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TMI Blog2015 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... was purchased for feeding the petitioner's own poultry and not for sale; adding that it was not a taxable commodity - the commodity is the same and the rate of tax is also the same, as it is 12.5 per cent - The benefit of lesser rate of tax available to a presumptive tax dealer under section 6(5) is carved out by way of exemption in respect of such dealers, who satisfy the different parameters as prescribed under the statute - It is for the law making authorities to prescribe various conditions so as to extend the benefit of exemption, by way of reduced rate of tax and incorporation of such provisions with retrospective effect cannot be misunderstood as enhancement of any rate of tax, by virtue of any amendment - The idea and understanding of the petitioner is thoroughly wrong and misconceived. Constitutional validity of section 6(5) with regard to the retrospective amendment made on August 28, 2005 w.e.f. April 1, 2005 – Held that:- There is absolutely no challenge or discrimination with regard to the rate of tax in respect of broiler chicken, which is 12.5 per cent, whether it is imported from outside the State or procured within the State - However, in respect of certain spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er,. P.R. RAMACHANDRA MENON J.- Rejection of application opting to have registration under section 6(5) of the Kerala Value Added Tax Act, 2003 as a presumptive dealer with liability to pay tax at lesser rate and the assessment finalised under section 25(1) of the Kerala Value Added Tax Act, ordering to satisfy the liability under section 6(1) of the Act, is mainly under challenge; simultaneously challenging the constitutional validity of section 6(5), particularly with regard to the retrospective amendment (made on August 28, 2005) with effect from April 1, 2005. 2. The petitioner-firm is running a poultry farm engaged in the sale of broiler chicken, having registration, both under the Kerala General Sales Tax and Central Sales Tax Acts. In the course of business, the petitioner used to bring the live chicken and such other goods from outside the State, to be sold within the State. However, pursuant to the new enactment, i.e., Kerala Value Added Tax Act, which was brought into force with effect from April 1, 2005, the petitioner decided to have the benefit of reduced rate of tax applicable to the presumptive dealers , who were not importers or dealers liable to tax un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was pointed out that the petitioner had not purchased taxable goods , inter-State, during the year 2004-05 and that the entire stock mentioned was in respect of maize , a poultry feed which was feeding the petitioner's poultry and not for sale. Maize being not a taxable commodity, having been exempted as per entry 12 of the First Schedule to the Kerala Value Added Tax Act, the petitioner was not liable to be treated as an importer as defined under section 2(xxii), obviously since the term importer means only a person who obtains or brings any taxable goods from outside. 4. After considering the said reply , the first respondent found that there was no merit in it and by virtue of the statutory prescription, as amended, the petitioner was liable to pay the tax, as prescribed under section 6(1). In the said circumstance, exhibit P4 pre-assessment notice under section 25 was issued to the petitioner on August 22, 2006 by registered post. 5. On service of notice, as observed by the first respondent, though two weeks' time was sought for on September 11, 2006 to comply with the requirement, the dealer had not responded further and accordingly, the assessment was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (2), any registered dealer not being,- (a) an importer; or (b) a dealer making any sale in the course of inter-State trade or commerce or export; or (c) a dealer registered under the Central Sales Tax Act, 1956 (Central Act 74 of 1956); or (d) a dealer effecting first taxable sale of goods within the State; or (e) a dealer covered by sub-section (1A); or (f) a contractor, whose total turnover for a year is below fifty lakh rupees, may, at his option, pay tax at the rate of half per cent of the turnover of sale of taxable goods as presumptive tax instead of paying tax under subsection (1): Provided that a dealer holding stock of goods purchased in the course of inter-State trade on the date of coming into force of the Act, will have the option to pay tax under this sub-section from the beginning of the quarter following the quarter in which he has sold such goods in the State and paid tax under sub-section (1) of section 6 and his registration under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) is cancelled: Provided further that any dealer covered by sub-section (1A) may, at his option pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Col. No. 10, that the total turnover for the previous year was ₹ 84,87,378 and as such, it is clearly hit by the second proviso to section 6(5). 10 With regard to the stock held by the petitioner as on April 1, 2005, it has been conceded that there was a total stock of ₹ 13.45 lakhs, which however was sought to be explained by the petitioner stating that it was only in respect of maize , which was purchased for feeding the petitioner's own poultry and not for sale; adding that it was not a taxable commodity. 11. True, by virtue of entry No. 12 of the First Schedule of the Kerala Value Added Tax Act, maize is not a taxable item in the State. It is also true that the term importer as defined under section 2(xxii) of the Act means any person who obtains or brings any taxable goods from any place outside the State or country, whether as a result of purchase or otherwise, for the purpose of business. But referring to the other incriminating circumstances brought to light, particularly, the C forms given by the petitioner (particulars of which have been given in exhibit P6 order), the first respondent has found that the petitioner had issued the C forms even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect cannot be misunderstood as enhancement of any rate of tax, by virtue of any amendment. The idea and understanding of the petitioner is thoroughly wrong and misconceived. 14. Coming to the challenge with reference to the constitutional validity of the relevant provisions, the petitioner contends in paragraph 10 and Ground K that section 6(5), by denying the concessional rate of presumptive tax to persons engaged in inter-State purchases, discriminates them so as to impose higher rate of tax in respect of goods imported and sold within the State, compared to the goods locally purchased and sold and hence it is ultra vires being violative of article 301 read with article 304(a) of the Constitution of India. The above provisions read as follows: Article 301: 301. Freedom of trade, commerce and intercourse.-Subject to the other provisions of this part, trade, commerce and intercourse throughout the territory of India shall be free. 304. Restrictions on trade, commerce and intercourse among States.-Notwithstanding anything in article 301 or article 303, the Legislature of a State may by law- (a) impose on goods imported from other States or the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 per cent, which was brought into effect from April 1, 2005. It is by virtue of the said amendment, that the petitioner has satisfied the presumptive tax at the lesser rate of 0.5 per cent instead of one per cent as it originally existed. It is only by way of option and not by virtue of any mandatory requirement, that the course provided under section 6(5) is brought in and if the petitioner is not happy with the same, it is always open for the petitioner to proceed on the normal and regular track for satisfaction of the tax under section 6(1), which alone has been done by the first respondent, passing exhibit P6 assessment order. But for the vague challenge as to the constitutional validity of the amended provision, the petitioner has not stated anything, in what way the provision is ultra vires to the Constitution or in what manner the State has exceeded in exercising its law making power. 17. There is a case for the petitioner that exhibit P2 notice was issued to the petitioner only on March 6, 2006, as a result of which, the petitioner could not collect tax at the normal rates from the customers. This argument does not persuade this court to draw an inference in fav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot in full conformity with the statutory prescription and as such, the option exercised and satisfaction of the requirements could be said as incomplete. 20. There is another contention for the petitioner that some other additional grounds are incorporated in exhibit P6 assessment order, which were not there in exhibit P4 pre-assessment notice and hence, the petitioner could not get an opportunity to explain the same. This does not appear to be palatable to this court, primarily for the reason that, no proper reply was submitted by the petitioner before passing exhibit P6 order (but for the admittedly belated reply of exhibit P5 dated October 3, 2006) and further since exhibit P6 order can be justified merely with reference to infringement of the second proviso to section 6(5), i.e., the admitted turnover of the petitioner for the previous year, as conceded in column No. 10 of exhi bit P1 application having more than ₹ 50 lakhs and hence it stands excluded by the statutory prescription itself. As such, no other ground is relevant or necessary to be looked into. 21. With regard to the contention of the petitioner that the first respondent ought to have referred to and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he poultry farm to get the benefit of presumptive tax under section 6(5), irrespective of whether there is manufacture or not in the rearing of chicks to chicken. It has been held in the said decision, that irrespective of whether there is manufacture or not in the rearing of chicks to chicken, the petitioner's sale of broiler chicken as full grown birds for meat purpose, has to be and rightly treated as first taxable sale . By virtue of the specific exclusion of first taxable sellers from the scheme of payment of presumptive tax under clause (d) of section 6(5), the lower authorities including the Tribunal have rightly rejected the claim of the petitioners. It is to be noted that section 6(5)(d) was very much there in existence, right from the beginning when the VAT Act was brought into force with effect from April 1, 2005, independent of any amendment subsequently brought about on August 28, 2005 (with retrospective effect from April 1, 2005). In other words, in view of the authoritative pronouncement of law by the Division Bench in the petitioner's own case, that the petitioner is not entitled to have the benefit of presumptive tax under section 6(5) (even by vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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