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2011 DIGILAW 1178 (KER)

M/S. N. P. Thomas v. Represented Kerala

2011-12-09

C.N.RAMACHANDRAN NAIR, K.VINOD CHANDRAN

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Judgment : RAMACHANDRAN NAIR, J. 1. This Writ Appeal is filed against the judgment of the learned Single Judge declining to interfere with appellant's challenge against the constitutional validity of Section 17B of the Kerala General Sales Tax Act, 1963 (hereinafter called as the Act for short). 2. We have heard learned counsel appearing for the appellant and learned Special Government Pleader appearing for the respondents, and have also gone through the judgment of the learned single Judge. 3. The Appellant is a registered dealer under the Act engaged in purchase and sale of cement within the State. Cement was an item taxable at the point of first sale under the First Schedule to the Act. However, when Finance Bill, 2004 was introduced "cement" along with another 20 items were proposed to be shifted from the First Schedule to the Fifth Schedule to the Act, which provides for two point levy of tax on the said commodities. By virtue of notification issued along with Finance Bill 2004, all dealers were bound to collect and remit tax based on the proposals contained in the Finance Bill. This would mean that from 01/04/2004 onwards first sellers of cement in Kerala were liable to collect and remit tax at 10% and last sellers at the rate of 5% on their sales. However, when Finance Act, 2004 was passed and notified on 27/07/2004, the proposal to shift several items including cement from the First Schedule to the Fifth Schedule in terms of the Finance Bill was given up. In other words, cement and the other 20 items were retained in the First Schedule. Noticing the difficulty for those dealers who would have complied with the proposals contained in the Finance Bill, based on notification issued under the Kerala Provisional Collection of Revenues Act, 1985, the Government introduced Section 17B to the Act through Finance Act, 2005, which is as follows:- "17B. Noticing the difficulty for those dealers who would have complied with the proposals contained in the Finance Bill, based on notification issued under the Kerala Provisional Collection of Revenues Act, 1985, the Government introduced Section 17B to the Act through Finance Act, 2005, which is as follows:- "17B. Special provision for completion of assessment:-Notwithstanding anything contained in this Act, a dealer who had purchased any goods falling under serial numbers 12 to 32 of item (iv) of sub-clause 18 of clause 3 of the Kerala Finance Bill, 2004 during the period from the first day of April, 2004 to the 27th day of July, 2004, from any registered dealer after paying tax at the rates shown in column (4) against the said serial numbers, such dealer shall pay tax on the re-sale of such goods at the rates mentioned in column (6) against such goods and the assessing authority shall complete the assessment under Section 17 of the Act." What is clear from the above provision is that registered dealers who have purchased several items stated in the above Section including cement from 01/04/2004 to 27/07/2004 by paying tax at the rates shown in column (4) therein should pay tax on the resale of such goods as provided in column (6). Therefore, the intended purpose of Section 17B is to give effect to tax proposal contained in Finance Bill, 2004 until the Bill became operational, i.e. until Finance Act, 2004 was passed and notified. 4. The appellant's case is that since Finance Bill 2004 as such was not passed, and along with other items "cement" was retained in the First Schedule for the year, i.e. 2004-05, tax was payable on first sales at the rate provided in the First Schedule to the Act. However, the appellant has no case that he has paid full rate of tax in terms of the First Schedule to the Act for the purchases made by him from 01/04/2004 to 27/07/2004. Even though appellant has stated in the WP(C) that for some purchases he has paid 10% tax and for certain other purchases he has paid 15%, we do not know what is the justification for the violation of the provisions of the Finance Bill, 2004, which was in force through notification issued under the Kerala Provisional Collection of Revenues Act, 1985. Section 17B makes it very clear that the same applies only to those dealers who have purchased goods referred to therein including cement at the rates provided in the Finance Bill, 2004, and so much so, if at all the appellant has made purchases at full rate of tax under the First Schedule to the Act then, such purchases are not covered by the above provision. As already stated the provision applies only to purchases made at lower rate of tax at 10% in terms of the Finance Bill and the purpose of subsequent levy for differential tax during the period when the Finance Bill was in force is to ensure that there is no escapement of tax at the hands of the dealers who availed lower rate of tax in terms of the proposal contained in the Finance Bill, 2004 until the Finance Act was passed. In our view, no dealer can have a grievance because there has not been any increase in rate of tax for any period through the introduction of Section 17B of the Act. On the other hand, the said provision was introduced to the Act only to get over the difficulty in levying tax in the course of assessment for the period the Finance Bill, 2004 was operational. The appellant has raised a further contention that Finance, Act, 2005 which enacted Section 17B cannot give retrospective effect from 01/04/2004 to 27/07/2004. We do not find any substance in this argument because as already stated, levy under Section 17B for a specific period is to get over difficulties for assessment of dealers, who have followed Finance Bill, 2004 for purchase and sale of goods. In other words those who have complied with the provisions of the Finance Bill, 2004, have not suffered any additional tax liability. Therefore, there is no retrospectivity as such for the above provision which was introduced only to provide levy and collection of tax during the period Finance Bill, 2004 was operational, but not ultimately given effect while passing the Finance Act. 5. Another contention raised by the appellant is that since representations have been made by several organisations, they have not complied with the provisions of the Finance Bill. Here again what we feel is pending representations if full rate of tax was collected on first sales, then purchasers from such dealers are not covered by the above provision. 5. Another contention raised by the appellant is that since representations have been made by several organisations, they have not complied with the provisions of the Finance Bill. Here again what we feel is pending representations if full rate of tax was collected on first sales, then purchasers from such dealers are not covered by the above provision. The appellant also has a case that he has paid tax only at 10% on the purchases which is based on the provisions of the Finance Bill, and so much so, the appellant is bound to pay tax on subsequent sales by virtue of the above provision. We, therefore, do not find any grievance or bonafides for the appellant to challenge the statutory provision. Further it is seen that even though the above provision is applicable to hundreds of cement dealers in the State no other person has approached this Court challenging the statutory provision which only means that the provision was smoothly implemented in the State for all other dealers. Further along with cement all other 20 items are covered by Section 17B and no other dealer has approached this Court with any Writ Petition expressing any difficulty in the implementation of Section 17B. Therefore, we do not find any merit in the Writ Appeal. Accordingly, the same is dismissed.