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TMI Blog2005 (4) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Petitioners submit that sections 1 and 6(c) of the Kerala Finance Act, 2001 (Act 7 of 2001) is unconstitutional and violative of article 265 of the Constitution of India and the unreasonable levy of compound tax on the persons engaging in metal crusher operations is contrary to articles 14 and 19(1)(g) of the Constitution of India. Further they contend that the retrospective operation of the amended provisions effective from July 23, 2001 as per section 1 of the Finance Act, 2001 is a colourable exercise of power. They also contend that the enhancement of compounded rate of tax to 300 per cent is disproportionate to the production in the crusher unit and that since rate of sales tax is not enhanced compounded tax should not have been i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes, namely: (i) For each crushing machine of size 36 x 9 Rs. 50,000 per annum (ii) For each crushing machine of size 16 x 9 Rs. 25,000 per annum (iii) For each crushing machine of size 12 x 9 Rs. 12,500 per annum Rates mentioned above continued to be in operation till an amendment was introduced. Rates were increased by the Kerala Finance Act, 2000 with effect from April 1, 2000. Amendment brought to section 7(1)(b) as per Act 20 of 2000 is as follows: 7. Payment of tax at compounded rate. (1) Notwithstanding anything contained in sub-section (1) of section 5, (a) ............................ (b) Any mechanised crushing unit producing granite metals may, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned for the purpose of computation of the quantum of the compounded tax. Further section 1(2) of the Act 7 of 2001 was introduced to give effect to the amendment from July 23, 2001. 5. The All Kerala Crusher Owners Association have addressed the Government complaining about the enhancement of the rate of compounded tax on primary crusher and Government have considered their grievances. Minister for Finance in the Budget Speech for the year 2003-2004 stated as follows: "Government have received several representations that the stone crusher industry is facing serious difficulties owing to the imposition of tax on primary crushers, especially since the product manufactured by them is not a saleable commodity. Since this is found to be a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er hand contended that there is no reason to interfere with the judgment of the learned single Judge and also contended that the petitioners have always got the option to pay tax under section 5(1) of the Act rather than opting on section 7(1)(b). Having opted under section 7(1)(b) they are bound by the Explanation contained in the Finance Act. Counsel submitted that there is no illegality in the Explanation added since the Legislature in its wisdom felt that primary crushers also form part of crushing units. Counsel submitted that even without using the expression primary crusher or secondary crusher, the expression would take in all the crushers since the same has to be taken as a unit. Explanation was added only to tide over the doubts e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be mitigated. Legislature in their wisdom has reduced the tax liability to stick on to the rule that primary crusher should also form part of mechanised crushing unit. 9.. Explanation was added by Act 7 of 2001 to explain the meaning of the words contained in the section. The apex Court in Bihta Co-operative Development and Cane Marketing Union Ltd. v. Bank of Bihar AIR 1967 SC 389 and Oblum Electrical Industries Pvt. Ltd. v. Collector of Customs (1997) 7 SCC 581 held that the Explanation shall be so read that it should not be so construed so as to alter the ambit of the section. Legislature in their wisdom have explained that the mechanised crushing unit would take in crushing machine which includes primary crusher and secondary crus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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