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TMI Blog2012 (11) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Commercial Tax had clarified the matter, will indicate that the assessee was right in stating that they were under a bona fide belief that appropriate entry under which the commodity is to be included was entry within the Second Schedule. Therefore it is inclined to quash the impugned orders of penalty. - W.P. (C) Nos. 4635, 16478, 16479 of 2009 - - - Dated:- 27-11-2012 - ABDUL REHIM C.K., J. For the Appellant : Joseph Jerard Samsom Rodrigues For the Respondents : Sojan James, Special Government Pleader (Taxes), C.K. ABDUL REHIM J.- In W.P. (C) No. 4635 of 2009 the petitionerbank is challenging exhibit P5 order of assessment finalised against them for the year 2007-08, under the Kerala Value Added Tax Act, 2003 ( the KVAT Act ). Bank is also challenging exhibit P6 series monthly assessments made with respect to various months in the assessment year 2008-09. In W.P (C) Nos. 16478 of 2009 and 16479 of 2009, the petitionerbank is challenging exhibit P4 orders imposing penalty under section 67(1) of the KVAT Act, with respect to assessment years 2006-07 and 2007-08. Since the issue involved in all these writ petitions pertains to the rate of tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems covered under entry 4 of the Third Schedule were brought along with bullion in the Second Schedule and made at taxable at one per cent. The relevant period in this cases and also in the cases dealt with by the Division Bench falls within the pre-amended period, i.e., before April 1, 2009. The Division Bench observed that, the minted rectangular form of gold bars made with fine finish and markings with sizes of 5 gms. 8 gms. and 10 gms. etc., are purchased only to be worn or to be gifted or purchased and retained only for its finish and beauty and not for use as a raw material in the manufacture of gold ornaments. Hence it cannot be treated as gold in unwrought form used as raw material for manufacture of other products, covered under entry 1 of the Second Schedule until the amendment came into effect on April 1, 2009. It was held that, the clarification issued by the Commissioner is applicable in such case and it applies to gold bars and gold coins of 5gms. 8 gms. and 10 gms. etc., marketed by the banks. It is submitted that the decision rendered by the Division Bench in HDFC Bank's case [2010] 36 VST 338 (Ker); [2011] 19 KTR 242 (Ker) has attained finality, not being chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f tax fixed was one per cent. The honourable Supreme Court held that ornaments and other articles of gold will not fall within the said category and rate of three per cent is applicable under section 5A of the KGST Act. Under the KVAT Act, till the amendment which came into effect on April 1, 2009, there contained different entries under the Second Schedule as well as in the Third Schedule. Entry No. 1 of Schedule II is bullions, which was sub-divided into (1) silver and (2) gold, with different HSN Codes noted as 7106.91.00 and 7108.12.00, respectively. Under the Third Schedule entry No. 4 deals with articles of gold, silver and platinum group of metals other than jewellery falling under Second Schedule . Subentry (4) of entry 4 in Schedule III is gold, semi-manufactured with HSN Code 7108.13.00. While interpreting applicability of the rate of tax in relation to commodities included in the VAT Act, the Division Bench in HDFC Bank 's case [2010] 36 VST 338 (Ker); [2011] 19 KTR 242 (Ker) held that the rule of interpretation specified in the Schedules appended to the KVAT Act is to be considered. It provides that commodities included in the Schedules are allotted with code num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commodities covered under these cases. 7. The contention that the assessments are contrary to law laid by the honourable apex court in Deputy Commissioner of Sales Tax v. G.S. Pai and Co. [1980] 45 STC 58 (SC) cannot be accepted. Entries contained in the KGST Act dealt with in that decision is totally different from entries contained in the Schedules of the KVAT Act, with specific codes mentioned therein. The honourable apex court has not laid any law that gold bars can only be classified as bullion nor had prevented the State Governments from legislating law including gold bars under any other category specified in the Schedule of the VAT Act. Therefore I am of the view that the interpretation given to the meaning to the entry bullion contained in the KGST Act, in which an observation is made that it will include gold bar, cannot be construed in any manner as a dictum laid by the honourable Supreme Court curtailing legislative competence of the State Governments to include gold bar in any other specific entry for the purpose of levying VAT. 8. The learned senior counsel further contended that in the Customs Tariff Act there is no HSN classification with respect to bullion, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no wilful or contumacious or blame worthy conduct on the part the bank in evading payment of differential rate of three per cent tax. Hence the allegation of mis-classification with deliberate intention to evade payment of tax is not sustainable. But the above contentions were discarded by the intelligence officer while imposing penalty, holding that there was no ambiguity with respect to the rate of tax applicable. It is mentioned in the impugned orders that, clarification issued by the Commissioner was not in the nature of a law making. But it only clarified the law as existing, on the basis of request made by affected parties. According to the first respondent there was no ambiguity existed in the rate of tax and hence there is deliberate mis-classification which is liable to be penalised. 10. The learned counsel for the petitioners, Sri Joseph Jerard Samson Rodrigues contended that the legal position stands covered though the decision in E. I. D. Parry (I) Ltd. v. Assistant Commissioner of Commercial Taxes [2000] 117 STC 457 (SC); AIR 2000 SC 551, wherein the honourable Supreme Court held that, when the assessee had not included any taxable turnover on a bona fide belief th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e against the assessment before this court and that the payment of tax was made only after this court rendered the judgments reported in HDFC Bank Limited v. Assistant Commissioner [2010] 36 VST 338 (Ker); [2011] 19 KTR 242 (Ker). It is not relevant as to when the assessee had actually paid the tax amount due. But the relevant aspect to be considered is as to whether the assessee had failed in making payment of the tax by mis-classification of the commodity by acting deliberately in a contumacious manner with an attempt to evade payment of tax. The fact that the assessing authority had finalised a best judgment assessment only after the Commissioner of Commercial Tax had clarified the matter, will indicate that the assessee was right in stating that they were under a bona fide belief that appropriate entry under which the commodity is to be included was entry within the Second Schedule. Therefore I am inclined to quash the impugned orders of penalty. In the result: (i) W.P (C) No. 4635 of 2009 is hereby dismissed. (ii) W.P (C) Nos. 16478 of 2009 and 16479 of 2009 are allowed. Exhibit P4 orders of penalty impugned therein are hereby quashed. - - TaxTMI - TMITax - CST, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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