The case of Union of India and Another v. State of Haryana and another is been witnessed by the Kerala High Court which stated that the existence of the taxable event would be fundamental to impose the GST. Therefore the bench set aside the penalty orders.
A division bench of Justice Jayasankaran Nambiar and Justice Mohammed Nias C.P. learning the petition sees that the assessing heads issuing the orders in a mechanical way without revealing the way of a taxable affair would be drawn in a provided case or without providing the cause to refuse the taxpayers claim for the exemption or deduction.
The petitioner, Prodair Air Products Private Limited company, is engaged in the activity of production and sale of industrial gases like Hydrogen, Nitrogen, and HP Steam. It is a wholly-owned subsidiary company of Air Products and Chemicals Inc., USA.
As per the orders of the penalty, the computation of the petitioner under the Kerala Value Added Tax Act, 2005 (KVAT Act) would have been finalized. Between the petitioner and BPCL the agreement would get entered was interpreted for issuing the order since one which has the consequence in the transfer of the property in the plant and the mentioned gases in the implementation of the works contract.
The assessing authority, the intelligence officer levying the penalty, directed to the proviso to Rule 10 (2) of the KVAT Rules, 2005 which, is towards determination of taxable turnover in association to works contracts in which transfer of property takes place not in the form of goods but in other form.
The contract price that the appellant claimed to receive as the sum of the fixed and variable costs was less than the price of the plant that was transported to the site, according to the assessing officer. As a result, the KVAT Act would collect tax at a rate of 14% applicable to works contracts (as opposed to 5% applicable to the provision of gases) on the cost of the plant and a percentage of the gross profit.
The counsel Arvind P Datar, administered via Adv. N. Prasad, for the petitioner, asserted that the impugned decisions do not comprise the finding that there is a property transfer of concerned in the performance of a works contract, and as a result, the existing cases do not encounter the conditions required to invoke Section 6 (1)(f) of the KVAT Act.
Furthermore, it was claimed that there was no works contract in place, then the appellant would be applicable to the input credit, as the credit was only denied because of the transfer of the plant to BPCL.
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As per the division bench, it is appropriate to point out that the principle of fairness, which is regarded as a crucial element of the rule of law in our country, makes it mandatory for an assessing authority to focus on every factor that influences an assessment. And also to give an adequate indication in the assessment order of having done so.
The bench analyzed that where the tax authority expected a jurisdiction that it did not have and hence it would be a matter of noticeable injustice to the applicant herein to compel it to embrace the methods provided by the statute.
More specifically, it was concluded that the role of an assessing authority could no longer be that of a strict and unreasonable automaton that is developed to levy the tax that the revenue department believes is due from an assessee.
| Case Title | Prodair Air Products India Pvt Ltd Vs. State of Kerala |
| Citation | W.A.NO.374 OF 2021 |
| Date | 03.04.2023 |
| Kerala High Court | Read Order |
