Best Buy Electronics & Home Appliances (Defunct) v. State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU WEDNESDAY, THE 25TH DAY OF MAY 2016/4TH JYAISHTA, 1938 OT.Rev.No. 102 of 2010 AGAINST THE ORDER IN T.A.(VAT)No.396/2009 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM, DATED 30-03-2010 ## REVISION PETITIONER/APPELLANT/ASSESSEE: M/S. BEST BUY ELECTRONICS & HOME APPLIANCES, (DEFUNCT), KARAMANA, THIRUVANANTHAPURAM. BY ADVS.DR.K.B. MOHAMEDKUTTY (SR) SRI.K.M.FIROZ ## RESPONDENT/RESPONDENT/REVENUE: THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. R BY SR. GOVERNMENT PLEADER SMT.SHOBA ANNAMMA EAPEN THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 25-05-2016, ALONG WITH OTRV. 2/2011 & WPC. 20167/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: O.T.Rev.No.102 of 2010 ## APPENDIX ## ANNEXURES: ANNEXURE A: TRUE COPY OF THE ASSESSMENT ORDER DATED 30.4.2007. ANNEXURE B: TRUE COPY OF THE FIRST APPELLATE ORDER DATED 7.7.2009. ANNEXURE C: TRUE COPY OF THE APPELLATE TRIBUNAL ORDER DATED 30.3.2010. // TRUE COPY // P.A. TO JUDGE ## **ANTONY DOMINIC & DAMA SESHADRI NAIDU, JJ.** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -** **O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011** **- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 25[th] day of May, 2016** ## **ORDER/JUDGMENT** ## _**Antony Dominic, J.**_ The petitioner in these revision petitions and the writ petition is a dealer in electronic goods and home appliances. They commenced their business from 17.8.2006. It is stated that they remitted the registration fee under the KVAT Act by chalan dated 2.8.2006. Admittedly, they submitted the application for registration only on 28.9.2006 and registration was granted on 29.9.2006. During the month of August, the petitioner effected local purchase for Rs.56,04,375/- and claimed Rs.8,12,021.96 being input tax credit towards output tax paid for the purchases in August 2006. Similarly, for the month of September 2006 they effected local purchase for Rs.16,69,236.15 and claimed input tax credit for Rs.2,67,424/-. The claims were rejected by the Assessing Officer and the orders were confirmed by the First Appellate O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 2 : Authority and the Tribunal. It is aggrieved by these orders, the revision petitions are filed. 2. In W.P.(C)20167/11, the petitioner mainly challenges Section 15B of the KVAT Act to the extent it allegedly discriminates the dealers who had taken registration voluntarily prior to 15.12.2007. Consequential reliefs are also sought for. 3. We heard the Senior Counsel for the petitioner and the learned Government Pleader appearing for the respondent. 4. In so far as the W.P.(C)No.20167/11 is concerned, what is raised for our consideration is the validity of Section 15B of the KVAT Act. The said provision reads thus: _-“15B._ _**Special drive for registration** Notwithstanding anything contained anywhere in this Act, dealers who had voluntarily applied for registration under the Act for the period from 15[th] December, 2007 to 31[st] March, 2008 would be entitled to --_ _(a) get registration with effect from the date of commencement of business irrespective of the date of application._ O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 3 : _(b) claim input tax credit on their purchases covered under bills/invoices of registered dealers within the State from the date of commencement of business; and_ _(c) pay tax under sub-section (5) of section 6, subject to eligibility, or pay tax under Section 8 for the relevant years subject to eligibility and filling application for compounding along with the registration application: Provided that such dealers shall be liable to pay interest on all dues and will not be entitled for any refund relating to the period prior to filing of registration application.”_ 5. The reading of this provision shows that notwithstanding the provisions of the Act, dealers who had voluntarily applied for registration under the Act for the period from 15.12.2007 to 31.3.2008 would be entitled to the benefits provided under Clause a, b and c therein, which includes claim for input tax credit. 6. Section 11 of the Act provides that the benefit of input tax credit shall be available only to registered dealers. Despite the above, by Section 15B, a beneficial provision, was introduced into the Act. It is complained that while doing so, the legislature has confined the benefit only to those unregistered dealers who applied O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 4 : for registration during the period 15.12.2007 to 31.3.2008. The complaint here is that in the process, dealers like the petitioner are discriminated and thus Article 14 of the Constitution of India is violated. 7. Having considered the submission made we are unable to accept the same. According to us, while introducing beneficial provisions such as Section 15B, the legislature is fully competent to introduce cut off dates confining the benefit of such provisions. Secondly, the benefit of provision being available only to unregistered dealers and the petitioner being a registered dealer, cannot complain of discrimination as they belong to a class different from unregistered dealers. This very view has been taken by this court while upholding the validity of Section 15B in the judgment in _Vijaya Trading Company v. Commercial Tax Officer and others [(2013) 57 VHT 481]_ where it was held that: _“3. A reading of the Section shows that notwithstanding the aforesaid provisions of the Act, dealers who had_ O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 5 : _voluntarily applied for registration under the Act for the period from 15.12.2007 to 31.3.2008 would be entitled to claim input tax credit on their purchasers covered under bills/invoices of registered dealers within the State, from the date of commencement of their business. It is evident that this section applies only to dealers who were not registered under the Act and had voluntarily applied for registration during the period specified in the Section._ _4. To plead discrimination, a dealer should be similarly situated to those dealers who are eligible for the benefit of the Section. Since the section applies only to unregistered dealers, only unregistered dealers can claim to be similarly situated to the beneficiaries of the Section. In so far as the petitioner is concerned, they got themselves registration with effect from 28.12.2006. Therefore, when Section 15B was introduced by the Kerala Finance Act, 2008 with effect from 1.4.2008, petitioner was registered dealer and hence is not one similarly situated to dealers who are eligible for the benefit of the section. Consequently, the petitioner cannot plead that they are similarly situated dealers and cannot complaint of discrimination or violation of Article 14 of the Constitution. If that be so, the case of discrimination canvassed by the petitioner has to be rejected._ _Even otherwise when beneficial provisions are introduced in a statute, legislature is entitled to specify cut of dates limiting its operation. Such dates will have various implication including financial. Therefore, unless it is shown by the person who impugn the provision that the cut of date indicated in the provision is arbitrary, a court_ O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 6 : _will not be sought to interfere with such a fixation of the cut of dates. In this case, apart from the pleading in the writ petition there is absolutely no reliable material substantiating the plea that the date fixed is arbitrary. That apart, I am also inclined to think that the legislature never intended that the section should result in a situation that on the introduction of the provision, issues which are settled and closed under the KVAT Act, should be re-opened. For all these reasons, I do not find any merit in the writ petition and the writ petition is dismissed.”_ 8. Therefore, W.P.(C)20167/11 is only to be dismissed and we do so. 9. In so far as the revision petitions are concerned, the short question that is raised for consideration of this court is whether the respondents have committed any illegality in rejecting the input tax credit claimed by the petitioner for August and September 2006. As we have already seen, based on the application made on 28.9.2006 for registration under the Act the petitioner was granted registration on 29.9.2006. In view of Circular No.48/06 issued by the Commissioner of Commercial Taxes, the registration took effect O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 7 : from date of application, namely, 28.9.2006. Therefore, as at the time when the purchases in question were made and the output tax was paid, the petitioner was not a registered dealer. 10. The claim of such an unregistered dealer for the benefit of input tax credit, has to be viewed only in the light of Section 11 of the KVAT Act. As is evident from Section 11(1) of the Act itself, the benefit of input tax credit is available only to registered dealers. Therefore, since the petitioner was an unregistered dealer at the relevant point of time they could not have claimed the benefit of Section 11(1) of the Act. 11. The learned counsel for the petitioner contended that registration granted is for an year and, therefore, during the assessment year in question since the petitioner was a dealer registered under the Act, they ought not have been denied the benefit of Section 11. We are unable to agree. According to us, this claim has to be appreciated in the light of the express wording of O.T.R.Nos.102/2010, 2/2011 & W.P.(C)No.20167 of 2011 : 8 : Section 11, which does not admit any doubt in the matter. Therefore, this plea now raised also cannot be accepted. For these reasons, we are unable to find any illegality in the orders impugned in these petitions. Revision petitions fail and are accordingly dismissed. **ANTONY DOMINIC JUDGE** **DAMA SESHADRI NAIDU JUDGE** _jes_