Jyothy Laboratories Limited v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** ## **&** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **THURSDAY, THE 12TH DAY OF MARCH 2020 / 22ND PHALGUNA, 1941** ## **WA.No.2235 OF 2019** **AGAINST THE ORDER/JUDGMENT IN WP(C) 20748/2017(P) OF HIGH COURT OF KERALA** ## **APPELLANT:** ## **M/S JYOTHY LABORATORIES LIMITED** **KANDANASEERY P.O.THRISSUR DISTRICT, KERALA-680 102. REPRESENTED BY ITS AUTHORIZED SIGNATORY SRI.T.V. THILAKAN. SENIOR OFFICER ACCOUNTS THAZHISSERY HOUSE, KANDANASSERY P.O.THRISSUR DISTRICT-680 102.** ## **BY ADV. SRI.SHAJI THOMAS** ## **RESPONDENT:** - **1 STATE OF KERALA REPRESENTED BY ITS SECRETARY TO FINANCE AND TAX DEPARTMENT, GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM-695 001.** - **2 COMMISSIONER OF COMMERCIAL TAXES, TAX TOWERS, KARAMANA, THIRUVANANTHAPURAM-695 002.** - **3 ASSISTANT COMMISSIONER ASSESSMENT, DEPARTMENT OF COMMERCIAL TAXES, SPECIAL CIRCLE, THRISSUR-680 001.** ## **OTHER PRESENT:** ## **MOHAMMED RAFIQ, SR.GP** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 31-10-2019, THE COURT ON 12-03-2020 DELIVERED THE FOLLOWING:** ## **C.K.ABDUL REHIM, ANU SIVARAMAN,JJ.** **= = = = = = = = = = = = = = =** ## **W.A.No.2235 of 2019** **= = = = = = = = = = = = = = = = Dated this the 12[th] day of March, 2020** ## **JUDGMENT** ## Anu Sivaraman, J. - 1.The appellant, who is a registered dealer under the Kerala Value Added Tax Act, 2006 (hereinafter referred to as the 'Act') has filed this writ appeal being aggrieved by the judgment of the learned single Judge dismissing the writ petition filed by him. - 2.Heard Sri.G.Shivadas, learned Senior Counsel appearing for the appellant and Sri.Mohammed Rafiq, learned Senior Government Pleader appearing for the respondents. - 3.A dispute was raised with regard to the rate of tax applicable to the products of the appellant by name 'Ujala Supreme' and 'Ujala Stiff and Shine'. It is stated that, Value Added Tax was being charged at the rate of 4% and 5% with regard to the products in question. Clarification was sought under Section 94 of the Act by one of the distributors of the appellant as to W.A.No.2235/19 3 the rate of tax applicable to the products. By an order dated 15.10.2007, the Commissioner of Commercial Taxes clarified that, the products were not classified under any of the schedules to the Act and hence falls within the purview of the residuary entry in SRO 82/2006, attracting tax at the rate of 12.5%. 4. The said clarification was challenged by the distributor before this Court in O.T. Appeal No.92/2007, which was dismissed on 6.4.2009. The matter was taken before the Apex Court in an SLP, which was admitted and the appeal was numbered as Civil Appeal No.1440/2010. In the meanwhile, assessment proceedings were completed against the appellant, which were taken up in appeals, which were allowed. The matter was taken up in Tax Revision Petitions filed before this Court by the Revenue, which were allowed in favour of the Revenue through order dated 12.04.2011, following the earlier decisions in the case of M.P.Agencies; and it was held that the products are taxable at the rate of 12.5%. Similar assessment orders for the assessment years 2006-2007, 2008-2009, 2009- W.A.No.2235/19 4 2010 etc. were also issued, which were subjected to appeals and revisions. The matter ultimately reached the Apex Court as Civil Appeals against the orders of this Court in the Tax Revision cases. The appeals preferred by the appellant herein were tagged along with the Civil appeal filed by the distributor, that is; M.P. Agencies and the Civil Appeals were allowed by Exhibit P3 judgment produced along with the writ petition. The Apex Court found that, the products would fall under Entry No.155(8)(d) and 118(5) of list A of the III Schedule to the KVAT Act,2003 attracting tax at the rate of 4% and 5% respectively. However, at paragraphs 40 and 41 of the judgment, it was held by the Apex Court as under:- “40. The High Court, we are disposed to think, has missed the issue in entirety and, therefore, we are obliged to dislodge the impugned judgment and orders. However, if any assesseeappellant has paid the amount of VAT to the State Government, they will not be entitled to get any refund of the said amount. 41.Consequently, the appeals are allowed and the judgment and orders are set aside with the stipulation that none of the assessee-appellant would be entitled to refund. However, in the facts and circumstances of the case, there shall be no order as to costs.” W.A.No.2235/19 5 - 5.Though the appellant filed an application for clarification seeking a modification/clarification as to the claim for refund in respect of the years not covered by the proceedings before the Apex Court, the application for clarification was rejected by order dated 18.1.2016. - 6.It is submitted by the learned senior council for the appellant herein, that the appellant had all along contended that the products were taxable only at the rate of 4% and 5% respectively and that tax had been collected only at such rates. Exhibit P16 series of invoices were produced along with the writ petition in support of the said contention. It was contended that the differential tax had been deposited under protest from its own funds and that as such, the amounts paid in excess of the rates of tax found in Exhibit P3 were liable to be refunded to the appellant. Raising such grounds, the writ petition had been filed. - 7.A detailed counter affidavit was placed on record by the W.A.No.2235/19 6 respondents in the writ petition, stating that the direction contained in Exhibit P3 judgment would clearly show that the appellants are not entitled to refund of the excess tax remitted by them and that in view of the clear language of Exhibit P3 there can be no attempt at any other interpretation of the directions contained in the judgment at the instance of this Court. 8.After considering the contentions advanced, the learned Single Judge held that, the directions with regard to ineligibility for getting refund of tax, mentioned in Exhibit P3 is quite clear. It was further found that, all the aspects placed by the petitioner in the writ petition, including the noncollection of the differential tax from the customers and the issue of payments made during pendency of the Civil Appeal before the Apex Court, were raised by the appellant in the application for clarification filed before the Apex Court, which stood dismissed by Exhibit P4. It was, therefore held that, in view of the clear directions in Exhibit P3 judgment and the refusal on the part of the Apex Court to consider the W.A.No.2235/19 7 application for clarification preferred by the petitioner against the same, this Court would not be justified in directing refund of the amounts which were specifically found be not refundable by the Apex Court. 9.Learned Senior Counsel appearing for the appellant would submit that, Exhibit P4 order dismissing the application for clarification was a non speaking order and as such no question has been decided therein. It is contented, relying on the decisions of the Apex court in Indian Oil Corporation Ltd v. State of Bihar and others [1987 (27) ELT 578 (SC)] and Ahmedabad Manufacturing and Calico Printing Co.Ltd v. Workmen and others [AIR 1981 SC 960], that Exhibit P4 would not stand in the way of this Court exercising jurisdiction under Article 226 of the Constitution of India and from considering the eligibility for refund raised by the appellant on its merits. It is stated that the directions in Exhibit P3 judgment can only be understood to mean that the tax due would not be liable to be refunded. According to the learned Senior Counsel, the “tax due” can only be at the rates as specified in Exhibit P3 W.A.No.2235/19 8 judgment and the differential tax would therefore be liable to be refunded. Further, it is contended that there is absolutely no unjust enrichment involved in the instant case, since the differential tax had never been collected at any point in the distribution network of the products in question. 10.The learned Senior Counsel would also place reliance on a decision of this Court in O.T.Rev.No.117/2017 (authored by one among us, C.K.Abdul Rehim, J.) (order dated 21.8.2019). It is stated that, in the said case filed by one of the dealers of the self same product, this Court had, after referring to Exhibit P3 judgment reported in M.P. Agencies v. State of Kerala [2015 (7) SCC 102 ] held that, if the amount has not been collected by the dealer, without passing on the burden to the customers, there would be no question of unjust enrichment and that as such, the dealer would be entitled for refund of the amounts paid by him. It is contended that the same benefit is liable to be extended to the appellants in this case as well. W.A.No.2235/19 9 11.It is contended that the Apex Court being aware of the position that tax cannot be levied except by authority of law, the embargo in paragraphs 40 and 41 of the judgment can only be against the collection of the “tax due” as found by the Apex Court in the said judgment, The decision of the Apex Court in Gajraj Singh and others v. State of U.P. And others [(2001) 5 SCC 712]. is relied on to contend that, the judgment should be presumed to have been delivered consistently with the provisions of law and departure from statutory provisions cannot be said to have been intended or laid down by the court, unless it is has been so stated specifically. Learned counsel relies on the decision of the Apex Court in Vikram Cement and another v. State of M.P. and others [(2015) 11 SCC 708] . It is contended that, where the entry tax on certain commodities had been reduced, the explanation appended that the amount already paid at higher rate shall not be refunded was found to be constitutionally invalid and in violation of Article 14 of the Constitution of India. The decisions in Corporation Bank v. Saraswathi Abharanshala [2010(18) STR 513 (SC)] and State of Andhra Pradesh v. Concap Capacitors W.A.No.2235/19 10 [2007 (217) ELT 481 SC] are also relied on to contend that tax collected in excess of “tax due” is liable to be refunded. 12.The learned Senior Government Pleader, appearing for the Revenue, would contend that, in the instant case the appellant herein was a party to Exhibit P3 judgment and as such, it would be clearly bound by the directions with regard to nonrefund of the amounts paid as tax, as contained in paragraphs 40 and 41 of Exhibit P3 judgment. It is contended that the finding of the learned single Judge to the effect that, allowing the writ petition would amount to modifying Exhibit P3 judgment, is therefore perfectly in order. It is contended that, any relief granted to the petitioner would have to be at the instance of the Apex Court alone and there can be no direction by this Court in variation to the clear observations in paragraphs 40 and 41 of Exhibit P3. 13.It is further contended that, the decisions relied upon by the learned Senior Counsel for the appellant are with regard to consideration of the issue after an SLP preferred in the Apex W.A.No.2235/19 11 Court had suffered a dismissal without any question of law being decided. It is stated that in the instant case, Exhibit P3 judgment contains a clear embargo as against refund of any amounts paid by the assessee and that as such, there is no question of any summary rejection of the petitioner's claim by the Hon'ble Supreme Court. The appellant submitted an application for clarification pointing out all the aspects raised in the writ petition (as has been extracted by the learned single Judge in the judgment under appeal) which was dismissed by Exhibit P4 order. It is contended that, in case it is the contention of the appellant that Exhibit P4 order does not disclose any reasons and that no finding has been rendered on the merits on the request made by the appellant, it would, at best, be open to the appellant to seek a further clarification before the Apex Court on that point. However, since the application for clarification has been rejected by the Apex Court and the wordings in Exhibit P3 are explicit, it would not be open for this Court to attempt interpretation of the directions of the Apex and to clarify it and to direct a refund. W.A.No.2235/19 12 14. With regard to the judgment in O.T.Rev.No.117/2017, it is specifically contended that, a reading of the said judgment would make it clear that this Court had specifically held that the directions of the Apex Court in Exhibit P3 are applicable only to the assessee/appellants therein and as such, claim of the dealers, who were not before the Apex Court in Exhibit P3, was liable to be considered on merits. Since the appellant herein was an assessee/appellant before the Apex Court in Exhibit P3, it is contended that the claim for refund cannot be entertained at the instance of the appellant herein. 15.We have considered the contentions advanced. The language of paragraphs 40 and 41 of Exhibit P3 judgment of the Apex Court is clear and unambiguous. If any assessee/appellant has paid the amount of tax to the State Government, they will not be entitled to get any refund of the said amount is the observation in paragraph 40. Paragraph 41 records the allowing of the appeals and the setting aside of the judgments and orders with the stipulation that none of the W.A.No.2235/19 13 assessee/appellants would be entitled to refund. The appellant raised a contention that the direction could only mean an embargo against refund of the “tax due”, and that there was no unjust enrichment, since the differential tax has not been collected at any stage of the distribution chain and had approached the Apex Court with an application for clarification. The learned single Judge had considered the averments contained in the said application in considerable detail. The question with regard to payment of tax for periods not covered by Exhibit P3 judgment has also been specifically raised in the application for clarification. It was the said application which was rejected by Exhibit P4. It is thereafter that the writ petition was filed seeking refund on the very same grounds as had been raised before the Apex Court in the application for clarification. 16.In the above view of the matter, we are of the opinion that the dismissal of the writ petition by the learned single Judge on the ground that a further consideration would amount to revisiting the request for clarification made by the appellant before the W.A.No.2235/19 14 Apex Court was completely justified. This Court, in O.T.Rev.No.110/2017 had considered the case of the dealers, who were not parties before the Apex Court in Exhibit P3. After noticing the directions in Exhibit P3 as well as dismissal of the application for clarification, it was found that the directions were binding with respect to the parties before the Apex Court in Exhibit P3. With regard to the dealers who were not parties before the Apex Court, it was found that the claim for refund would have to be considered on the basis of relevant aspects including whether the amount had, as a matter of fact, been collected from the customers or had been paid from the funds of the dealer. The said finding in the Tax Revision case cannot come to the aid the petitioner, who was directly an assessee/appellant before the Apex Court in Exhibit P3. The judgments relied on by the learned counsel for the petitioner would only support the settled legal position that the dismissal of Special Leave Petition in limine would not amount to deciding any question and that the issues may be open to be decided in other appropriate proceedings. Exhibit P4, being an order dismissing an application for clarification, the said W.A.No.2235/19 15 principle can have no application in the facts and circumstances of the instant case. We find no illegality or defect in the judgment of the learned single Judge requiring interference of this Court in the intra court appeal. The writ appeal therefore fails and the same is accordingly dismissed. Sd/- **C.K. ABDUL REHIM, JUDGE** **sd/ANU SIVARAMAN, JUDGE** sj True copy PS to Judge