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2017 DIGILAW 1139 (KER)

Kairali Granites v. State of Kerala

2017-08-09

A.MUHAMED MUSTAQUE

body2017
JUDGMENT : 1. The petitioner is a dealer under the Kerala Value Added Tax Act. They bring marbles and granites from outside the State and also by way of import from other countries. The petitioner challenges the Circular No.18/2012 produced as Ext.P7. The petitioner highlighted their grievance before the State, in taking measurements of the granites and marbles brought from outside the State. 2. The petitioner's case is that the manufacturer is giving allowance at 33% of the defects due to irregular shape of marbles and granites. The petitioner also highlighted that the Central Excise tariff prescribes 25% allowance on the gross volume of such marbles and granite slabs. Therefore, the petitioner wanted the State to adopt a uniform policy as far as giving allowance to unshaped marbles and granites. This resulted in the petitioner approaching this Court. 3. Pursuant to the direction of this Court in Ext.P6 judgment, Ext.P7 circular was issued. As per Ext.P7 circular, it was ordered as follows: "...... 1. In case, excess quantity of transport of marble/granite is suspected, the consignment shall be measured. 2. While measuring the square/ rectangular slabs a marginal deduction of 3 inch lengthwise and 2 inch widthwise is to be allowed for patches, cracks, uneven edges, uneven shapes etc. For even edges no allowances shall be made. The above instructions shall be strictly followed by the check post/intelligence authorities". 4. In fact, the Commissioner of Commercial Taxes, who issued Ext.P7 circular, fixed a uniform allowance for marbles and granite slabs. The petitioner's case is that when 33% of the defects have been allowed by the manufacturer and 25% allowance was granted by the Central Excise tariff on the gross volume, there is no scope for departure from such practice. Therefore, Ext.P7 circular has to be interfered with 5. It is to be noted that the marbles and granite slabs are brought from outside the State on different dimensions and size. The allowance is granted by the manufacturer taking note of the wastes involved due to the nature and shape of such slabs. The Central Excise tariff prescribed 25% allowance on the gross volume to have a uniformity in the matter. However, if the circular as such is implemented, it can be easily said that it is against the interest of the traders. The Central Excise tariff prescribed 25% allowance on the gross volume to have a uniformity in the matter. However, if the circular as such is implemented, it can be easily said that it is against the interest of the traders. As far as the department is concerned, the only point to be considered is whether there was attempt for evasion of tax by claiming deduction of 33% allowance on the gross volume of the slabs transported. This Court is of the view that when the manufacturer allows such 33% deduction, the duty of the department is only to verify and find whether taking note of such size of the slab, the claim for deduction of 33% or such other percentage is genuine or not. If it is not found that such claim is genuine, certainly it is open for the department to refix deduction on being satisfied that such claim was exorbitant or exaggerated for the purpose of evasion. However, in each of such cases the department will have to enter a finding on facts to disallow such claim. It may be difficult to have a uniformity as each consignment would contain slabs of different size and dimension. In such situation, the only course that open to the department is to verify each consignment and find out whether the claim made by the petitioner is genuine or not. If it is not genuine, certainly reasons have to be stated for finding so, to reduce deduction claimed by the assessee, the trader. There is no rationale behind Ext.P7 in fixing the extent of deduction with reference to the measurement of slabs. As already adverted, each consignment will have to be verified if the department entertains the doubt in genuineness of the claim of the assessee or trader. As such Ext.P7 circular is implemented, it would result in arbitrariness in fixing the deduction claimed by the assessee or trader. Accordingly, Ext.P7 is set aside. This writ petition is disposed of as above.