High Court of KeralaDivision Bench2022-10-10Revisions dismissed; High Court upheld the Trib...

Imperial Spirits Ltd. v. State of Kerala (OT.Rev Nos. 77/2021 & 78/2021)

Case / Petition Number:OT.Rev Nos.77/2021 & 78/2021

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: S. V. Bhatti
Basant Balaji
Judgment Date: 2022-10-10
Court Decision / Holding: The High Court dismissed the revisions, holding that the petitions cannot be entertained for questions not raised before the KVAT Appellate Tribunal and that the jurisdiction under Section 63 is limited to questions of law decided or not decided by the Tribunal. Hence, the revisions fail and are dismissed, upholding the Tribunal’s orders.
Final Disposition: Revisions dismissed; High Court upheld the Tribunal’s orders and declined to entertain questions not raised before the Tribunal under Section 63 KVAT Act.

Parties to the Case

Appellants / Petitioners

Imperial Spirits Ltd., ManiyakkaranChalla, Govindapuram, Chittur, Palakkad District, represented by its Director, Viswanathan Satish

Respondents

State of Kerala, represented by its Secretary, Taxes Department, Govt. Secretariat, Thiruvananthapuram - 695001

Legal Representation & Advocates

Counsels for Petitioners

• Adv. Harisankar V. Menon
• Adv. Meera V. Menon

Counsels for Respondents

• Sr GP V. K. Shamsudheen

Case Synopsis & Summary

The two connected O.T.Revisions (Nos. 77/2021 and 78/2021) were heard by a Division Bench of the Kerala High Court (S. V. Bhatti, J., and Basant Balaji, J.) arising from common orders dated 03.02.2021 of the KVAT Appellate Tribunal, Kozhikode, in two assessments for the year 2011-12. Imperial Spirits Ltd challenged the Tribunal’s tax decisions, including the imposition of tax on the estimated value of de-mineralized water and the inclusion of interest receipts (Rs. 1,86,74,437/-) in turnover. The petitioner contended that taxation of interest income and its inclusion as turnover is illegal under the KVAT Act, 2003. The State defended the revisions, arguing that Section 63 permits the High Court to entertain revisions only when the Appellate Tribunal or Commissioner has decided erroneously or failed to decide a question of law, and that such grounds should have been raised before the Tribunal. While the petitioner argued that the ground is a pure question of law and should be entertainable due to remittance, the Court examined the relevant authorities, notably the binding principle established in Kerala Distilleries & Allied Products (P) Ltd, and related precedents, and held that revisions cannot be entertained for questions not raised before the Tribunal. Consequently, the revisions were dismissed. The order reflects a cautionary stance on revisiting questions of law outside the Tribunal’s record, reinforcing the limited revisional jurisdiction under KVAT.

Provisions of Law Cited

KVAT Act, 2003, Section 63 (Revision by the High Court)KVAT Act, 2003, Section 60(4) and Section 60(7)KVAT Act, 2003, Section 59(4)

Legal Doctrines & Maxims

Interference by the High Court in revision under KVAT Act is permissible only if the Tribunal has decided erroneously or failed to decide any question of law.
Jurisdiction of the High Court in revision is limited and depends on questions of law being raised before the Tribunal.
Binding precedent from Kerala Distilleries & Allied Products (P) Ltd establishing the principle that revisions cannot be entertained for questions not raised before the Tribunal.

Submissions & Arguments

Contentions of Appellants / Petitioners

Adv. Meera V. Menon submitted that imposing tax on interest income and treating it as turnover falls outside the scope of the KVAT Act and is per se illegal. The petitioner argued that the issue of taxing interest and inclusion in turnover was not properly raised before the Tribunal, but urged that this ground constitutes a pure question of law and should be entertained by the High Court since the matter could be remitted for a modified assessment and re-adjudication.

Contentions of Respondents

Sr GP V. K. Shamsudheen contended that the revisions are governed by Section 63, with jurisdiction to entertain only when the Tribunal or Commissioner has decided erroneously or failed to decide a question of law. He argued that the ground raised is not a question of law and that the petitioner did not raise it before the Tribunal, citing precedents such as Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) Ernakulam v. Kerala Distilleries & Allied Products (P) Ltd, and others to maintain the revisions.

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	Cited as binding precedent to support the principle that revisionary jurisdiction under KVAT Act is limited to questions of law raised before the Tribunal; the present court follows this framework.
Commissioner of Sales Tax, U.P vs M/s. Bishamber Singh Layaq Ram	(1981) 2 SCC 27	Positive	Cited in the context of judgments governing revisionary jurisdiction and the requirement that questions of law be raised before the Tribunal.
A. Baiju v. State of Kerala	Manu/Ke/0403/2007	Positive	Cited as part of the line of authorities reinforcing the need to raise questions of law before the Tribunal for revisionary jurisdiction.

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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.**