Pentafour Associates vs State Of Kerala
2024 Latest Caselaw 13416 Ker

Kerala High Court

Pentafour Associates vs State Of Kerala on 24 May, 2024

Author: A.K.Jayasankaran Nambiar

Bench: A.K.Jayasankaran Nambiar

       IN THE HIGH COURT OF KERALA AT ERNAKULAM
                         PRESENT
 THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
                            &
     THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
   FRIDAY, THE 24TH DAY OF MAY 2024 / 3RD JYAISHTA, 1946
                  OT.REV NO. 108 OF 2019
AGAINST THE JUDGMENT DATED 19.12.2018 IN TAVAT NO.811 OF
   2018 OF KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM
REVISION PETITIONER:

         PENTAFOUR ASSOCIATES,
         KUREEKAL BUILDING, 805-T,
         OPP. WONDERLA HOLIDAYS PVT.LTD.,
         PALLIKKARA, KUMARAPURAM,
         ERNAKULAM DISTRICT, PIN - 683 571.

         BY ADVS.
         R.MURALEEDHARAN
         DR.ANIES GEORGE


RESPONDENT:

         STATE OF KERALA,
         REPRESENTED BY THE DEPUTY COMMISSIONER
         (LAW), DEPARTMENT OF COMMERCIAL TAXES,
         ERNAKULAM, PIN - 682 031.

         BY ADV. V .K .SHAMSUDHEEN SR GP

     THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR
ADMISSION ON 24.05.2024, ALONG WITH OT.Rev.110/2019,
111/2019, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 O.T.Revision (VAT) Nos.108, 110 & 111 of 2019
                                         2




         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                    PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
                                         &
        THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
   FRIDAY, THE 24TH DAY OF MAY 2024 / 3RD JYAISHTA, 1946
                          OT.REV NO. 110 OF 2019
 AGAINST THE ORDER/JUDGMENT DATED IN TAVAT NO.812 OF
   2018 OF KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM
REVISION PETITIONER:

             PENTAFOUR ASSOCIATES,
             KUREEKAL ASSOCIATES,
             805-T, OPPOSITE WONDERLA HOLIDAYS PVT. LTD.,
             PALLIKKARA, KUMARAPURAM,
             ERNAKULAM DISTRICT, PIN - 683 571.

             BY ADVS.
             R.MURALEEDHARAN
             DR.ANIES GEORGE


RESPONDENT:

             STATE OF KERALA
             REPRESENTED BY THE DEPUTY COMMISSIONER
             (LAW), DEPARTMENT OF COMMERCIAL TAXES,
             ERNAKULAM, PIN - 682 031.

             BY ADV. V .K .SHAMSUDHEEN SR GP


     THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR
ADMISSION ON 24.05.2024, ALONG WITH OT.Rev.108/2019 AND
CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
 O.T.Revision (VAT) Nos.108, 110 & 111 of 2019
                                         3




         IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                    PRESENT
THE HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR
                                         &
        THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
   FRIDAY, THE 24TH DAY OF MAY 2024 / 3RD JYAISHTA, 1946
                          OT.REV NO. 111 OF 2019
 AGAINST THE ORDER/JUDGMENT DATED 19.12.2018 IN TAVAT
     NO.813 OF 2018 OF KERALA VAT APPELLATE TRIBUNAL,
                                 ERNAKULAM
REVISION PETITIONER:

             PENTAFOUR ASSOCIATES,
             KUREEKAL BUILDING, 805-T,
             OPP. WONDERLA HOLIDAYS PVT. LTD.,
             PALLIKKARA, KUMARAPURAM,
             ERNAKULAM DISTRICT, PIN-683 571.

             BY ADVS.
             R.MURALEEDHARAN
             DR.ANIES GEORGE


RESPONDENT:

             STATE OF KERALA
             REPRESENTED BY THE DEPUTY COMMISSIONER
             (LAW), DEPARTMENT OF COMMERCIAL TAXES,
             ERNAKULAM, PIN-682 031.

             BY ADV. V .K .SHAMSUDHEEN SR GP

     THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR
ADMISSION ON 24.05.2024, ALONG WITH OT.Rev.108/2019 AND
CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
 O.T.Revision (VAT) Nos.108, 110 & 111 of 2019
                                         4



                                                                    CR



                                  JUDGMENT

Dr. A.K.Jayasankaran Nambiar, J.

As the issue involved in all these revision petitions is the

same, they are taken up for consideration together and

disposed by this common judgment.

2. The brief facts necessary for the disposal of the

O.T. Revisions are as follows:

The revision petitioner before us was a dealer in

bakery products and beverages, most of which were prepared

by him and sold through a commercial outlet owned by him in

front of an amusement park. During the assessment years

2012-13, 2013-14 and 2014-15, the petitioner had opted to pay

tax on the goods sold by him from his outlet at the rate of

0.5% in terms of Section 8(c)(i) of the Kerala Value Added Tax

Act ('the Act' for short). Section 8(c)(i) of the Act reads as

follows:

O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

Any dealer in cooked food and beverages, including beverages prepared by him, other than a dealer supplying cooked food or beverages to any airline service company or institution or shipping company for serving in air craft, ships or steamer or served in air craft, ship, steamer, bar attached hotel or star hotel may, at his option, instead of paying tax in accordance with the provisions of sub-section (1) of section 6 but subject to payment of tax, if any, payable under sub-section (2) thereof, paid tax at half percent of the turnover of cooked food and beverages prepared by him and also on the turnover of other goods in respect of which he is not the dealer effecting first taxable sale, as defined in the explanation under sub-section (5) of the section 6.

Cooked food for the purpose of this clause shall include sweets and fresh fruit juice prepared and served in the restaurants and hotels.

3. The Assessing Authorities while completing the

assessment found that out of the total sales turnover conceded

by the petitioner, there was a certain portion of the turnover

that pertained to sales of bakery products that had been

purchased by the petitioner from other dealers within the

State for the purposes of resale. The Assessing Authority was O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

of the view that the second limb of Section 8(c)(i), which

permitted an assessee opting to pay tax under Section 8(c)(i)

to pay tax at 0.5% even on the turnover of other goods of

which he was not the dealer effecting first taxable sales as

defined in the explanation under Section 6(5) of the Act, would

not apply to the petitioner since according to it, the other

goods had also to be in the nature of cooked food and

beverages.

4. The Assessing Authority therefore completed the

assessment by subjecting the turnover of re-sale bakery

products to the regular rate of tax under Section 6 of the Act

and accepting the petitioner's claim for payment of tax at the

compounded rate under Section 8(c)(i) of the Act in respect of

the remaining turnover.

5. In the appeal preferred by the petitioner before the

First Appellate Authority, the said authority confirmed the

order of assessment, but permitted the petitioner to avail

input credit of the tax paid at the time of purchase of those

bakery products including beverages on the sale of which he O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

was required to pay tax at the regular rate under Section 6(1)

of the Act.

6. In the further appeal preferred before the Appellate

Tribunal, the Tribunal chose to affirm the findings of the

authorities below and dismissed the appeal preferred by the

petitioner. It is impugning the said order of the Appellate

Tribunal, that the petitioner is before us through these O.T.

Revisions by raising the following questions of law:

1. Whether the findings of the Tribunal that there is no merit in the contention of the appellant that he is eligible for payment of compounded tax @1/2% on the turnover of other packaged bakery items such as bread, jam, chocolate, 'kurkure', etc produced by others and purchased by the revision petitioner from local registered dealers paying tax at their sale point, is correct in law?

2. Whether the findings of the Tribunal that the compounded rate of tax in terms of Sec.8(c)(i), is applicable only on the turnover of cooked food and beverages prepared by a dealer in cooked food and beverages, is correct in law?

3. Whether the finding of the Tribunal is correct in upholding the order passed by the 1st O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

Appellate Authority and the Assessing Authority rejecting the claim of payment of compounded tax @1/2% of the entire turnover conceded by the revision petitioner, especially when he has paid over tax under Sec.6(2) on the turnover of goods purchased from unregistered dealers and when the other packaged bakery products dealt with were purchased from registered dealers in Kerala paying VAT at their sale point?

4. Whether the finding of the Tribunal is correct in upholding the assessment of the turnover of packaged bakery products sold by the petitioner at Scheduled rates?

7. We have heard Sri.R.Muraleedharan, the learned

counsel for the petitioner in these O.T. Revisions and

Sri.V.K.Shamsudheen, the learned senior Government Pleader

for the respondent State.

8. On a consideration of the facts and circumstances of

the case and the submissions made across the bar, we are of

view that the interpretation of the provisions of Section 8(c)(i)

of the Act by the authorities below is legally unsustainable. As

can be seen from the provisions of Section 8(c)(i) of the Act,

an option is given to a dealer in cooked food and beverages, O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

including beverages prepared by him, to pay tax at half

percent of the turnover of cooked food and beverages

prepared by him and also on the turnover of other goods in

respect of which he is not the dealer effecting first taxable

sale as defined in the explanation under Section 6(5) of the

Act.

9. In our view, once a dealer satisfies the definition of a

dealer in cooked food and beverages, including beverages

prepared by him, then he is permitted to pay tax at the rate of

half percent of the turnover of not only the cooked food and

beverages prepared by him, but also on the turnover of other

goods in respect of which he is effecting a second sale within

the State. On the facts of the instant case, we find that the

respondents do not dispute the fact that the petitioner is a

person who is entitled to pay tax at the rate of 0.5% as

envisaged under Section 8(c)(i) since, on a substantial part of

his disclosed turnover, they had unequivocally accepted the

payment of tax at 0.5%. If that be so, then the only other

question to be considered is whether the other goods in which

he had traded as a dealer had to be of the same nature as O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

cooked food and beverages. We are of the view that the very

purpose of the legislature using the words "other goods"

would be frustrated if the phrase is interpreted to refer to

goods of the same nature as cooked food and beverages. The

purport of the Section appears to be to enable a dealer

primarily dealing in cooked food and beverages, including

beverages prepared by him, to discharge his tax liability at the

rate of 0.5% on his total turnover, which includes cooked food

and beverages as well as other goods in which he may be

incidentally dealing with as part of his business. So long as a

substantial part of his turnover pertains to cooked food and

beverages, including beverages prepared by him, he would be

entitled to pay tax at the compounded rate even on the

turnover of the other goods incidentally sold by him in the

course of business.

10. We therefore set aside the impugned orders of the

authorities below and allow these revisions by answering the

questions of law raised in favour of the assessee and against

the revenue.

O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

The O.T. Revisions are allowed as above.

Sd/-

DR. A.K.JAYASANKARAN NAMBIAR JUDGE

Sd/-

SYAM KUMAR V.M. JUDGE

SSS O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

APPENDIX OF OT.REV.No. 108/2019

PETITIONER'S ANNEXURES

ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER PASSED BY COMMERCIAL TAX OFFICER, II CIRCLE, PERUMBAVOOR, DATED 07/03/2017.

ANNEXURE B                 TRUE COPY OF THE COMMON ORDER
                           PASSED     BY     THE     APPELLATE
                           AUTHORITY, IN KVATA NO.1737, 1738
                           AND 1739 OF 2017 DATED 06/03/2018.
ANNEXURE C                 CERTIFIED COPY OF THE ORDER
                           PASSED BY THE KERALA VALUE ADDED
                           TAX       APPELLATE       TRIBUNAL,
                           ADDITIONAL     BENCH,   ERNAKULAM
                           DATED    19/12/2018  IN   TA   (VAT)
                           NOS.811,812 AND 813/2018.

O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

PETITIONER'S ANNEXURES

ANNEXURE A A TRUE COPY OF THE ASSESSMENT ORDER PASSED BY COMMERCIAL TAX OFFICER, II CIRCLE, PERUMBAVOOR, FOR 2013-14 DATED 07.03.2017.

ANNEXURE - B TRUE COPY OF THE COMMON ORDER PASSED BY THE APPELLATE AUTHORITY, IN KVATA NO. 1737, 1738, AND 1739 OF 2017 DATED 06.03.2018.

ANNEXURE - C TRUE COPY OF THE COMMON ORDER PASSED BY THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, ERNAKULAM, DATED 19.12.2018 IN TA(VAT) NOS.

811, 8125 AND 813/2018.

O.T.Revision (VAT) Nos.108, 110 & 111 of 2019

PETITIONER'S ANNEXURES

ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER PASSED BY COMMERCIAL TAX OFFICER, II CIRCLE, PERUMBAVOOR, FOR 2014-15 DATED 07.3.2017.

ANNEXURE B                 TRUE COPY OF THE COMMON ORDER
                           PASSED     BY     THE     APPELLATE
                           AUTHORITY, IN KVATA NO.1737, 1738
                           AND 1739 OF 2017 DATED 06.03.2018.
ANNEXURE C                 TRUE COPY OF THE COMMON ORDER
                           PASSED BY THE KERALA VALUE ADDED
                           TAX      APPELLATE         TRIBUNAL,
                           ADDITIONAL    BENCH,    ERNAKULAM,
                           DATED    19.12.2018    IN    TA(VAT)
                           NOS.811,812, AND 813/2018.