ACC Limited (formerly Associated Cement Co. Ltd.) v. State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS TUESDAY, THE 16TH FEBRUARY 2010 / 27TH MAGHA 1931 ST.Rev..Petn. No. 13 of 2010() -----------------------TA.312/2008 of S.T.A.TRIBUNAL,ADDL.BENCH,KZD. .................... PETITIONER: ------------------------------- ACC LIMITED, (FORMERLY KNOWN AS ASSOCIATED CEMENT CO.LTD.) KAMRAJ ROAD, RED FIELDS, COIMBATORE. BY SRI. JOSEPH VELAPPILLY SRI.M.PATHROSE MATTHAI, SRI.SAJI VARGHESE SMT.MARIAM MATHAI SRI.RAMESH CHERIAN JOHN SRI.P.THOMAS GEEVERGHESE RESPONDENT: --------------- STATE OF KERALA, REP.BY JOINT COMMISSIONER (LAW) IN CHARGE COMMERCIAL TAXES, ERNAKULAM. BY GOVT. PLEADER, SRI. MUHAMMED RAFFIQUE THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 16/02/2010, ALONG WITH STRV NO.14 OF 2010. THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **K.M. JOSEPH & M.L.JOSEPH FRANCIS JJ.,** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - Rev. Petn. Nos. 13 and 14 of 2010** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - -** **Dated this the 16[th] day of February, 2010.** ## **JUDGMENT** **Joseph J.,** These Revision Petitions are filed by the same party (M/s. A.C. C Ltd., Coimbatore). 2. Briefly put, it is necessary to refer to the facts. S.T. Revision petition No.13 of 2010 relates to the year 1998 - 1999 and S.T. Revision petition No.14 of 2010 relates to the year 1999-2000. The petitioner permitted the use of the name of “A.C.C.” for the cement manufactured by M/s.Cochin Cements Ltd. It is the further case that the petitioner had also levied fee on the strength of an agreement from M/s. Cochin Cements Ltd. for the use of petitioner's Rev. Petn. Nos. 13 & 14/ 2010 2 trade name. According to the petitioner, M/s.A.C.C Ltd should be treated as the brand name owner. It is therefore the case of the petitioner that M/s.Cochin Cements Ltd which has sold portion of its turnover is to be further treated as the brand holder and therefore the sale by the petitioner cannot be rendered exigible under Section 5(2) as its sale is the second sale and it is not otherwise covered by the provisions of Section 5(2). 3. We heard Shri. Joseph Vellapilly, learned Senior counsel for the petitioner and the learned Government Pleader. 4. It is the petitioner's case that there is a distinction between brand holder and brand owner. While the petitioner may be the brand owner, M/s.Cochin Cements Ltd is the brand holder. M/s. Cochin Cements Ltd is not obliged to sell the entire stock to the petitioner. The fact that considerable portion of sales turnover of M/s.Cochin Cements Ltd is in favour of the petitioner cannot determine the legal question emanating from Section 5(2). Further Rev. Petn. Nos. 13 & 14/ 2010 3 the contention of the petitioner is that the petitioner has been mulcted with liability to pay the interest under Section 23(3A) of the Act. It is submitted that the case of the revenue was that the petitioner has to pay tax interest under Section 23(3). The party proceeded on this basis before the Tribunal. The Tribunal found that interest could not be levied under Section 23(3), but it has been decided to impose interest under Section 23(3A). The case of the petitioner is that it is impermissible for two reasons. Firstly it is contended that there is no notice issued under Section 23(3A). Secondly it is the case of the petitioner that having regard to words employed in Section 23(3A), there is no scope for invoking Section 23(3A) and to impose interest under Section 23(3A). It is pointed out that the so called turnover relating to the sale of M/s.Cochin Cements Ltd has been included in the returns and therefore the elements necessary for invoking Section 23(3A) are not present. 5. Per contra, the Government pleader would point out that the Rev. Petn. Nos. 13 & 14/ 2010 4 alleged question of law as purported to be raised on the basis of the provisions of Section 5(2) and the liability to pay interest under Section 23(3A) are covered against the petitioner. He would submit that issues which are sought to be raised are concluded by judgment of this court in S.T. Revsn. petitions Nos. 76 of 2008 and 81 of 2008. The learned Government pleader would raise two arguments. Firstly he would contend that a Division Bench of this court doubted the correctness of the judgment in **P.K. Damodaran v. State of Kerala** (2004(12) KTR 133) and was referred the matter to a larger bench. A full bench of this court heard the matter and proceeded to overrule **P.K. Damodaran v. State of Kerala'** s case and has declared that the amendment to Section 23(3A) of the Act is clarificatory and therefore the interest levied on these cases is in accordance with law and does not warrant any interference. 6. Sri.Joseph Vellapilly, learned senior counsel would submit that it may be true that there is a judgment between the parties at the Rev. Petn. Nos. 13 & 14/ 2010 5 stage of provisional assessment in relation to the question under Section 5(2) of the Act, but he would submit that actually the court has not noted the crucial aspect present in the facts of the case consequent to the terms of the agreement between the parties. Under the terms of the agreement, the petitioner who is the brand owner has duly permitted M/s. Cochin Cements Ltd to use the brand name. Consequently it is the contention that M/s.Cochin Cements Ltd would become the brand holder. He would point out that this aspect has not been specifically dealt with by the Bench of this court in S.T. Rev.Petn. Nos. 76 and 81 of 2008. He would point out that in terms of the agreement, it is pointed out that there is no obligation cast on the parties to sell and purchase respectively the whole stock. 7. The fact that in a given case, a good portion of the turnover is sold actually to the petitioner would not make a difference in the law as contained in Section 5(2). He would also submit that the judgment also requires re - consideration, as it cannot be treated as Rev. Petn. Nos. 13 & 14/ 2010 6 laying down the correct principle. As regards the question of the interest also, he would reiterate that there is no notice issued and that Section 23(3A) is inapplicable. 8. The learned Government pleader would point out that remedy of the petitioner lies in seeking review. He would submit that a perusal of the judgment would show that the petitioner is bound by the judgment. He would rely on the following paragraph of the judgment: “In any case since in this case we have decided the issue on merit, the assessing officer will make regular assessment for 1998-99 in the place of the provisional assessment cancelled by the Tribunal. The ST Revisions are allowed vacating the orders of the Tribunal and restoring the regular assessment for 19992000 and with direction to the assessing officer to make regular assessment for 1998-99, if not already done.” 9. In view of the principles laid down in the above judgment, Rev. Petn. Nos. 13 & 14/ 2010 7 it may not be appropriate for us to consider the question and to treat the petitioner as having raised unanswered questions of law for our consideration. We would think that the petitioner is to be treated as bound by the judgment in ST. Rev.Nos. 76 and 81 of 2008. The learned Senior counsel for the petitioner submits that the said judgment is challenged before the Apex Court. In the circumstances of the case, it may not be appropriate for us to go into the question as to whether the judgment is correct or not. 10. As far as the second question of law is concerned which is pressed before us, namely the correctness of levying interest under Section 23(3A) is concerned we take notice of the judgment of Full Bench of this court in S.T. Revn. No. 90 of 2009,( **State of Kerala v. Western India Cosmetic and Health Products Ltd.).** Therein this court has taken a view that the judgment in P.K. Damodaran's case, (138 STC 442) is incorrectly decided and that interest is payable under Section 23(3A) of the KGST Act as a compensatory measure. Rev. Petn. Nos. 13 & 14/ 2010 8 11. We also take note of the judgment of Division Bench of this court in **Chandramani Traders v. State of Kerala (** 2009 (16) VST 294 Kerala). This was the judgment, where the question was the liability to pay interest under Section 23(3). The learned Government Pleader also pointed out that the in the notice issued after the assessment, there is no mention therein as to the provisions. Accordingly these revision petitions are dismissed. ## **K.M. JOSEPH, JUDGE** ## **M. L. JOSEPH FRANCIS, JUDGE.** dl/