned Ext.P7 is not sustainable. Accordingly, Ext.P7 is quashed.
6. At this juncture learned Counsel for the petitioner submitted that, since the writ petition is disposed of, quashing of Ext.P7, till such time the assessing officer accepts the revised returns contemplated under Section 42 (2) the proceedings initiated in pursuance to Ext. P4 for taking action under Section 25 (2) may be kept in abeyance. Accepting the above request, till such time the final returns is accepted by authorities, proceedings pursuant to Ext.P4 shall be kept in abeyance.
APPE
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