2003 (6) TMI 451 - HC - VAT and Sales Tax

Summary

Issues:
- Whether the turnover of rubber and raw cashew nuts procured by the assessee for and on behalf of other entities forms part of the assessee's total turnover for the purpose of levy of turnover tax under section 5(2A) of the Act.
- Whether the assessee is liable to pay interest under section 23(3) of the Act for the period prior to the demand made pursuant to the assessment orders.

Analysis:
1. The primary issue in this case revolves around whether the turnover of rubber and raw cashew nuts procured by the assessee on behalf of other entities should be included in the assessee's total turnover for the purpose of turnover tax. The assessee contended that since it acted as a procurement agent for specific entities, the turnover from these transactions should not be considered part of its total turnover. On the contrary, the State argued that even a procurement agent qualifies as a dealer under the Act, and hence, the turnover from agency transactions should be included in the total turnover. The State relied on various legal precedents to support its argument, emphasizing that the transactions were treated as part of the assessee's turnover in its books and returns.

2. The court referred to a previous Division Bench judgment that established the liability of commission agents to pay turnover tax, emphasizing the definitions of key terms like "dealer," "total taxable turnover," and "turnover" under the Act. The court noted that the assessee had included the turnover from these transactions in its returns and had sought exemption, indicating its treatment as part of the turnover. Additionally, specific notifications granted exemptions for certain transactions, further supporting the inclusion of these turnovers in the total turnover for assessment purposes.

3. Another aspect of the case involved the levy of interest under section 23(3) of the Act. The assessee argued against the imposition of penal interest, citing a Supreme Court decision that penal interest cannot be levied for the period before a demand is raised pursuant to assessment orders. The Tribunal did not address this claim, prompting the court to direct the assessing authority to consider the issue independently and determine the liability for penal interest for the relevant period based on the materials presented.

4. In conclusion, the court upheld the inclusion of the turnover from agency transactions in the assessee's total turnover for assessing turnover tax, noting the exemptions granted under specific notifications. The court also directed a review of the levy of penal interest under section 23(3) for the period preceding the demand made following the assessment orders, emphasizing the need for a thorough examination based on the Supreme Court's decision cited by the assessee.

5. The judgments were delivered after considering the arguments presented by both parties and relevant legal provisions, ensuring a comprehensive analysis of the issues raised under the Kerala General Sales Tax Act, 1963.