Imperial Spirits Ltd v. State of Kerala

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: S. V. Bhatti
Basant Balaji
Judgment Date: 2022-10-10
Court Decision / Holding: Revisions dismissed.
Final Disposition: Revisions dismissed

Parties to the Case

Appellants / Petitioners

Imperial Spirits Ltd

Respondents

State of Kerala

Legal Representation & Advocates

Counsels for Petitioners

• Harisankar V. Menon
• Meera V. Menon

Counsels for Respondents

• V. K. Shamsudheen

Case Synopsis & Summary

Imperial Spirits Ltd v State of Kerala concerns two OT Revision petitions challenging orders of the KVAT Appellate Tribunal Kozhikode (TA(VAT) Nos. 577/2018 and 475/2018) for the assessment year 2011-12. The petitioner dealer contends that the tax levied on the estimated value of de-mineralized water and the inclusion of interest receipts of Rs. 1,86,74,437 as part of turnover are illegal under the KVAT Act, 2003. The revisions argue that the ground relating to interest income, which was not urged before the Tribunal, is a pure question of law that merits consideration by this Court, particularly since the matter had been remitted to the Assessing Officer for a modified order. The respondent State counters that the revisions are filed under Section 63 of the KVAT Act and that this Court’s jurisdiction at the first instance is limited to cases where the Appellate Tribunal has decided erroneously or failed to decide a question of law; the ground was not raised before the Tribunal, and the cited precedents (Deputy Commissioner of Sales Tax v Kerala Distilleries, Bishamber Singh Layaq Ram, and A. Baiju) mandate dismissal for non-raising. The High Court addresses the substantial question of law and relies on these precedents to hold that the revisions cannot be entertained; accordingly, the revisions are dismissed. The decision clarifies the narrow scope of revision under KVAT and the necessity of raising all legal questions before the Tribunal.

Provisions of Law Cited

KVAT Act, 2003, Section 63KVAT Act, 2003, Section 60(4)KVAT Act, 2003, Section 60(7)KVAT Act, 2003, Section 59(4)

Legal Doctrines & Maxims

Jurisdiction in revision is limited to questions of law; revisions cannot be entertained for questions not raised before the Appellate Tribunal.

Submissions & Arguments

Contentions of Appellants / Petitioners

The applicant contends that imputing tax on interest income and including it in turnover is per se illegal under the KVAT Act. It was not argued before the Appellate Tribunal, but the petitioner argues that the matter is a pure question of law and the High Court should permit raising it, since the assessment was remitted to the Assessing Officer for a modified order. The petitioner also seeks a direction to reassess the interest income and finalize the assessment, arguing that the grounds are legally debatable and require determination by this Court.

Contentions of Respondents

The respondent argues that the revision under Section 63 KVAT Act is permissible only when the Appellate Tribunal has decided erroneously or failed to decide a question of law. The ground raised was not put before the Tribunal, and cited precedents (Deputy Commissioner of Sales Tax v Kerala Distilleries, Bishamber Singh Layaq Ram, A. Baiju) require dismissal for non-raising. The Tribunal’s decision on imposition of tax on interest income and treatment as turnover is to be applied as per the statutory scheme.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Kerala Distilleries & Allied Products (P) Ltd	1992 SCC Online Ker.490	Positive	Used to support the principle that revision is permissible only if the question of law was raised before the Tribunal; non-raising grounds lead to dismissal.
Commissioner of Sales Tax, U.P v. M/s. Bishamber Singh Layaq Ram	(1981) 2 SCC 27	Positive	Cited to reinforce requirement that questions of law must be raised before the Tribunal for revision.
A. Baiju v. State of Kerala	Manu/Ke/0403/2007	Positive	Cited as part of jurisprudence limiting revisions when grounds are not raised before the Tribunal.

Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE S.V.BHATTI** ## **&** ## **THE HONOURABLE MR.JUSTICE BASANT BALAJI** **MONDAY, THE 10[TH] DAY OF OCTOBER 2022 / 18TH ASWINA, 1944** **OT.REV NO. 77 OF 2021** **AGAINST THE ORDER IN TAVAT 577/2018 OF KVAT/AGRL.I.T. & SALES TAX** ## **ADDITIONAL BENCH, KOZHIKODE** ## **REVISION PETITIONER:** IMPERIAL SPIRITS LTD MANIYAKKARANCHALLA, GOVINDAPURAM, CHITTUR, PALAKKAD DISTRICT, REPRESENTED BY ITS DIRECTOR, VISWANATHAN SATISH BY ADVS. HARISANKAR V. MENON MEERA V.MENON ## **RESPONDENT:** STATE OF KERALA REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM - 695 001. ## **OTHER PRESENT:** SR GP V.K. SHAMSUDHEEN THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 10.10.2022, ALONG WITH OT.Rev.78/2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.T.REV. Nos.77 & 78 of 2021 -2- ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE S.V.BHATTI** **&** ## **THE HONOURABLE MR.JUSTICE BASANT BALAJI** **MONDAY, THE 10[TH] DAY OF OCTOBER 2022 / 18TH ASWINA, 1944** ## **OT.REV NO. 78 OF 2021** **AGAINST THE ORDER IN TAVAT 475/2018 OF KVAT/AGRL.I.T. & SALES TAX** ## **ADDITIONAL BENCH, KOZHIKODE** ## **REVISION PETITIONER:** **M/S. IMPERIAL SPIRITS LIMITED., MANIYAKKARANCHALLA, GOVINDAPURAM, CHITTUR, PALAKKAD DISTRICT, REPRESENTED BY ITS DIRECTOR, VISWANANTHAN SATISH.** **BY ADVS. HARISANKAR V. MENON MEERA V.MENON** **RESPONDENT:** **STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695001.** **BY ADV GOVERNMENT PLEADER, SR GP VK SHAMSUDHEEN** **THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 10.10.2022, ALONG WITH OT.Rev.77/2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** O.T.REV. Nos.77 & 78 of 2021 -3- ## **O R D E R** **[OT.Rev Nos.77/2021, 78/2021]** ## S. V. Bhatti, J. Heard learned counsel Meera V. Menon for the petitioner and Mr. V. K Shamsudheen learned Sr. Government Pleader for the respondent. 2. M/s. Imperial Spirits Ltd is the petitioner in these two revisions. The revisions are directed against the common orders dated 03.02.2021 in TA (VAT) Nos.577/2018 and 475/2018 of the KVAT Appellate Tribunal, Kozhikode. The revisions relate to the assessment years 2011-12. The dealer challenges the appellate order (Deputy Commissioner) to the extent of imposition of tax on the estimated value of de-mineralized water. The tribunal accepted the case of the dealer on the imposition of tax on the estimated value of de-mineralized water. The dealer raises the following substantial question of law in the Appels: Whether on the facts and circumstances of the case, is not the O.T.REV. Nos.77 & 78 of 2021 -4- imposition of tax n the interest receipts of Rs.1,86,74,437/- illegal, arbitrary and unjustified as falling outside the purview of the KVAT Act, 2003? 3. Adv. Meera V Menon argues that the imposition of tax on interest income and inclusion as turnover is _per se_ illegal. The dealer under advice or mistaken impression did not raise a ground before the tribunal. The ground now raised before this Court is a pure question of law and the dealer may be permitted to raise ground since the matter is remitted to the Assessing Officer for issuing modified order. The assessing officer may be directed to reassess the interest income and finalize the assessment. 4. _Per contra_ Mr. Shamsudheen argues that the revisions are filed under Section 63 of the KVAT Act, which reads as follows: **“63. Revision by the High Court** .-(1) Any officer empowered by the Government in this behalf or any other person objecting to an order passed by Appellate Tribunal under sub-section (4) or subsection (7) of Section 60, or any person objecting to an order passed by the Commissioner under sub-section (4) of Section 59 may, within ninety days from the date on which a copy of such order is served on him in the manner prescribed, prefer a petition to the High Court on the ground that the Appellate Tribunal or the Commissioner has either decided erroneously or failed to O.T.REV. Nos.77 & 78 of 2021 -5- decide any question of law: The jurisdiction of this Court at the first instance could be availed only if the Appellate Tribunal has either decided erroneously or failed to decide a question of law. The nature of the grievance argued is not a question of law at all. Secondly, without specifically raising this ground before the Tribunal the dealer is not permitted both by the prescription of Section 63 of the KVAT act and the judgments reported in **Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Kerala Distilleries & Allied Products (P) Ltd[1] , Commissioner of Sales Tax, U.P v. M/s. Bishamber Singh Layaq Ram[2] , A. Baiju v. State of Kerala[3]** to maintain the revisions. We have taken note of the arguments and perused the order under revisions. The question formulated for our consideration deals with interest income included as > 1 1992 SCC Online Ker.490 2 (1981) 2 SCC 27 3 Manu/Ke/0403/2007 O.T.REV. Nos.77 & 78 of 2021 -6- turnover. The preponderance of the judicial opinion is as follows: ## Kerala Distilleries & Allied Products (P) Ltd case “15. On hearing the rival pleas submitted before us, we are of the view that the plea of the assessee should succeed. We should bear in mind that in disposing of these revisions, the jurisdiction of this Court is limited, in that, interference is permissible only if the Tribunal has decided erroneously or failed to decide “any question of law”. In other words, any question of law now put forward before - this Court should have been specifically advanced before the Tribunal and it should have been either decided erroneously or the Tribunal should have failed to decide the question of law raised before it. (Emphasis added) From the binding precedent, it is clear that this Court does not entertain the revision on a question not raised or canvassed before the Tribunal. By following the principle laid down in the judgments referred to above, the revisions fail and are accordingly dismissed. **S.V.BHATTI JUDGE** **BASANT BALAJI JUDGE** JS O.T.REV. Nos.77 & 78 of 2021 -7- ## **APPENDIX OF OT.REV 78/2021** ## **PETITIONER ANNEXURES** ## **Annexure A** **COPY OF NOTICE ISSUED BY THE ASSISTANT COMMISSIONER (ASSESSMENT), SPECIAL CIRCLE, PALAKKAD DATED 12/08/2016.** ## **Annexure B** **A COPY OF REPLY SUBMITTED BY THE REVISION PETITIONER BEFORE THE ASSISTANT COMMISSIONER (ASSESSMENT), SPECIAL CIRCLE, PALAKKAD DATED 26/08/2016.** **Annexure C COPY OF DEBIT NOTE OF THE REVISION PETITIONER DATED 31/03/2012.** **Annexure D** **COPY OF ASSESSMENT ORDER ISSUED BY THE ASSISTANT COMMISSIONER, SPECIAL CIRCLE, PALAKKAD DATED 31/08/2016.** - **Annexure E COPY OF APPEAL FILED BY THE REVISION PETITIONER BEFORE THE DEPUTY COMMISSIONER (APPEALS), ERNAKULAM DATED 21/09/2016.** **Annexure F COPY OF ORDER ISSUED BY THE DEPUTY COMMISSIONER (APPEALS), PALAKKAD DATED 02/03/2017.** **Annexure G COPY OF SECOND APPEAL FILED BY THE REVISION PETITIONER BEFORE THE APPELLATE TRIBUNAL, PALAKKAD DATED 19/06/2017.** **Annexure H** **COPY OF ORDER IN TA(VAT) NO 475/2018 OF THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, KOZHICODE.** O.T.REV. Nos.77 & 78 of 2021 -8- ## **APPENDIX OF OT.REV 77/2021** ## **PETITIONER ANNEXURES** ## **Annexure A** **COPY OF ORDER ISSUED BY THE ASST. COMMISSIONER (ASSESSMENT), COMMERCIAL TAXES PALAKKAD.** **Annexure B COPY OF ORDER ISSUED BY THE DEPUTY COMMISSIONER (APPEALS), PALAKKAD.** ## **Annexure C** **COPY OF ORDER IN TA (VAT) NO.577/2018 OF THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, KOZHIKODE.**