This High Court dismissed a writ petition challenging a penalty order and the denial of registration incentive for a jewelry dealer. The court rejected the constitutional challenge to Section 18B(d) of the KVAT Act and held the petitioner ineligible.
Writ petition dismissed; no interference with the penalty order or registration rejection.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
THURSDAY, THE 30TH DAY OF JUNE 2016/9TH ASHADHA, 1938
WP(C).No. 5450 of 2015 (E)
PETITIONER:
AJITH V NAIR, M/S.AISWARYA JEWELLERS, THENGANA JUNCTION, CHANGANASSERY, KOTTAYAM - 683 542.
BY ADVS.DR.K.P.PRADEEP SRI.T.T.BIJU SMT.T.THASMI
RESPONDENT(S):
1.THE STATE OF KERALA, REPRESENTED BY SECRETARY (TAXES) TO THE GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.
2.THE INTELLIGENCE OFFICER, SQUAD NO. III, DEPARTMENT OF COMMERCIAL TAXES, KOTTAYAM- 686001. 3.THE COMMERCIAL TAX OFFICER, CIRCLE-I, CHANGANASSERY, KOTTAYAM- 686 101 4.THE DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, KOTTAYAM, PIN - 686 001.
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WP(C).No. 5450 of 2015 (E) --------------------------
*ADDL. R6 IMPLEADED
6.THE DEPUTY TAHSILDAR (RR), TALUK OFFICE, CHANGANASSERY, KOTTAYAM - 686 102.
ADDL. R6 IS IMPLEADED AS PER ORDER DATED 17.6.2015 IN IA.8098/2015.
BY GOVERNMENT PLEADER SMT.LILLY.K.T
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31-05-2016, THE COURT ON 30-06-2016 DELIVERED THE FOLLOWING:
mbr/
WP(C).No. 5450 of 2015 (E)
APPENDIX
PETITIONER(S)' EXHIBITS:
| EXHIBIT-P1- | TRUE COPY OF THE ISSUED BY THE 2ND |
SIR NO.325796 DATED 29/10/2012 RESPONDENT. |
|---|---|---|
| EXHIBIT-P2- | TRUE COPY OF THE DATED 17/05/2013 |
NOTICE NO.ISK III SR 9/2012-13 ISSUED BY THE 2ND RESPONDENT. |
| EXHIBIT-P3- | TRUE COPY OF THE THE COMMISSIONER OF COMMERCIAL TAX THIRUVANANTHAPURA |
CIRCULAR NO.4 OF 2013 ISSUED BY OF COMMERCIAL TAXES, DEPARTMENT ES, GOVERNMENT OF KERALA, M. |
| EXHIBIT-P4- | TRUE COPY OF THE THE PETITIONER TO |
REPLY DATED 05/06/2013 FILED BY EXHIBIT-P2 NOTICE. |
| EXHIBIT-P5- | TRUE COPY OF THE DATED 01/07/2013 THE KVAT ACT, 200 |
ORDER NO.ISK III CR 9/2012-13 ISSUED UNDER SECTION 67 (1) OF 3 BY THE 2ND RESPONDENT. |
| EXHIBIT-P6- | TRUE COPY OF THE W.P(C) 19896 OF 2 |
JUDGMENT DATED 13/08/2013 IN 013 OF THIS HON’BLE COURT. |
| EXHIBIT-P7- | TRUE COPY OF THE BY THE PETITIONER |
APPEAL DATED 16/08/2013 FILED AGAINST EXHIBIT-P5 ORDER. |
| EXHIBIT-P8- | TRUE COPY OF THE RP NO.199/14-15 D 4TH RESPONDENT. |
ORDER IN REVISION NO.KVATA ATED 30/10/2014 ISSUED BY THE |
| EXHIBIT-P9- | TRUE COPY OF THE DATED 04/06/2014 |
ORDER NO.NCR 85/13-14 ISSUED BY THE 3RD RESPONDENT. |
| EXHIBIT-P10- | TRUE COPY OF THE DATED 20/10/2014 |
ORDER NO.CR 9/2012-13 ISSUED BY THE 3RD RESPONDENT. |
| EXHIBIT-P11- | TRUE COPY OF THE DATED 23.5.2015 I ADDITIONAL 6TH RE |
DEMAND NOTICE NO.2015/546/5/10 SSUED IN FORM NO.1 BY THE SPONDENT. |
| EXHIBIT-P12- | TRUE COPY OF THE DATED 23.5.2015 I ADDITIONAL 6TH RE |
DEMAND NOTICE NO.2015/546/5/10 SSUED IN FORM NO.10 BY THE SPONDENT. |
RESPONDENT(S)' EXHIBITS & ANNEXURES:
ANNEXURE R2(A): A TRUE COPY OF THE CHECK REPORT.
/TRUE COPY/
P.S. TO JUDGE
mbr/
**A.M.SHAFFIQUE, J * * * * * * * * * * * *** W.P.C.No.5450 of 2015
Dated this the 30th day of June 2016
J U D G M E N T
Petitioner challenges the penalty order Ext.P5, the revisional order Ext.P8, Ext.P9, an order by which his registration as dealer under Kerala Value Added Tax Act, 2003 (hereinafter referred to as 'the Act') is rejected and Ext.P10 order by which assessment has been completed under Section 22(3) of the Act. Petitioner also seeks for a declaration that Clause (d) of Proviso to Section 18B of the Act is unconstitutional and for a declaration that the petitioner is entitled for the benefit available as per Ext.P3 circular as introduced in the Kerala Finance Bill, 2013.
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that certain category of dealers were not covered. The scheme also envisaged a situation wherein it is stated that those dealers, who take registration will not be liable for tax or penalty in respect of transactions prior to 01/04/2013. An inspection was conducted in the petitioner's premises on 29/10/2012. The Intelligence Officer verified the books of accounts and issued notice dated 17/05/2013 under Section 67(1) of the Act. In Ext.P2, it was observed that “running business in gold without registration and non-issuance of sale bills is violation of Sec.15, Sec.40 and Rule 58 are offences warranting penal action under Section 67(1) of the KVAT Act” . Hence he was called upon to file objection and a proposal was mad to impose penalty of Rs.4,22,982/-. Petitioner submitted Ext.P4 reply. According to him, he is only engaged in the making of gold ornaments with the gold supplied by customers as per their work orders. He submitted that he was under bona fide belief that KVAT registration is not necessary. He also requested for withdrawing of penal proceedings and requested for grant of benefit of the one time incentive scheme as per Circular No.4/2013.
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meantime, the Commercial Tax Officer had also taken proceedings for assessment and the assessment order is passed on 20/10/2014 as per Ext.P10 by which he was assessed to tax during the assessment year 2012-13 at Rs.4,22,982/-.
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registration scheme to the petitioner.
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benefit is not allowed to manufacturers of gold and silver and dealers against whom penal proceedings were initiated before 01/04/2013. According to the respondents, penal proceedings started after the shop inspection on 29/10/2012. Further contention is that Sec.18B(d) clearly stated that the dealers referred to in sub Section (1) of Section 6 will not come under the beneficial category of Sec.18B. Therefore dealers in jewellery will not come under the purview of beneficiaries for one time incentive to new registrant scheme as provided in Sec.18B. Petitioner, therefore, is not eligible for the same. The respondent also narrates the various infirmities which have been noticed as far as the petitioner is concerned.
“ 18B. Special provision for one-time
incentive to new registrants.- Notwithstanding anything contained in this Act, dealers who were liable to take registration under this Act, but had not taken registration, may voluntarily take
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registration between 1st April, 2013 and 30th September, 2013 and such dealers shall not be liable to tax or penalties with respect to the transactions prior to 1st April, 2013:
Provided that this section shall not be applicable to the transactions of dealers who were,-
(c) manufacturers, but excluding dealers coming under sub-clause (i) of clause (c) of Section 8;
(d) other dealers referred to in sub-section (1)of section 6;
(e) companies; and (f) dealers against whom penal proceedings were initiated for non-registration and non-payment of tax under this Act, before 1st April, 2013:”
The provision has been brought into force by the Kerala Finance Act, 2013 with effect from 01/04/2013. Of course, in the scheme Ext.P3, the coverage was not granted to the following categories. (1) Importers (2) work contractors (3) Manufacturers other than dealers coming under sub-clause (i) of clause (c) of Section 8 (4)
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dealers against whom penal proceedings were initiated for nonregistration and non-payment of tax under the Act before 01/04/2013. Sec.18B, of course, enlarges the categories of dealers which are not covered under the Scheme. The benefit, however, was granted only to persons who may voluntarily take registration between 01/04/2013 to 30/09/2013. If we go by the scheme of the Act, there is an obligation cast upon every dealer to take registration under the Act. Chapter IV deals with registration and permit. Sec.15 indicates that every dealer whose total turnover in any year is not less than Rs.10 lakhs, (prior to 01/04/2013, it was Rs.5 lakhs), and any other dealer may, get himself registered under this Act. Sub Section (1) may not apply to certain categories of dealers specified in sub Section (2). Exception was provided only to authorised retailer or wholesale distributors. Sec.18B has been incorporated only as a special provision granting exemption from the liability to pay tax or penalty for non-registration who voluntarily takes registration between the specified dates of 01/04/2013 and 30/09/2013. This provision, apparently, is an exception to the general provision and is brought as a scheme for enabling dealers to take registration as
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a one time measure. There cannot be any discrimination as far as incentive is concerned. Incentive is only a concession extended to persons who had not complied with the statutory provisions, which cannot be treated as discriminatory in any manner.
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01/04/2013. That apart, in the scheme as well as under Sec.18B, petitioner was not eligible for the benefit of the scheme or the Statute, if there is any penal proceedings initiated prior to 01/04/2013. It is contended that the notice for penalty was issued only on 17/04/2013. But it is relevant to note that the inspection was conducted in the premises on 29/10/2012 and thereafter, check report was prepared on 04/01/2013 at which time it was detected that the petitioner was liable to be proceeded against. Therefore issuance of notice under Section 67(1) of the Act, by itself, cannot be taken as the date for commencement of penalty proceedings, as the proceedings commenced much earlier. Even otherwise, when there is a special exclusion for dealers coming under Sec.6(1), to get the benefit of Sec.18B, the petitioner cannot claim the said benefit.
In the result, I do not find any reason to interfere with the orders passed by the authorities. It shall be open for the petitioner to challenge the impugned orders by taking appropriate steps, in accordance with law. No other grounds are made out to interfere with the order of penalty since the revisional authority had already reduced the quantum of penalty. It shall be open for
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the petitioner to challenge Ext.P9 and P10 before the appropriate authority.
With the above observation this writ petition is dismissed.
(sd/-)
(A.M.SHAFFIQUE, JUDGE)
jsr
3 issues framed by the court
Whether Section 18B(d) of the KVAT Act excluding jewelry dealers from one-time registration incentive is unconstitutional under Article 14.
Whether the petitioner is entitled to the benefit of the one-time voluntary registration scheme.
Whether penalty proceedings commenced before 01/04/2013 for the purpose of excluding the petitioner from the incentive scheme.
3 provisions across 1 enactments
Ajith V Nair
The State of Kerala
A.M. Shaffique
As recorded by the court registry
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