A contractor must continue paying VAT on a compounded basis under the KVAT Act once chosen until project completion, as stipulated by statutory provisions.

O R D E R

A.K.Jayasankaran Nambiar, J.

This OT. Revision is preferred against the order dated 30.12.2016 of the Kerala Value Added Tax Appellate Tribunal, Palakkad, in TA(VAT).No.291 of 2013 and C.O.No.12 of 2013.

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

The petitioner is a private limited company engaged in the construction and sale of apartments. It is an assessee under the Kerala Value Added Tax Act, 2003 (hereinafter referred to as 'the KVAT Act'). During the year 2007-08, the petitioner commenced construction of four apartments in various parts of the State, namely, (i) Oceanus Bluemount, Thiruvananthapuram, (ii) Oceanus Residency, Palakkad, (iii) Oceanus Rainbow, Thiuvananthapuram and (iv) Oceanus May Flower, Palakkad. Out of the above four projects, the petitioner opted to pay tax on compounded basis in terms of Section 8 (a) of the KVAT Act in respect of the first two projects, namely, Oceanus Bluemount, Thiruvananthapuram, Oceanus Residency, Palakkad. With regard to the other two projects, the petitioner opted to pay tax on regular basis under Section 6 of the KVAT Act. The assessments for the first two projects were accordingly completed on compounded basis, and the same arrangement continued for the next assessment year also, namely, 2008-09.

3. For the assessment year 2009-10, although the petitioner applied for and continued to pay tax on compounded basis for the same two projects at Thiruvananthapuram and Palakkad, the assessing authority, by an order dated 29.10.2010, cancelled the permission granted to the petitioner to pay tax on compounded basis for the two projects during the assessment year 2009-10. For reasons best known to the petitioner, the said cancellation order was not impugned by him before the Appellate Authority. While so, pursuant to the cancellation order, the assessment of the petitioner for the assessment year 2009-10 in respect of the above two projects came to be completed in terms of Section 6 of the KVAT Act along with the other two projects. Aggrieved by the said assessment order, the petitioner preferred appeals before the First Appellate Authority, which allowed the appeal. However, in a further appeal carried by the revenue before the Appellate Tribunal, the Tribunal ultimately reversed the finding of the First Appellate Authority and confirmed the order of the assessing authority on the aspect of the method of assessment to be followed against the petitioner in respect of the two projects aforementioned. The Appellate Tribunal, however, remanded the matter to the assessing authority for verification of certain factual aspects regarding the deduction claimed by the petitioner on the amounts paid towards labour in respect of the said projects. It is aggrieved by the said order of the Appellate Tribunal that the petitioner is before us through this Revision Petition.

4. We heard Sri.Harisankar V. Menon, the learned counsel for the petitioner, and Smt.M.M.Jasmine, the learned Government Pleader for the respondent.

5. On a consideration of the facts and circumstances of the case and the submissions made across the bar, we find from a perusal of the statutory provision that although under Section 8 (a) of the KVAT Act, a works contractor may at his option, instead of paying tax in accordance with the provisions of Section 6 of the Act, pay tax at the rate of 3% of the contract amount after making the permissible deductions envisaged therein, the 6th proviso to the said Section makes it clear that notwithstanding anything contained in the Act, contractors who have opted for payment of tax under Sub Clause (ii) of Clause (a) of during the previous year shall continue to pay tax on that portion of the works remaining unfinished as on 1st April, 2009, at the rates applicable as on 1st April, 2009. In our view, the purport of the said proviso appears to be to prevent a contractor who has opted for payment of tax on compounded basis in respect of specified