Kerala High Court
Navin Cherian vs The Commercial Tax Officer on 28 November, 2012
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR
MONDAY, THE 25TH DAY OF SEPTEMBER 2017/3RD ASWINA, 1939
WP(C).No. 7271 of 2017 (H)
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PETITIONER(S):
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NAVIN CHERIAN,
PROPRIETOR, POOVELIL AGGREGATES, VADAYAMPADY P.O.,
PERUMBAVOOR, ERNAKULAM-682311.
BY ADV. SRI.V.DEVANANDA NARASIMHAM
RESPONDENT(S):
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1. THE COMMERCIAL TAX OFFICER,
SECOND CIRCLE, PERUMBAVOOR, ERNAKULAM-683542.
2. THE COMMISSIONER OF COMMERCIAL TAXES,
TAX TOWER, KARAMANA P.O., THIRUVANANTHAPURAM-695002.
3. THE STATE OF KERALA,
THIRUVANANTHAPURAM-695 001, REPRESENTED BY ITS
SECRETARYTO TAXES.
BY GOVERNMENT PLEADER SRI.SHAMSUDHEEN.V.K
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD
ON 25-09-2017, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
TS
WP(C).No. 7271 of 2017 (H)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXHIBIT P1- TRUE COPY OF THE FORM 1B COMPOUNDING APPLICATION FOR
METAL CRUSHER UNIT DATED 28/11/2012 E-FILED IN KVATIS FOR
THE YEAR 2012-13 BEFORE 1ST RESPONDENT BY THE
PETITIONER.
EXHIBIT P2- TRUE COPY OF THE FORM 1B COMPOUNDING APPLICATION FOR
METAL CRUSHER UNIT DATED 30/04/2O13 E-FILED IN KVATIS FOR
THE YEAR 2013-14 BEFORE 1ST RESPONDENT BY THE
PETITIONER.
EXHIBIT P3- TRUE COPY OF THE PERMISSION TO PAYTAX UNDER
COMPOUNDING SCHEME DATED 30/06/2012 FOR THE
YEAR 2012-13 ISSUED BY THE 1ST RESPONDENT TO THE
PETITIONER.
EXHIBIT P4- TRUE COPY OF THE PERMISSION TO PAYTAX UNDER
COMPOUNDING SCHEME DATED 10/06/2013 FOR THE
YEAR 2013-14 ISSUED BY THE 1ST RESPONDENT TO THE
PETITIONER.
EXHIBIT P5- TRUE COPY OF THE FORM 10D ANNUAL RETURN
DATED 04/06/2013 FOR THE YEAR 2012-13 E-FILED BY THE
PETITIONER IN KVATIS BEFORE 1ST RESPONDENT.
EXHIBIT P6- TRUE COPY OF THE FORM 10D ANNUAL RETURN
DATED 04/06/2013 FOR THE YEAR 2013-14 E-FILED BY THE
PETITIONER IN KVATIS BEFORE 1ST RESPONDENT.
EXHIBIT P7- TRUE COPY OF THE NOTICE DATED 09/11/2016 FOR THE
YEAR 2012-13 ISSUED BY THE 1ST RESPONDENT U/S.25A OF THE
KVAT ACT TO THE PETITIONER.
EXHIBIT P8- TRUE COPY OF THE NOTICE DATED 09/11/2016 FOR THE
YEAR 2013-14 ISSUED BY THE 1ST RESPONDENT U/S.25A OF THE
KVAT ACT TO THE PETITIONER.
EXHIBIT P9- TRUE COPY OF THE COMMON REPLY DATED 22/11/2016 FOR THE
YEAR 2012-13 AND 2013-14 FILED BY THE PETITIONER BEFORE
THE 1ST RESPONDENT AGAINST EXBTS-P7 & P8 NOTICES.
TS
WP(C).No. 7271 of 2017 (H)
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EXHIBIT P10- TRUE COPY OF THE KVAT ASSESSMENT ORDER
DATED 20/12/2016 FOR THE YEAR 2012-13 PASSED U/S 25A OF
THE KVAT ACT BY THE 1ST RESPONDENT.
EXHIBIT P11- TRUE COPY OF THE KVAT ASSESSMENT ORDER
DATED 20/12/2016 FOR THE YEAR 2013-14 PASSED U/S 25A OF
THE KVATACT BY THE 1ST RESPONDENT.
RESPONDENT(S)' EXHIBITS
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EXHIBIT R1(A):- TRUE COPY OF THE AUDIT ENQUIRY NO.147 DATED 02.09.2015.
EXHIBIT R1(B):- TRUE COPY OF THE TABLE SHOWING AVERAGE CAPACITY OF
ROCK BREAKER.
/TRUE COPY/
PS TO JUDGE
TS
A.K.JAYASANKARAN NAMBIAR, J.
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W.P.(C).No.7271 Of 2017
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Dated this the 25th day of September, 2017
J U D G M E N T
The petitioner has approached this Court aggrieved by Exts.P10 and P11 assessment orders passed against the petitioner under the Kerala Value Added Tax Act (hereinafter referred to as the KVAT Act) for the assessment years 2012-2013 and 2013-2014 respectively. The petitioner, who is an assessee on the rolls of the 1st respondent carries on crushing operations in his unit where he uses three crushers namely, one secondary crusher of size-II, one secondary crusher of size-III and a primary crusher. The petitioner opted to pay tax on compounded basis in terms of Section 8 (b) of the KVAT Act, 2003 and paid tax as applicable based on the jaw size of the machines that were used in his premises. It is seen that the classification of the machines as primary and secondary, and further, as secondary (size II and size III) were based on the respective jaw sizes of the machine as detailed in Section 8 (b) of the KVAT Act. It would appear that the respondents issued a pre- assessment notice to the petitioner for the aforementioned assessment years proposing to reopen the assessment, on the -2- W.P.(C).No.7271 Of 2017 ground that, based on material received from the mining and Geology Department, which indicated that a secondary crusher operated using a motor with a power greater than 30 HP would normally fall under size III and not size II, the declaration submitted by the petitioner was erroneous, and consequently, one of the secondary machines, declared as size II, would have to be treated as size III for the purposes of assessment. Exts.P10 and P11 assessment orders were accordingly passed reclassifying the particular machine, that was classified by the petitioner as size II, as size III, and demanding a differential tax from the petitioner on the said basis.
2. I have heard the learned counsel appearing for the petitioner and also the learned Government Pleader appearing for the respondents.
3.The learned Government Pleader would submit, based on the counter affidavit filed on behalf of the 1st respondent, that the demand of differential tax was based entirely on the information received from the Mining and Geology Department, -3- W.P.(C).No.7271 Of 2017 which clearly suggested that any crusher machine operating with a Horse Power of more than 30 HP would automatically fall for classification under size III and not size II as contended by the petitioner. On a perusal of the relevant statutory provisions, however, I find that, as per the statutory scheme of payment of compounded tax under Section 8 (f), the tax payable is based on the production capacity of the machine, which in turn is determined by the jaw size of the crushing machine concerned. The capacity of the machine, based on the power of the motor affixed to the machine, is not the criteria that is specified under the Act for classifying a machine for the purposes of tax. I, therefore, find that the material received from the Mining and Geology Department is wholly irrelevant to the determination of the capacity of the machine for the purposes of payment of tax under the KVAT Act. Inasmuch as there is no dispute with regard to the jaw size of the machine as declared by the petitioner at the time of opting to pay tax on compounded basis, I am of the view that, Exts.P10 and P11 assessment orders, inasmuch as they proceed to confirm a differential demand on the petitioner based on a criteria that is not specified in the statute, cannot be legally -4- W.P.(C).No.7271 Of 2017 sustained. I, accordingly, quash Exts.P10 and P11 assessment orders and allow the writ petition with consequential reliefs to the petitioner.
Sd/-
A.K.JAYASANKARAN NAMBIAR JUDGE mns/25.09.17