Kerala High Court Affirms Stringency of Self-Assessment Provisions in Tax Matters

Kerala HC Law Insider

LI Network

Published on: December 06, 2023 at 12:20 IST

The Kerala High Court has underscored the demanding nature of obligations under self-assessment provisions, deeming them more exacting than those in a regular assessment regime.

Justice Dinesh Kumar Singh’s bench observed that the duty imposed on the assessee to submit accurate returns is particularly onerous, leading to penalty imposition for filing untrue or incorrect returns, irrespective of whether disclosures were made in the books of account.

The case at hand involves a challenge to a penalty order issued by the department under Section 67(1) of the Kerala Value Added Tax Act, 2003 (KVAT Act). The petitioner contested the penalty for alleged turn-over suppression and tax evasion during the financial year 2013–2014. While the petitioner had already paid a compounding fee and tax, the court directed the payment of a balance penalty.

The petitioner argued that the compounding order approved by the Assessing Officer should supersede other provisions of the Act.

Additionally, the petitioner asserted that no further action for estimating taxable turnover or imposing a penalty should be pursued as the compounding order remained unrevoked.

The department countered, claiming the petitioner independently paid the penalty and tax at a 3% rate without an official order to that effect. The department also asserted that the compounding order did not cover the discovered suppression and negation of tax during the inspection at the petitioner’s premises.

The court upheld the department’s order, stating it was not beyond jurisdiction or in violation of natural justice principles. In its decision, the court declined to invoke Article 226 of the Constitution of India, emphasizing the adherence to legal procedures.

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