Kerala High Court
State Of Kerala vs M/S.Mahal Traders on 2 March, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
TUESDAY, THE 02ND DAY OF MARCH 2021 / 11TH PHALGUNA, 1942
OT.Rev.No.145 OF 2014
AGAINST THE ORDER/JUDGMENT IN TA (VAT) 714/2010 DATED 24-03-2014 OF KERALA VAT
APPELLATE TRIBUNAL, ERNAKULAM
REVISION PETITIONER/S:
STATE OF KERALA
BY SR.GOVERNMENT PLEADER MOHAMMED RAFIQ
RESPONDENT/S:
M/S.MAHAL TRADERS
POONTHURA P.O., THIRUVANANTHAPURAM.
R1 BY ADV. SMT.S.K.DEVI
R1 BY ADV. SRI.M.RAJ MOHAN
R1 BY ADV. SRI.SANTHOSH P.ABRAHAM
R1 BY ADV. SRI.SHANMUGHAM D. JAYAN
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 02.03.2021,
ALONG WITH OT.Rev.148/2014, OT.Rev.150/2014, THE COURT ON THE SAME DAY PASSED
THE FOLLOWING:
O.T.(Rev.) No. 145, 148 & 150/2014
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
TUESDAY, THE 02ND DAY OF MARCH 2021 / 11TH PHALGUNA, 1942
OT.Rev.No.148 OF 2014
AGAINST THE ORDER/JUDGMENT IN TAVAT 715/2010 DATED 24-03-2014 OF KERALA
VAT APPELLATE TRIBUNAL, ERNAKULAM
REVISION PETITIONER/S:
STATE OF KERALA
BY SR.GOVERNMENT PLEADER MOHAMMED RAFIQ
RESPONDENT/S:
M/S. MAHAL TRADERS
POONTHURA P.O., THIRUVANANTHAPURAM.
R1 BY ADV. SMT.S.K.DEVI
R1 BY ADV. SRI.M.RAJ MOHAN
R1 BY ADV. SRI.SANTHOSH P.ABRAHAM
R1 BY ADV. SRI.SHANMUGHAM D. JAYAN
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON
02.03.2021, ALONG WITH OT.Rev.145/2014, OT.Rev.150/2014, THE COURT ON THE
SAME DAY PASSED THE FOLLOWING:
O.T.(Rev.) No. 145, 148 & 150/2014
-3-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE S.V.BHATTI
&
THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS
TUESDAY, THE 02ND DAY OF MARCH 2021 / 11TH PHALGUNA, 1942
OT.Rev.No.150 OF 2014
AGAINST THE ORDER/JUDGMENT IN TAVAT 716/2010 DATED 24-03-2014 OF KERALA
VAT APPELLATE TRIBUNAL, ERNAKULAM
REVISION PETITIONER/S:
STATE OF KERALA
BY SR.GOVERNMENT PLEADER MOHAMMED RAFIQ
RESPONDENT/S:
M/S.MAHAL TRADERS
POONTHURA P.O., THIRUVANANTHAPURAM.
R1 BY ADV. SMT.S.K.DEVI
R1 BY ADV. SRI.M.RAJ MOHAN
R1 BY ADV. SRI.SANTHOSH P.ABRAHAM
R1 BY ADV. SRI.SHANMUGHAM D. JAYAN
OTHER PRESENT:
SR GP MOHAMMED RAFIQ
THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON
02.03.2021, ALONG WITH OT.Rev.145/2014, OT.Rev.148/2014, THE COURT ON THE
SAME DAY PASSED THE FOLLOWING:
O.T.(Rev.) No. 145, 148 & 150/2014
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ORDER
[ OT.Rev.145/2014, OT.Rev.148/2014, OT.Rev.150/2014 ]
Dated this the 2nd day of March 2021
S.V. Bhatti, J.
Revenue is the petitioner in the instant three revisions and
challenges the common order dated 24.03.2014 in T.A. (VAT)
Nos.714/2010, 715/2010 and 716/2010. The respondent is a
registered dealer under the KVAT Act. The details of the three
revisions are stated thus:
Sl.No. Assessment Tax Appeal No. O.T.Rev. No.
Year
1 2006-07 714/2010 145/2014
2 2007-08 715/2010 148/2014
3 2008-09 716/2010 150/2014
2. In these three revisions the issue deals with the
applicable rate of tax on a product sold and covered in the sales
O.T.(Rev.) No. 145, 148 & 150/2014
return of respondent, i.e., 'Orbit White Chewing Gum'. The assessee
reported the sales of 'Orbit White Chewing Gum' and paid tax at the
rate of 4%. The assessing officer rejected the claim of respondent
and determined the ratable tax of 'Orbit White Chewing Gum' at
12.5%. The chronological dates and events noted in O.T.Rev.
No.145/2014 are considered for disposing of all the revisions, as the
circumstances are identical and the issue is same.
3. The assessing officer, through Annexure A, revised the
return and called upon the respondent to pay balance tax of
Rs.43,428/- towards difference of tax and interest due thereon. The
respondent filed appeal, before the Deputy Commissioner (Appeals)
Thiruvananthapuram, and the appellate authority through
Annexure B modified the order. The respondent filed second
appeals before the Tribunal, and the Tribunal through the
impugned order allowed the appeals filed by the Revenue, hence the
tax revisions.
O.T.(Rev.) No. 145, 148 & 150/2014
4. Before adverting to the submissions of learned counsel
appearing for the parties, we find it convenient to excerpt the
operative portion of the common order under appeal, hereunder:
"4. The matter was finally heard on 12.03.2014. The appellant
has produced the invoice raised by M/s. Wringly India Pvt. Ltd.
where the item orbit white chewing gum is including under the
H.S.N. Code 3004.90.11 an Ayurvedic Medicine taxable @ 4%. This
has been accepted by the Central Excise Department. The item
specified under Sl.No.24 of RNR goods does not include the
Ayurvedic preparation manufactured under license from the
Director of Indian System of Medicine falling under H.S.N. Code
3004.90.11. Hence the matter is decided in favour of the appellant
and the appeals are allowed."
5. Learned Senior Government Pleader Mohammed Rafiq
argues that the Tribunal fell in a serious error by ipse dixit accepting
the invoices raised by the manufacturer M/s.Wringly India Pvt. Ltd,
in favour of dealer for the chewing gum, as covered by H.S.N. Code
3004.90.11, an Ayurvedic Medicine taxable @ 4%. The chewing gum
has been accepted by the Central Excise Department as chargeable
@ 4%. The classification is undertaken by keeping all primary
O.T.(Rev.) No. 145, 148 & 150/2014
aspects in perspective, which are further assisted by supporting or
secondary circumstances in favour of one or the other classification.
Explained further, his argument is that neither the invoice nor the
details set out in the invoice under the goods sold in favour of the
dealer are finally or conclusively determining factors. Apart from
the said contention, it is argued that H.S.N Code 3004.90 comes
under 'Ayurvedic, Unani, Homoeopathic, Siddha or Bio-chemic systems
medicaments, put up for retail sale'. H.S.N. Code 3004.90.11 deals with
'Of Ayurvedic system'. A bare perusal of the description of the said
code will not lead to a conclusion that the product 'Orbit White
Chewing Gum' can be treated as an Ayurvedic, Unani etc product,
for the purpose of KVAT Act as well, leviable at concessional rate of
tax. Entry 36(8)(h)(i) of Third Schedule of KVAT Act, 2003 deals with
'Medicaments of Ayurvedic system'. According to him, there is no
finding on the crucial aspect, namely that the chewing gum is a
medicament of Ayurvedic system. Therefore, in the case on hand,
extension of concessional rate of tax could be contrary to the
O.T.(Rev.) No. 145, 148 & 150/2014
scheme of KVAT Act and through adjudication concessional rate is
granted which is otherwise unavailable to the respondent dealer.
He argues finally that on whether the subject product is taxable at
4% or 12%, the Tribunal being a final authority on fact and the
findings, are incomplete or inconclusive, the matters ought to be
remitted to Tribunal by setting aside the order under revision. The
Revenue and the respondent could be allowed to establish their case
in accordance with law on the applicable rate of tax.
6. Advocate Shanmughan D. Jayan argues that the
reasoning of the Tribunal though can be characterized as very brief,
the reasoning contains grist for recording a finding that the rate of
tax applicable to the subject produce is 4%. He argues that chewing
gum comes under the broad parlance of Ayurvedic medicine. The
manufacturer has obtained license from the competent authority
under Drugs and Cosmetics Act, 1940, for the subject product under
'Ayurvedic' category. He does not seriously object to remand, and
requests the Court to direct the Tribunal to grant opportunity to
O.T.(Rev.) No. 145, 148 & 150/2014
respondent/assessee to bring on record material in support of the
case of respondent that applicable rate of tax is only 5% under Entry
36 of KVAT Act.
7. The above arguments bring home our conclusion
without much reasoning on the first objection taken by the
Revenue, namely that in a matter dealing with classification of the
product and deciding applicable Entry, the Tribunal would have
certainly done better by setting out its reason in support of its
conclusion. This Court, in a judgment reported in Himalaya Drug
Company v. State of Kerala1 has taken the view that importing of the
definition in a statute in the regulatory regime into a fiscal statute
would not be warranted in view of the fact that the exemptions or
concessions granted in a fiscal statute are to be strictly construed.
The entitlement to concessional rate is first established by
demonstrating the nature of the product, applicable rate of tax, and
the comparative study of acceptance of same product under other
enactments, such as Customs Act, Central Excise Act, etc, could be
1 2020 (3) KLT 799
O.T.(Rev.) No. 145, 148 & 150/2014
undertaken. The Tribunal committed an error of jurisdiction by
solely relying on Invoice and treating the chewing gum as a product
falling under Ayurvedic, Unani, etc. In the case on hand, for the
view we have taken in the preceding paras, we do not want to dwell
further into the matter and we are convinced that the common
order under revision is untenable, suffers from too much of brevity,
and the relevant aspects, either way, which have bearing on
determining the applicable rate of tax, are not considered by the
Tribunal and reconsideration of issue is warranted.
8. Hence, the common order under revision is set aside.
T.A. (VAT) Nos.714/2010, 715/2010 and 716/2010 are restored to file.
The matter remitted to Tribunal for disposal afresh, in accordance
with law, within three months from the date of receipt of a copy of
this order. The parties, if so advised, are given liberty to place
further material in support of their respective contentions before
the Tribunal. On such request being made, the Tribunal considers
and affords reasonable opportunity to both parties.
O.T.(Rev.) No. 145, 148 & 150/2014
The revisions are allowed as indicated above.
Sd/-
S.V.BHATTI
JUDGE
Sd/-
BECHU KURIAN THOMAS
JUDGE
jjj
O.T.(Rev.) No. 145, 148 & 150/2014
O.T.REVN. NO. 145/2014
APPENDIX
PETITIONER'S ANNEXURES
A: TRUE COPY OF THE ASSESSMENT ORDER FOR THE EYAR 2006-07 DATED 02.02.2010
PASSED BY THE COMMERCIAL TAX OFFICER, SECOND CIRCLE,
THIRUVANANTHAURAM
B: THE TRUE COPY OF THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS)
THIRUVANANTHAPURAM DATED 11.08.2010 IN KVATA NO.416/2009
C: A CERTIFIED COPY OF THE COMMON ORDER IN TA(VAT) NO.714/2010 TO 716/2010
DATED 24.03.2014 ON THE FILE OF THE KERALA VALUE ADDED TAX APPELLATE
TRIBUNAL, ERNAKULAM.
O.T.(Rev.) No. 145, 148 & 150/2014
O.T.REVN. NO. 148/2014
APPENDIX
PETITIONER'S ANNEXURES
A: TRUE COPY OF THE ASSESSMENT ORDER FOR THE EYAR 2007-08 DATED 05.08.2009
PASSED BY THE COMMERCIAL TAX OFFICER, SECOND CIRCLE,
THIRUVANANTHAURAM
B: THE TRUE COPY OF THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS)
THIRUVANANTHAPURAM DATED 11.08.2010 IN KVATA NO.114/2009
C: A CERTIFIED COPY OF THE COMMON ORDER IN TA(VAT) NO.714/2010 TO 716/2010
DATED 24.03.2014 ON THE FILE OF THE KERALA VALUE ADDED TAX APPELLATE
TRIBUNAL, ERNAKULAM.
O.T.(Rev.) No. 145, 148 & 150/2014
O.T.REVN. NO. 150/2014
APPENDIX
PETITIONER'S ANNEXURES
A: TRUE COPY OF THE ASSESSMENT ORDER FOR THE EYAR 2008-09 DATED 02.02.2010
PASSED BY THE COMMERCIAL TAX OFFICER, SECOND CIRCLE,
THIRUVANANTHAURAM
B: THE TRUE COPY OF THE ORDER OF THE DEPUTY COMMISSIONER (APPEALS)
THIRUVANANTHAPURAM DATED 11.08.2010 IN KVATA NO.417/2009
C: A CERTIFIED COPY OF THE COMMON ORDER IN TA(VAT) NO.714/2010 TO 716/2010
DATED 24.03.2014 ON THE FILE OF THE KERALA VALUE ADDED TAX APPELLATE
TRIBUNAL, ERNAKULAM.
