Kerala High Court
State Of Kerala vs A.N. Sivakumar on 27 July, 2012
Author: A.M.Shaffique
Bench: A.M.Shaffique
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR
&
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
THURSDAY, THE 9TH DAY OF JANUARY 2014/19TH POUSHA, 1935
OT.Rev.No. 25 of 2013
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AGAINST THE ORDER IN TA 1426/2011 of KERALA VAT APPELLATE TRIBUNAL,
ERNAKULAM DATED 27-07-2012
REVISION PETITIONER/RESPONDENT/REVENUE:
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STATE OF KERALA
REP. BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES
ERNAKULAM.
BY GOVERNMENT PLEADER SRI.BOBBY JOHN PULIKKAPARAMBIL
RESPONDENT/APPELLANT/ASSESSEE:
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A.N. SIVAKUMAR
SIVANIVAS, PUTHENANGADY P.O., KOTTAYAM
PIN-686005.
BY ADV. SRI.HARISANKAR V. MENON
BY ADV. SMT.MEERA V.MENON
BY ADV. SRI.MAHESH V.MENON
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON
09-01-2014, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
MANJULA CHELLUR,C.J.
&
A.M.SHAFFIQUE, J.
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O.T.Rev.No.25 of 2013
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Dated this the 9th day of January, 2014
JUDGMENT
Manjula Chellur,CJ The respondent-assessee admittedly is a dealer undertaking works contract within the State of Kerala. It is also not in dispute that the assessee opted for payment of tax at compound rate as contemplated under section 8(a)(i) of the Kerala Value Added Tax Act (the Act for short) stating that they are neither a registered dealer under Central Sales Tax Act nor an importer, therefore they are eligible to pay compound rate of tax at 3% of the contract amount. However, assessing authority rejected the claim and imposed 8% tax as contemplated under Section 8(a)(ii) of the Act.
2. An appeal came to be filed before the First Appellate Authority which confirmed the order of the assessment made by the assessing authority. Aggrieved by the same, second appeal O.T.Rev.No.25 of 2013 2 came to be filed by the assessee before the Appellate Tribunal and the Tribunal accepted the stand of the assessee rejecting the stand of the Department. Aggrieved by the same, the Revenue is before this Court.
3. On perusal of the orders of the Tribunal, though several other issues came up for consideration, we need not ponder over other than the controversy of Section 8(a) of the K(VAT) Act, whether the respondent assessee is liable to pay tax under Section 8(a)(i) or 8(a)(ii) of the Act. It is not in dispute that prior to the amendment brought to this Section by Kerala Finance Act of 2008 with effect from 01.04.2008, so far as 8(a)(i) instead of 'and' the expression used was 'or' and instead of 'a person who is not an importer' they had referred to 'a dealer effecting first taxable sale in the State. By virtue of this amendment 'and' was brought in the place of expression 'or' and the word 'who was not an importer' was replaced in the place of 'dealer effecting first taxable sale'.
4. The Tribunal, after referring to both, the amended and unamended provisions, opined that in order to deny the benefit by the department, the two conditions by virtue of 2008 O.T.Rev.No.25 of 2013 3 amendment must be complied with; otherwise the dealer is entitled for lesser compound rate of interest at 3%.
5. According to the Tribunal, prior to the amendment even when compliance of one condition, such benefit would be rejected. Learned Government Pleader made emphasis on 'comma' after the words 'Central Act of 74 of 1956'. According to him, because of the word 'and', even if one of the conditions exist, the dealer will not get the benefit. In order to understand the actual meaning of the provision whether it is more comprehensive in nature extending the benefit to the contract dealers dealing in contract works, both the provisions are mentioned hereunder:-
6. Section 8(a)(i) as it stood prior to 01.04.2008 reads as under:-
"(a)(i) any works contractor not being a dealer registered under the provisions of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), or a dealer effecting first taxable sale in the State may, at his option, instead of paying tax in accordance with the provisions of the said section, but subject to payment of tax, if any, payable under sub-section(2) thereof, pay tax at two per cent of the whole contract amount"
O.T.Rev.No.25 of 2013 4
By virtue of amendment brought, it reads as under:-
"(a)(i) any works contractor not being a dealer registered under the provisions of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), and who is not an importer, may, at his option, instead of paying tax in accordance with the provisions of the said section, pay tax at three percent of the whole contract amount.
(ii) any works contractor not falling under clause (i) above may, at his option, instead of paying tax in accordance with the provisions of the said section, shall pay tax at three percent of the contract amount after deducting the purchase value of goods excluding freight and gross profit element consigned into the State on stock transfer or purchased from outside the State and for the purchase value of goods so deducted shall pay tax at the scheduled rate applicable to such goods."
7. Learned counsel for the respondent assessee also brought to our notice budget speech for 2008-09 to impress upon the Court regarding the purpose why such amendment was thought of by Finance Act of 2008. As a matter of fact this is brought on record by Revenue in the memorandum of revision at page 4 which reads as under:-
O.T.Rev.No.25 of 2013 5
"It is proposed to simplify the provisions for compounding for Works Contracts.
The negative list will be omitted.
It is proposed to permit contractors with Central Sales Tax registration to compound at 8% and those without such registration to compound at 3%. They will be exempted from paying purchase tax under Section 6(2). These rates will not be applicable to works awarded by Government of Kerala, Kerala Water Authority and Local Bodies. The existing rates will continue for them. It is estimated that this measure will fetch us an additional Rs.10 Crore."
8. Though the budget speech refers to compounding rate of interest at 8% and 3% as stated above, they have not made any reference to why the expression `or" was removed replacing it with the word 'and'.
9. Learned Government Pleader places reliance on the decision Sree Durga Distributors vs. State of Karnataka reported in 2008(16)KTR 55 to explain what exactly a comma would mean with reference to a particular sentence. Where their Lordships had an occasion to analyse the words `and', namely with reference to `comma'. It was with regard to Entry 5 of Schedule 1 of Karnataka Value Added Tax O.T.Rev.No.25 of 2013 6 regarding Animal feed etc. by applying the meaning of a 'comma'. If we read the present amendment what exactly it would mean would decide the controversy before us. If comma after the word '1956' is read along with the word `and' it does not give any other meaning than to the effect that in addition to the previous sentence, instead of `and' sign of 'comma' could be used. By using `and' and 'comma' it does not make any difference with regard to the meaning. Prior to the amendment the expression `or' would only mean either the previous expression or the latter expression, that is, a person who is not a registered dealer under CST Act or a person who is a person first taxable sale within the state. Therefore, definitely it would mean one of the conditions would be enough to deny the benefit.
10. In the amended provision either by using word 'comma' or by using the expression `and', it means both the conditions must be satisfied to deny the benefit of opting less compounded rate of interest, that is, the assessee should be a registered dealer under CST and further should not be an O.T.Rev.No.25 of 2013 7 importer as well. The Tribunal has in detail discussed and analysed both the provisions prior to amendment and subsequent to amendment and has concluded that in order to deny the benefit available under Section 8(a)(i) the Revenue must be able to show compliance of both the conditions and not one of the conditions.
In that view of the matter, we are of the opinion, there is no justification in the stand now raised by the Department. Accordingly, the revision petition is dismissed.
MANJULA CHELLUR, CHIEF JUSTICE A.M.SHAFFIQUE, JUDGE.
sj 10/01