2002 (2) TMI 1293 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge to the validity of a clarification issued by the Commissioner of Commercial Taxes under section 59A of the KGST Act regarding the application of reduced tax rate under Notification S.R.O. No. 1091/99.
2. Interpretation of section 5D of the Kerala General Sales Tax Act, 1963, regarding the levy of additional sales tax.
3. Availability of alternate remedy under section 40 of the KGST Act for challenging orders passed under section 59A.

Analysis:
1. The petitioner, a contractor-cum-supplier to Cochin Shipyard Ltd., challenged a clarification (exhibit P2) issued by the Commissioner of Commercial Taxes under section 59A of the KGST Act. The clarification stated that the reduced rate under Notification S.R.O. No. 1091/99 does not apply to additional sales tax, which is a special levy. The petitioner contended that the clarification was invalid as it contradicted the benefit claimed under the notification. The petitioner argued that a similar clarification challenged by another party was remanded for reconsideration, but no orders were issued. The court proceeded to decide the issue on merits, emphasizing the need for clarity in interpreting the relevant provisions.

2. The court analyzed section 5D of the KGST Act, which provides for the levy of additional sales tax. The section mandates an increase in tax payable under sections 5 and 5A by an additional sales tax at the rate of fifteen percent. The court noted that the additional sales tax is an independent levy on the total tax payable by the dealer under sections 5 and 5A. The court differentiated between the reduced rate of tax under the notification and the additional sales tax, highlighting that the notification does not cover the additional sales tax levied under section 5D. The court also referenced a Supreme Court decision to support its interpretation of the statutory provisions.

3. The court addressed the availability of an alternate remedy under section 40 of the KGST Act for challenging orders passed under section 59A. The court clarified that an appeal under section 40 is open to any person objecting to an order affecting them passed under section 59A. The court highlighted the importance of availing the statutory remedy of appeal rather than approaching the High Court under article 226 of the Constitution of India. The court emphasized the technical aspects of the appeal process and the limitation period for filing appeals, providing guidance on the procedure for aggrieved parties seeking redressal.

In conclusion, the court dismissed the original petition challenging the clarification issued by the Commissioner of Commercial Taxes, upheld the validity of the clarification, and advised on the appropriate recourse through the statutory appeal mechanism under section 40 of the KGST Act for aggrieved parties.