Disposed

Bejoy Cyriac v. the Commissioner of Commercial Taxes

Kerala HC14 Mar 2019OT.Appeal/3/2014

Case brief

AI extract

What is this about?

This judgment dismisses two Other Tax Appeals challenging a 2013 clarification under the KVAT Act. The court held that the clarification is prospective only. Appellants are governed by an earlier 2007 circular and are entitled to a refund for any excess payment made.

What did the court decide?

Appeals dismissed; clarification upheld prospectively; appellants entitled to refund of excess tax paid under earlier rules.

Bejoy Cyriac Vs the Commissioner of Commercial Taxes — Income Tax | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM &

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THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI

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THURSDAY ,THE 14TH DAY OF MARCH 2019 / 23RD PHALGUNA, 1940

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OT.Appeal.No. 3 of 2014

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AGAINST THE ORDER/JUDGMENT IN WPC 31565/2010 of HIGH COURT OF KERALA DATED 04-07-2012

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APPELLANT:

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BEJOY CYRIAC PROPRIETOR, COCHIN CARTON MANUFACTURES, REFINERY ROAD, TRIPUNITHURA, ERNAKULAM.

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BY ADVS. SRI.RAJU JOSEPH (SR.) SRI.K.T.POULOSE (KORATTY)

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RESPONDENTS:

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1 THE COMMISSIONER OF COMMERCIAL TAXES THIRUVANANTHAPURAM 695 001.

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2 THE AUTHORITY FOR CLARIFICATION DEPARTMENT OF COMMERCIAL TAXES, THIRUVANANTHAPURAM 695 001.

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3 THE COMMERCIAL TAX OFFICER KVAT CIRCLE-1, TRIPUNITHURA, ERNAKULAM 682301.

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OTHER PRESENT:

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SR GP- SRI. V.K.SHAMSUDHEEN

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THIS OTHER TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.03.2019, ALONG WITH OT.Appeal.4/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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O.T.A. Nos.03 & 04/2014

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM &

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THE HONOURABLE MR. JUSTICE R. NARAYANA PISHARADI

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THURSDAY ,THE 14TH DAY OF MARCH 2019/23RD PHALGUNA, 1940

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OT.Appeal.No. 4 of 2014

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AGAINST THE ORDER IN CLARIFICATION No.C3/6639/2013 of COMMISSIONER OF COMMERCIAL TAXES, TRIVANDRUM DATED 30-082013

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APPELLANT:

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M/S.COCHIN BLISTER PACK 11/343B, NEAR L.P.SCHOOL, IRIMPANAM, THRIPUNITHURA P.O., ERNAKULAM, REPRESENTED BY ITS MANAGING PARTNER SRI. BEJOY CYRIAC.

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BY ADVS. SRI.RAJU JOSEPH (SR.) SRI.K.T.POULOSE (KORATTY)

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RESPONDENTS:

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1 THE COMMISSIONER OF COMMERCIAL TAXES THIRUVANANTHAPURAM-695001.

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2 THE AUTHORITY FOR CLARIFICATION DEPARTMENT OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-695001.

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3 THE COMMERCIAL TAX OFFICER KVAT CIRCLE-I, TRIPUNITHURA, ERNAKULAM-682301.

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THIS OTHER TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.03.2019, ALONG WITH OT.Appeal.3/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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O.T.A. Nos.03 & 04/2014

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C.K. ABDUL REHIM & R. NARAYANA PISHARADI, JJ.

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O.T. Appeal Nos. 03 & 04 OF 2014

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Dated this the 14^th day of March, 2019

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C O M M O N J U D G M E N T

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Abdul Rehim, J.

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Since the challenge raised in both these appeals is

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against the very same order passed by the authority under Section 94 of the Kerala Value Added Tax Act, 2003(hereinafter refereed to as the 'KVAT Act', for short), both these appeals are considered together and disposed of through this common judgment.

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Challenge against the order impugned in these

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cases was already considered and decided by a Division Bench of this court in the judgment in OTA Nos.8 and 10 of 2013(dated

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22-06-2017). In the said judgment the validity of the impugned

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clarification was upheld, by holding that the sale by any

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O.T.A. Nos.03 & 04/2014

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registered dealers like that of the appellants herein, whose business places are within the Domestic Tariff Area(DTA), to units within the Special Economic Zone(SEZ) do not qualify to be deemed exports. It is held that their statutory entitlements and benefits are governed only by provisions of Section 8 of the Central Sales Tax Act and Section 6 of the KVAT Act. In view of the said finding, the challenge raised in the present appeals has to fail. But in the judgment in OTA Nos.8 and 10 of 2013 the Division Bench had further held that, the impugned clarification has no retrospective effect and that the position with respect to earlier period will be governed by another clarification issued earlier, which is produced as Annexure II in the present appeals. Therefore, the demand issued against the appellants in OTA Nos.8 and 10 of 2013, for repayment of the refund already made to them was restrained, and it was held that they are not liable to make repayment of the amounts already refunded to them.

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O.T.A. Nos.03 & 04/2014

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Following the judgment in OTA Nos.8 and 10 of

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2013 the Division Bench had disposed of OTA 5/2014, which

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was also filed challenging the very same clarification, which is challenged in the present appeals. In that case also, it was made clear by this court that, the impugned clarification will have only prospective effect and will not fasten the appellant with any liability for refund of any amount already paid to him on the strength of the previous clarification.

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In view of the judgments in OTA Nos.8 and 10 of 2013 and in OTA 5/2014, learned senior counsel appearing for the appellants in these cases had fairly conceded that, the appeals can be dismissed by confirming the impugned clarification. But he made a request to this court to make it clear that the liability of the appellants with respect to the period prior to the impugned clarification will be governed by the earlier clarification issued by the authority dated 15.09.2007 and on that basis to declare that the appellants will be entitled for

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O.T.A. Nos.03 & 04/2014

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exemption under Section 6(7)(b) and will be entitled for refund of the Input Tax Credit under Section 13(2) of the KVAT Act.

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The above request is opposed by the learned Senior Government Pleader appearing for the respondents, raising a contention that, question as to whether the sale made by the appellants to a unit in the SEZ would qualify to be export sales, has already been decided by a learned Judge of this court in

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Lalitha Muralidharan v. Commissioner of Commercial Taxes, Thiruvananthapuram[(2016) 91 VST 175(Ker)] , which judgment has already been confirmed in W.A. No.2665/2015, dated 14.06.2017. Therefore it is contended that, the benefit of the earlier clarification which prevailed till the year 2013, when the impugned clarification was issued, cannot be given to the appellants. In support of such a contention he placed reliance on a decision of the Hon'ble Supreme Court in Commissioner of Central Excise v. Ratan Melting & Wire Industries[2008

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(4) KLT 607(SC)] . It is held therein that circulars and

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O.T.A. Nos.03 & 04/2014

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instructions issued by the Board are binding in law on the authorities under the respective statutes. But when the Supreme court or the High Court declares the law on the point in question, it would not be appropriate for the court to direct that the circular should be given effect to; and not the view expressed in the decision of the court. So far as the clarification issued by the Government, they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the court to declare what the particular provision of statute says and it is not for the executive. Looked at from another angle, a circular which is contrary to the statutory provision has really no existence in law.

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While considering the contentions based on the applicability of the clarification issued in the year 2007, which is modified through the impugned clarification issued on 30.08.2013, we take note of the fact that the judgments passed by the Division Bench of this court in OTA Nos.8 and 10 of 2013

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O.T.A. Nos.03 & 04/2014

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as well as the judgment in OTA 5/2014, remains unchallenged.

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We do not think that a different attitude can be taken in the matter. Therefore we hold that, for the period till 30.08.2013, the

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date on which the impugned clarification was issued, the appellant will be governed by the situation as clarified in the earlier Circular dated 15.9.2007. 7. The learned Government Pleader further contended that there is a difference in the situation, because with respect to the appellants in OTA Nos.8 and 10 of 2013 and OTA 5/2014, they were granted refund on the basis of the earlier clarification and the question considered was only repayment of the amount already refunded. But in the cases at hand, no such refund was effected, it is pointed out. However, since we have made it clear that the impugned clarification will not have any retrospective effect and that the appellants are governed by the earlier clarification, we hold that they will be entitled for refund of the amount if any paid, without allowing them the

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O.T.A. Nos.03 & 04/2014

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exemptions.

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Under the above mentioned circumstances, the

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above appeals are hereby dismissed by declining the challenge raised against the impugned clarification. However, it is made clear that the appellants will be governed by provisions of the earlier clarification, dated 15.09.2007 and they will be entitled for refund, if any amount has been remitted in excess of the prescriptions contained therein.

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Sd/- C.K. ABDUL REHIM, JUDGE .

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Sd/- R. NARAYANA PISHARADI, JUDGE .

ul/-

[True copy]

P.S. to Judge.

O.T.A. Nos.03 & 04/2014