Kerala High Court
M/S. Kerala Bakers vs The Assistant Commissioner (Kvat) on 15 June, 2016
Author: A.M. Shaffique
Bench: A.M.Shaffique
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
WEDNESDAY, THE 15TH DAY OF JUNE 2016/25TH JYAISHTA, 1938
WP(C).No. 8888 of 2015 (I)
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PETITIONER(S):
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M/S. KERALA BAKERS,
PARIYARAM PO, PUDUPPALLY, KOTTAYAM-21,
A REGISTERED PARTNERSHIP FIRM,
REP. BY ITS MANAGING PARTNER SRI.N.T.GEORGE.
BY ADVS.SRI.E.P.GOVINDAN
SRI.P.ABRAHAM CHERIAN
SMT.K.N.MANEESHA
SMT.G.DEEPA
RESPONDENT(S):
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1. THE ASSISTANT COMMISSIONER (KVAT),
SPECIAL CIRCLE, COMMERCIAL TAXES,
KOTTAYAM DISTRICT-686 001.
2. THE COMMERCIAL TAX OFFICER ON
DEPUTATION TO SPECIAL CIRCLE,
COMMERCIAL TAXES, KOTTAYAM-686 001.
3. THE COMMISSIONER OF COMMERCIAL TAXES,
KERALA, PUBLIC BUILDINGS, VIKAS BHAVAN PO,
TRIVANDRUM-695 001.
4. THE STATE OF KERALA,
REP. BY THE SECRETARY, TAXES DEPARTMENT,
GOVERNMENT SECRETARIAT, TRIVANDRUM-695 001.
BY GOVERNMENT PLEADER SMT.LILLY K.T.
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 15-06-2016, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
msv/
WP(C).No. 8888 of 2015 (I)
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APPENDIX
PETITIONER(S)' EXHIBITS
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EXT P1 : TRUE COPY OF THE RECTIFIED ORDER DT 05-02-2015 PASSED BY
THE FIRST RESPONDENT FOR THE YEARS 2005-06.
EXT P2 : TRUE COPY OF THE RECTIFIED ORDER DT 05-02-2015 PASSED BY
THE FIRST RESPONDENT FOR THE YEARS 2006-07.
EXT P3 : TRUE COPY OF THE REVISED ASSESSMENT ORDER DT 02-12-2011
FOR THE YEARS 2005-06.
EXT P4 : TRUE COPY OF THE REVISED ASSESSMENT ORDER DT 02-12-2011
FOR THE YEARS 2006-07.
EXT P5 : TRUE COPY OF THE APPELLATE ORDER DT. 19-04-2012 IN
KVATA 277 & 278/12 FOR 2005-06 & 2006-07.
EXT P6 : TRUE COPY OF THE MODIFIED ORDER DT. 14-12-12 PASSED BY
THE FIRST RESPONDENT FOR 2005-06.
EXT P7 : TRUE COPY OF THE MODIFIED ORDER DT. 14-12-12 PASSED BY
THE FIRST RESPONDENT FOR 2006-07.
EXT P8 : TRUE COPY OF THE LETTER DT. 14-11-2012 ISSUED BY THE
THIRD RESPONDENT.
EXT P9 : TRUE COPY OF THE PROCEEDINGS DT. 17-12-2012 PASSED BY
THE FIRST RESPONDENT.
EXT P10 : TRUE COPY OF THE REGISTRATION CERTIFICATE
DT. 19-09-2007 ISSUED BY THE REGISTRAR TRADE MARK,
MUMBAI.
RESPONDENT(S)' EXHIBITS:
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NIL
//TRUE COPY//
P.S.TO JUDGE
Msv/
A.M. SHAFFIQUE, J.
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W.P.(C) No. 8888 of 2015
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Dated this the 15th day of June, 2016
JUDGMENT
Petitioner challenges Exts.P1 and P2 rectified orders issued by the first respondent, invoking Section 66 of the Kerala Value Added Tax Act, 2003.
2. The short facts involved in the writ petition would disclose that the petitioner being a dealer in bakery products was assessed to tax on the basis that he was selling the bakery products under the brand name 'Thomson Biscuits' during the year 2005-06 and 2006-07. The Assessing Officer proceeded on the basis that the bakery products were sold under the brand name 'Thomson Biscuits' during the aforesaid period. Petitioner raised a contention that the registered trade mark was obtained only on 19.9.2007. However, the Assessing Officer proceeded on the basis that the brand name was registered with retrospective effect from the date of application ie; on 18.9.2001 and accordingly the petitioner was W.P.(C) No. 8888 of 2015 -2- assessed to tax for the aforesaid period at a higher rate applicable for sale of bakery products under the brand name. The matter was carried in appeal. The Appellate Authority remitted the matter back to the Assessing Authority for fresh consideration.
3. It seems that the Assessing Authority had sought for a clarification from the Commissioner. The Commissioner as per letter dated 14.11.2012 informed the Assistant Commissioner, Special Circle, Kottayam that the biscuits became taxable at 13.5% from the date of registration of trade mark. It is submitted that on that basis, assessment orders were completed. However, after a considerably long period, the assessment is revised invoking Section 66 of the Kerala Value Added Tax Act. Exts. P1 and P2 are the orders passed by which the petitioner is called upon to pay tax at 12.5%. The main contention raised by the petitioner is that there was no situation warranting proceedings under Section 66 of the Act. There was no error apparent on the face of record to rectify the earlier order, which had already become final. The W.P.(C) No. 8888 of 2015 -3- learned counsel also relies upon the judgment of the Apex Court in M/s. Deva Metal Powers Pvt. Ltd v.
Commissioner, Trade Tax, U.P. [2008 (16) KTR 482 (SC), wherein the Apex Court had occasion to consider the meaning of 'mistake' which has been elaborately dealt with. Paragraph 11 of the said judgment, which reads as under:
"11. "Mistake" is an ordinary word but in taxation laws, it has a special significance. It is not an arithmetical error which, after a judicious probe into the record from which it is supposed to emanate is discerned. The word "mistake" is inherently indefinite in scope, as to what may be a mistake for one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. It is something which a duly and judiciously instructed mind can find out from the record. In order to attract the power to rectify under Section 22, it is not sufficient if there is merely a mistake in the order sought to be rectified. The mistake to be rectified must be one apparent from the record. A decision on a debatable point of law or a disputed question of fact is not a mistake apparent from the record. The plain meaning of the word "apparent" is that it must be something which appears to be so ex facie and it is incapable of argument of debate. It, therefore, W.P.(C) No. 8888 of 2015 -4- follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectifications."
Another judgment relied upon is Meghraj Biscuits Industries Ltd v. Commissioner of Central Excise, U.P [2007 (3) SCC 780]. In that case, the Apex Court was considering the legality and effect of the deeming fiction in the provisions of the Trade Marks Act and whether such a deeming provision can be extended to Excise Law. It was held that the effect of making registration certificate applicable from retrospective date is based on the principles of deemed equivalence to public user of such mark. Such deeming fiction cannot be extended to excise law and it was confined to the provisions of the Trade Marks Act. Paragraph 18 is relevant, which reads as under:
"18. On reading the above quoted paragraphs from the above judgment, with which we agree, it is clear that the effect of making the registration certificate applicable from retrospective due is based on the principle of deemed equivalence to public user of such mark. This deeming fiction cannot be extended to the excise law. It is confined W.P.(C) No. 8888 of 2015 -5- to the provisions of the Trade Marks Act. In a given case like the present case where there is evidence with the Department of the trade mark being owned by M/s. Kay Aar Biscuits (P) Ltd. and where there is evidence of the appellants trading on the reputation of M/s. Kay Aar Biscuits (P) Ltd which is not rebutted by the appellant assessee, issuance of registration certificate with retrospective effect cannot be confer the benefit of exemption notification to the assessee. In the present case, issuance of registration certificate with retrospective effect from 30.9.1991 will not tantamount to conferment of exemption benefit under the excise law once it is found that the appellants had wrongly used the trade mark of M/s. Kay Aar Biscuits (P) Ltd."
4. On the other hand, the learned Government Pleader while supporting the stand taken in the matter, submits that Section 66 apparently applies to the fact situation. This is a case where there is a clear error by which the taxability of the bakery product was in question. The authority had taken a view that the higher tax is liable to be paid only on registration of the trade mark. As per the provisions of the Trade Marks Act, itself the registration will have retrospective effect and that apart, the petitioner was effecting sale of the products under the brand name for quite a long time and even as early W.P.(C) No. 8888 of 2015 -6- as from 1980 onwards.
5. I have heard the learned counsel on either side and I am of the view that there is justification on the part of the petitioner in challenging Exts.P1 and P2. Section 66 reads as under:
"66. Power to rectify any error apparent on the face of the record- (1) Any authority including Appellate Tribunal and Settlement Commission issuing any order or proceedings under this Act may, on application or otherwise, at any time within four years from the year in which the order is passed by it, rectify any error apparent on the face of the record:
Provided that no such rectification, which has the effect of enhancing an assessment or any penalty, shall be made unless such authority has given notice to the person affected and has allowed him a reasonable opportunity of being heard.
(2) Where such rectification has the effect of reducing an assessment or penalty, the assessing authority shall make any refund to the person entitled thereto.
(3) Where any such rectification has the effect of enhancing an assessment or penalty, the assessing authority shall give the dealer or other person, a revised notice of assessment or penalty and thereupon the provisions of this Act and the rules made thereunder shall apply as if such notice has been given in the first instance.
Explanation- The liability to pay the tax or other amount shall arise only from the date specified W.P.(C) No. 8888 of 2015 -7- in the revised notice."
6. The statute permits the rectification of 'any error apparent on the face of record'. The question is whether there was any error apparent on the face of the record as far as Exts.P6 and P7 are concerned. In the said orders, there is a clear finding that "only when the trade name is registered , biscuits becomes taxable @ 12.5%. The crucial event is the registration of trade mark, which determines the classification for the purpose of taxation. Hence the assessee is liable to pay tax @ 12.5% w.e.f. 19.9.2007, but at the time their business had closed".The aforesaid finding is based on the statutory provisions. It is true that the registration of trade mark under the Trade Marks Act can have retrospective effect and as far as his brand name is concerned, he is entitled to use the brand name either with or without registration. But question is regarding taxability. The liability to pay tax arises only when the petitioner gets a registered trade mark for the product. The item 11 in the notified list of goods taxable at the specified rate reads as under:
W.P.(C) No. 8888 of 2015 -8-
"Bakery products including biscuits of all varieties, cakes, pastries, pizza, bread, sold under brand name registered under the Trade Marks Act, 1999."
Therefore, the event of taxability arises when there is a registration of the trade mark. In other words, the petitioner is not entitled to collect tax, if there is no registration of trade mark, as held by the Apex court in Meghraj Biscuits Industries Ltd (supra). The deeming provision under the Trade Marks Act applies only for the purpose of the said Act and cannot be applied to any other statutes unless otherwise provided.
In the said circumstances, I am of the view that there was no error apparent on the face of record to enable the authorities to invoke Section 66 of the Act and accordingly this writ petition is allowed and Exts.P1 and P2 are quashed.
Sd/-
A.M. SHAFFIQUE JUDGE Scl/15.06.2016