Kerala High Court
M/S.Alukkas Photo Press vs The Commercial Tax Officer on 2 April, 2019
Author: A.K.Jayasankaran Nambiar
Bench: A.K.Jayasankaran Nambiar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
TUESDAY ,THE 02ND DAY OF APRIL 2019 / 12TH CHAITHRA, 1941
WP(C).No. 25104 of 2017
PETITIONER:
M/S.ALUKKAS PHOTO PRESS
HILLS HIDES, 155-A, B,F, M.C. ROAD, OPP.BSNL, KOTTAYAM,
REPRESENTED BY ITS MANAGING PARTNER, A.A.JOSHY, ALUKKA
HOUSE, XXII/369/1, AVENUE ROAD, THRISSUR - 680 005.
BY ADVS.
SRI.HARISANKAR V. MENON
SMT.MEERA V.MENON
RESPONDENTS:
1 THE COMMERCIAL TAX OFFICER,
1ST CIRCLE, KOTTAYAM - 686 001.
2 THE COMMISSIONER OF COMMERCIAL TAXES
TAX TOWERS, KILLIPALAM, KARAMANA,
THIRUVANANTHAPURAM - 695 005.
BY ADV. GOVERNMENT PLEADER SRI.SHAMSUDEEN V.K
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
02.04.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No. 25104 of 2017 2
JUDGMENT
The petitioner is engaged in screen printing and printing of flex boards. In connection with his business activity, the petitioner had purchased a digital press for use in his unit. While effecting the purchase, the petitioner paid an amount of Rs.4,72,75/- towards tax under the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act'), which component was paid by his vendor at the time of selling the digital press to the petitioner. In accordance with Section 11 (2 ) of the KVAT Act, the petitioner preferred an application before the assessing authority seeking permission to avail input tax credit of the tax paid on the digital press purchased by him. The 1st respondent assessing authority, however, by Ext.P1 order dated 15.07.2016 rejected the claim of the petitioner for input tax credit, on the ground that, the vendor had paid tax on the sale of the digital press by treating the transaction as a deemed sale. The objection of the respondent is essentially that, inasmuch as the vendor of the petitioner had only transferred the right to use the capital goods to the petitioner and WP(C).No. 25104 of 2017 3 had paid tax on the said transaction on account of it being classified as deemed sale for the purposes of payment of value added tax, the petitioner could not avail input tax credit of the said tax borne by him in view of the express provisions of Section 11 (4) of the KVAT Act. Ext.P1 order is impugned in this Writ Petition by the writ petitioner who contends that Section 11 (4) of the KVAT Act only puts restrictions on the entitlement of a person to avail input tax credit and inasmuch as the restrictions under that Section were applicable only to the vendor in the instant case, so long as the vendor had discharged his tax liability under the KVAT Act, without availing any Input Tax credit at his end, the petitioner could not be denied the input tax credit of the tax borne by him.
2. A counter affidavit has been filed on behalf of the respondents, wherein the stand taken is with reference to Section 11(4) of the KVAT Act. It is stated that the transactions corresponding to sale of capital goods were shown by the vendor as a right to use, and therefore, it could not be considered as a sale for the purposes of the petitioner availing input tax credit. WP(C).No. 25104 of 2017 4
3. I have heard Sri.Harisankar V. Menon the learned counsel for the petitioner and the learned Government Pleader appearing for the respondents.
4. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find that as per the scheme of the KVAT Act, and in particular, Section 11 thereof, any registered dealer who is liable to pay tax under Sub Section 1 of Section 6 of the Act is entitled to avail input tax credit of the tax paid on the goods purchased by him. In respect of capital goods purchased by a dealer, the input tax credit is allowed over a period of three years from the date of commercial production or from the date on which the capital goods are put to use, whichever is later, subject to such conditions as may be prescribed under the Act. It is apparent, therefore, that, save for the manner in which the input tax credit is to be availed, there is nothing to indicate that a registered dealer who has paid tax on the procurement of an item of capital goods, which he has admittedly use for the purposes of his business, cannot avail input tax credit of the tax borne by him in the transaction with his vendor. In particular, it has to be WP(C).No. 25104 of 2017 5 noticed that the provisions of Section 11 do not mandate that the person availing input tax credit in respect of capital goods has to be the owner of the goods for the purposes of availing the said input tax credit. The scheme of input tax credit, as borne out by the Section, would clearly reveal that so long as the purchaser has paid the tax in respect of the purchase transaction, he is entitled, subject to the conditions imposed under the said Section, to avail input tax credit of the tax paid by him, and utilize the same for payment of tax on the products sold by him in the course of business. Section 11(4) of the KVAT Act that was relied upon by the respondents for holding the petitioner disentitled to input tax credit deals only with the disqualifications in respect of a person availing input tax credit. Inasmuch as the disqualification pointed out, as regards payment of tax on a transaction which was only a deemed sale, was relevant only to the vendor of the petitioner, one fails to understand how the said provision could be invoked against the petitioner who himself was not paying tax on a deemed sale transaction but on an actual sale transaction. I am of the view therefore that the reasons shown in Ext.P1 order to hold the petitioner disentitled to input tax credit cannot be legally WP(C).No. 25104 of 2017 6 sustained. I therefore quash the said order and allow this writ petition by holding that the petitioner shall be entitled to input tax credit subject to his compliance with the other requirements of Section 11 of the KVAT Act read with Rule 13 of the KVAT Rules.
Sd/-
A.K.JAYASANKARAN NAMBIAR JUDGE mns WP(C).No. 25104 of 2017 7 APPENDIX PETITIONER'S/ EXHIBITS:
EXHIBIT P1 COPY OF ORDER ISSUED BY THE 1ST
RESPONDENT DATED 15.07.2016
EXHIBIT P2 COPY OF APPLICATION FILED BY THE
PETITIONER BEFORE THE 1ST RESPONDENT
DATED 30.07.2016.
EXHIBIT P3 COPY OF LETTER ISSUED BY THE 2ND
RESPONDENT DATED 10.06.2016.
RESPONDENTS EXHIBITS:NIL
//TRUE COPY//
P.A TO JUDGE