2000 (10) TMI 934 - HC - VAT and Sales Tax

Summary

Issues involved:
1. Challenge against exhibit P11 order for tax liability exemption.
2. Challenge against section 45A notice of the Kerala General Sales Tax Act, 1963.
3. Challenge against exhibits P. 3 to P. 7 regarding tax liability for coffee purchases.
4. Interpretation of the Kerala Provisional Collection of Revenues Act, 1985.
5. Validity of tax imposition under the Finance Act, 1998 for coffee purchases.
6. Application of retrospective taxation laws.
7. Issuance of notice under section 45A for penalty exemption.

Analysis:

1. The cases revolve around the tax assessment period from April 1998 to July 1998. The primary issue concerns the change in the point of levy of tax on coffee under the Kerala General Sales Tax Act, 1963. The Finance Act of 1998 initially proposed shifting the levy point to the last purchase point but later reverted to the first purchase point in the State.

2. The petitioners, as first point purchasers of coffee, argued that the Finance Act, 1998 should not apply to them due to the declaration under the Kerala Provisional Collection of Revenues Act, 1985. They contended that tax collected during the period in question was unjust since they did not collect tax during that time. However, the court held that the petitioners cannot avoid tax liability under the Finance Act, emphasizing the enforceability of the Act and the retrospective nature of taxation laws.

3. The Kerala Provisional Collection of Revenues Act, 1985, enables immediate enforcement of tax provisions from budget proposals. The Act allows for refunds if a declared provision ceases to have the force of law. The court clarified that the petitioners cannot benefit from this Act as the Finance Act, 1998 is a valid legislation imposing tax obligations on them.

4. Referring to precedents, the court highlighted that retrospective application of tax laws is permissible under legislative powers. The court cited cases where the Supreme Court upheld the validity of retrospective taxation, emphasizing the government's authority to levy taxes based on legislative competence.

5. Regarding the notice issued under section 45A of the Kerala General Sales Tax Act, 1963, for penalty exemption, the court acknowledged the confusion surrounding tax payment due to the changing tax provisions. Consequently, the court quashed the penalty notice and granted the petitioners one month to pay the due tax. Failure to comply within the specified period allows authorities to initiate recovery proceedings.

6. In conclusion, the court dismissed the tax revision cases and original petitions, affirming the retrospective application of tax laws and upholding the tax liability of the petitioners under the Finance Act, 1998.