High Court rejects compounding scheme, says ‘Ice cream’ not “cooked food”; ‘Common parlance’ test inapplicable

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HC holds that ‘ice cream’ specifically included in notified list of goods taxable at 12.5% under entry 64(9) is not eligible for compounding scheme as applicable to ‘cooked food’ taxable at 4% under Entry 30A of Third Schedule to Kerala VAT Act; Observes, one cannot apply general meaning to permit a particular scheme applicable to a different entry and “common parlance test has no relevance when there is a specific entry”, inasmuch as Legislature had no intention to cover all cooked food in common parlance under compounding scheme;

Refuses to accept assessee’s contention that absent specific permission granted by Department on compounding application, payment of quarterly tax as per scheme makes it a concluded contract and Department cannot resile from it in course of the year; While finding force in Single Judge bench’s findings as regards functioning of Commercial Tax Department, that contrary stand cannot be taken when assessee opted and discharged tax on compounded basis which was accepted by Department without demur, HC states that lethargy of Department cannot however, absolve assessee from natural consequences flowing from the Act; Remarks, “It is trite that when there is a deeming provision contemplating or imagining a putative state of affairs to exist, then the imagination cannot be allowed to boggle at the logical consequences of such putative state of affairs”, thus elucidates that when there is a deemed permission, there is a deemed order which can be revised and consequently, directs fresh assessment: Kerela HC

Citation: [TS-102-HC-2018(KER)-VAT]