2003 (1) TMI 690 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Scope and content of the last part of the notification, S.R.O. No. 127 of 2000.
2. Validity of notices issued under section 43 of the Kerala General Sales Tax Act, 1963.

Detailed Analysis:

1. Scope and Content of the Last Part of the Notification, S.R.O. No. 127 of 2000:

The main issue in all the cases was the interpretation of the last paragraph of the notification, S.R.O. No. 127 of 2000, which states: "This notification shall be deemed to have come into force on the first day of January, 2000. Tax, if any, already collected in the higher rate shall be paid over to Government and tax, if any, already paid shall not be refunded." The appellants, who are dealers in arecanut, argued that the two clauses should be read conjunctively, implying that the tax already paid should only be non-refundable if it was collected from customers. They contended that since they did not collect tax from customers (as the tax was on the last purchase point), they should be eligible for a refund of the excess tax paid.

The court, however, rejected this interpretation. It held that the notification's language was clear and unambiguous, providing that any tax already paid shall not be refunded, irrespective of whether it was collected from customers or not. The court emphasized that the liability to pay tax arises as soon as the sale or purchase is effected, regardless of tax collection from customers. The court cited the principle that a taxing statute must be interpreted strictly as it reads, without adding or subtracting words based on presumed legislative intent.

The court also noted that the intention behind the notification was to prevent any outflow of money from the government exchequer due to the retrospective reduction in tax rates. The court referenced the Supreme Court's decision in State of Kerala v. Vattukalam Chemicals Industries, which supports the notion that clear statutory language should be interpreted as it is, without external aids.

The court concluded that the appellants, having already paid the tax, could not claim a refund based on the retrospective reduction in tax rates. The court agreed with the Commissioner of Commercial Taxes' clarification that the retrospective operation of the notification should not result in any refund of the tax already paid.

2. Validity of Notices Issued Under Section 43 of the Kerala General Sales Tax Act, 1963:

The appellants also challenged the notices issued under section 43 of the Act, which were intended to correct the mistake of ordering a refund. The court deferred the resolution of this issue to the statutory authorities, directing them to dispose of the matter in light of the court's decision on the scope and content of the notification.

Conclusion:

The appeals were disposed of with the court upholding the interpretation that tax already paid shall not be refunded, regardless of whether it was collected from customers. The court also dismissed the related contentions regarding the notices issued under section 43, relegating those issues to the statutory authorities for further consideration. The court's decision emphasized strict adherence to the language of the taxing statute and notification, rejecting any interpretations based on presumed legislative intent or equitable considerations.