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TMI Blog2018 (12) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... stic trays, containers, box and bowls come under Entry 174 of List A of Third schedule bearing HSN Code 3923 and are taxable at the rate of 5%. 2. Later, in a Local Audit Report (LAR), pursuant to audit of the receipts and refunds of the Commercial Tax Office- II, Kannur, the Office of the Accountant General pointed out a major irregularity in the appellant having conceded the turn over of containers at the rate of 5%. The LAR found that the appellant had in their ER1 return before the Central Excise Authorities showed the plastic packing materials manufactured by them to be covered under HSN Code 3923.90.90 and thus the amendments made to the KVAT Act made all such packing materials manufactured by the appellant exigible to tax at the rate of 20%. The Commissioner under Section 94(7) initiated suo motu proceedings and issued a notice against the appellant pointing out the specific observations made in the LAR of the AG. The appellant was granted an opportunity, was heard and order passed as Annexure F, which is challenged by the appellant on grounds of lack of jurisdiction as also on the Entry under 174 of the Third Schedule-List A being very specific and inclusive of all packing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act so designating the Commissioner, is hence preserved, especially in continuance of any action taken prior to repeal. Despite the repeal of the KVAT Act, the right accrued on the appellant by way of the order passed under Section 94(2), by the Authority nominated under Section 94(1) stands undisturbed as also the obligation or liability visited on the appellant by reason only of continuation of the proceedings under Section 94(7). The invocation of the said suo motu powers under Section 94(7) cannot be wished away on the mere repeal of the KVAT Act. 5. The power of suo motu revision, conferred on the Commissioner, is a valuable right conferred on the State and its Department to interfere with any orders, prejudicial to the revenue, passed under Section 94(2), by an Authority constituted under Section 94(1). It is the appellant who invoked Section 94 and having obtained an order in their favour from the Authority nominated; they cannot argue for the consequential powers, that too the valuable visitorial jurisdiction, under the very same provision to be interdicted, for reason only of repeal of the enactment, especially when the rights, privileges, obligation or liability incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has found that the items, which were the subject matter of clarification, would not be covered under the said entry and would be taxable at the rate applicable for residuary items. We do not think that any contention raised on the Commissioner having acted on the dictates of the audit party, can be sustained. It was perfectly in order for the Commissioner to have noticed the objection raised by the audit party and invoked the suo motu powers and after hearing the parties found the taxation to be permissible under the residuary entry. It is trite that the suo motu powers can be invoked by oneself or on an intimation of an irregularity, brought to the notice of the Authority, conferred with such powers, by any person concerned with the subject matter of the issue. 9. Now we come to the issue as to the rate of tax to be applied on containers, trays and bowls manufactured by the appellant and sold for the purpose of packing food articles and to be disposed of after use ie : after consumption of the food packed in such containers, trays and bowls as distinguished from cups. Essentially the contention raised by the learned counsel for the appellant is that Entry 174 of Third Schedule-Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gain in 2016 by Finance Act, Sl.No.3 was substituted and as of now Sl.No.3 and 3A reads as hereunder: "3. all types of plastic carry bags including nonwoven poly propylene bags. 3A. disposable plates,tumblers, cups and leaves made of plastic including styrofoam and styrofoam sheets". In addition to the aforesaid amendments it is also relevant to notice the amendment made to Entry 174 under List A to Third Schedule which was as hereunder: "other than those specifically mentioned in serial No. (3) of clause 'a' of subsection 1 of section 6." The contention seems to be that only those which have been specifically excluded by the amendment to Entry 174 could be taxed under Section 6 and all other articles under the HSN Heading is exempted as a packing material. 11. It is trite that the legislature of the State has the power to tax differently even those commodities coming under a particular Entry under the Customs or Excise Tariff Act. In this context the Rules of Interpretation as available under the KVAT Act assumes significance which have been noticed by the Commissioner in the impugned order and we find it appropriate to extract the following: "HSN Numbers are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r plastics: kg. 10% -- 3923 29 10 Of poly (vinyl chloride) kg. 10% -- 3923 29 90 Other kg. 10% -- 3923 30 Carboys, bottles, flasks and similar articles: 3923 30 10 Insulated ware kg. 10% - 3923 30 90 Other kg. 10% -- 3923 40 00 Spools, cops, bobbins and similar supports kg. 10% -- 3923 50 Stoppers, lids, caps and other closures: 3923 50 10 Caps and closures for bottles kg. 10% -- 3923 50 90 Other kg. 10% - 3923 90 Other : 3923 90 10 Insulated ware kg. 10% - 3923 90 20 Aseptic bags kg. 10% -- 3923 90 90 Other kg. 10% -- 13. As against this; in Entry 174 of the Third Schedule-List A of the KVAT Act, the main Heading is not accompanied or aligned with an HSN number. It has also to be observed that the specific goods which are placed before us for consideration being containers, trays and bowls made of plastic are not included either under Sl.No.3 or 3A of the table under Section 6(1) of the KVAT Act. The specific articles dealt with here, ie: containers, trays and bowls as also cups; the latter of which are taxable at rates seen from the Table under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Entry 174 is not aligned to the four digit HSN Code and the eight digit HSN Code under 3923.90.90 is not aligned against any of the sub-entries under Entry 174. 16. We also find that the Commissioner has correctly found that the said goods do not come under either Sl.No.3 or 3A. We have extracted those goods which come under Sl.No.3 or 3A herein above, which do not include either of the goods now arising for our consideration in the appeal; being containers, trays and bowls. The said commodities do not also fall under Entry 174 packing materials and hence necessarily the same has to be taxed under the residuary entry of SRO 82/2006. 17. The learned Counsel for the appellant then submitted that the impugned order can have only prospective application going by the binding precedent in Sreedhareeyam Ayurvedic Medicines (P) Ltd. & Ors. State of Kerala & Ors. [(2011) 19 KTR 561 (Ker.). We are convinced that the said judgment has no application to the above case as the provision exists now. Therein, there was an earlier clarification which was overruled by a later one and retrospectivity given to the later one. It is in such circumstance that the Division Bench of this Court found th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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