Wrong VAT Rate Can Be Rectified: Kerala High Court

The Kerala High Court has held that the mistake of applying the wrong value-added tax (VAT) rate can be rectified.

The single bench of Justice Gopinath P. has observed that, as per Section 66 of the KVAT Act, once it is brought to the notice of the officer that there is a mistake in applying the correct rate of tax, it is within the power conferred on the officer to rectify the mistake.

The petitioner/assessee has submitted that goods that were taxable at the rate of 5% were assessed at the rate of 13.5% by completing the assessment as per order. It prompted the petitioner to file an application for rectification along with c-forms and invoices that, according to the petitioner, show that the goods in question could have been taxed only at 5%.

The officer has rejected the petition for rectification on the ground that the petitioner has produced the documents, which showed that the goods were taxable only at the rate of 5%, along with the rectification petition and not at the time of assessment.

The court has held that the respondent/department has misdirected himself in law while deciding to reject the application for rectification on the ground that the petitioner produced the documents in support of the claim for a lower rate of tax only along with the application for rectification.

The court has restored the rectification application filed by the petitioner. The respondent shall reconsider the matter and take a decision on the application for rectification.

Case Title: M/s Crescent Construction Versus Deputy Commissioner of State Tax

Citation: 2022 LiveLaw (Ker) 631 

Citation: WP(C) No. 34555 Of 2022

Date: 01.11.2022

Counsel For Petitioner: Advocates Harisankar V. Menon, Meera V. Menon, R. Sreejith, K. Krishna

Counsel For Respondent: Sr. Government Pleader Thushara James

Click Here To Read Order