K.G. Rejimon, Proprietor, M/S Thermal Tech Engineers, Pulluva((typo))zhi P.O., Perumbavoor v. State of Kerala represented by its Secretary, Taxes Department, Govt. Secretariat, Thiruvananthapuram-695001

``` IN THE HIGH COURT OF KERALA AT ERNAKULAM ``` ``` PRESENT ``` ``` THE HONOURABLE MR.JUSTICE S.V.BHATTI ``` ``` & ``` ``` THE HONOURABLE MR.JUSTICE BASANT BALAJI ``` ``` FRIDAY, THE 25[TH] DAY OF NOVEMBER 2022 / 4TH AGRAHAYANA, 1944 ``` ``` O.T.REVN. NO.22 OF 2021 ``` ## **`REVISION PETITIONER/APPELLANT/APPELLANT/ASSESSEE:`** ``` K.G.REJIMON, PROPRIETOR, M/S.THERMAL TECH ENGINEERS, PULLUVAZHI P.O., PERUMBAVOOR. ``` ``` BY ADVS. P.S.SOMAN SMT.T.RADHAMONY ``` ## **`RESPONDENT/RESPONDENT/REVENUE:`** ``` STATE OF KERALA, REPRESENTED BY ITS SECRETARY, TAXES DEPARTMENT, GOVT. SECRETARIAT, THIRUVANANTHAPURAM-695 001. ``` ``` GOVERNMENT PLEADER, SMT.M.M. JASMIN ``` ``` THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 25.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` OT.Rev.22/2021 2 ## **`ORDER`** ``` (Dated: 25[th] November, 2022) ``` ## `Basant Balaji, J.` ``` This Tax Revision is filed against the order dated 28.12.2020 in R.P.Order No.CT/4057/2016-R1 of the Commissioner of State Tax, State Goods and Service Tax Department, Thiruvananthapuram. ``` ``` 2. The revision petitioner is the registered dealer dealing with Thermic Fluid Heater. The assessing authority noticed that the dealer conceded the sale as machinery and parts under the 3[rd] schedule, which is taxable at 4%. As per the clarification order No.C7- 2881/06/CT, dated 12.08.2006 of the Commissioner of Commercial Taxes, items Thermic Fluid Heaters, steam boilers, etc. are clarified as products coming under Schedule-V and taxable at 12.5%. The Commercial Tax Officer completed the assessment of the petitioner for the year 2009-10 under Section 25(1) of the KVAT Act and levied tax at 12.5%. Against the assessment order, ``` OT.Rev.22/2021 3 ``` the petitioner filed a statutory appeal before the 1[st] Appellate Authority. ``` ## `3. The 1[st] Appellate Authority by order dated 31.01.2014 allowed the appeal as follows:` ``` “I have examined the contentions raised in appeal and records. The learned assessing authority had completed the assessment for the year 2009-10 in the light of the clarification order No.C7- 2881/06/ dated 12.8.2006 of the Commissioner, Commercial Taxes, Thiruvananthapuram the item such as Thermic Fluid Heaters, Steam Boilers are clarified as the product exigible to tax @ 12.5%. ``` ``` In the judgment dated 15.2.2008 in OTA No.2 of 2008, the Hon’ble High Court of Kerala set aside the clarification order passed by the Commissioner of Commercial Taxes and remitted back to the Commissioner, Commercial Taxes to re-do the matter. So the clarification is not in force now. But there is no observation was made by the Hon’ble High Court in respect of the rate of tax of commodities covered by the clarification order. Considering facts and circumstances of the case, I am of view that it is only fair and reasonable to re-do the assessment. The appellant is directed to produce relevant documents connected with the case and the assessing authority directed to consider the case afresh in the light of above judgment. The appeal is disposed as modified as indicated above. Ordered accordingly.” ``` ``` 4. The Assessing Authority in compliance with the ``` ``` direction of the 1[st] Appellate Authority, modified the assessment order dated 11.11.2013 and passed a fresh order dated 16.10.2015, wherein, the tax levied is at ``` OT.Rev.22/2021 4 ``` the rate of 4%. The Deputy Commissioner, Commercial Taxes, Mattancherry, in exercise of the power under Section 56(3) of the KVAT Act, cancelled the order dated 16.10.2015 of the Assessing Authority and remitted back for fresh disposal relying on a clarification order No.C3/28881/06/CT dated 07.04.2016, whereby the rate of tax of Thermic Fluid Heater was fixed as 14.5%. The revision petitioner challenged the order dated 03.09.3016 of the Deputy Commissioner, before the Commissioner of Sales Tax, State Goods and Service Tax Department, Thiruvananthapuram. The Commissioner heard the parties and passed Annexure-H order dated 28.12.2020, dismissing the revision and confirming the order dated 03.09.2016 of the Deputy Commissioner. Aggrieved by the order of the Commissioner of Sales Tax, this revision is filed by the petitioner. ``` ``` 5. Heard the learned counsel for the petitioner as well as the respondent. ``` ``` 6. The main contention raised by the counsel for the revision petitioner is that, along with the ``` OT.Rev.22/2021 5 ``` revision petition a detailed hearing note was filed before the Commissioner of Sales Tax, in which he raised ``` ``` 8 grounds to substantiate the illegality and irregularity in the order of the Deputy Commissioner and the Commissioner without considering any of the grounds raised by the petitioner, dismissed the revision in a cryptic manner. One of the grounds raised is, the petitioner has produced an expert opinion from the qualified engineer explaining the nature, function and use of the machine dealt with by the petitioner. The opinion of the expert is produced in this revision as Annexure-G(5). ``` ``` 7. The substantial questions of law that arise for consideration are: ``` ``` a. Whether on the facts and in the circumstance of the case, is not the revisional authority, the Commissioner, erred in dismissing the revision petition filed by the petitioner? ``` ``` b. Whether on the facts and in the circumstance of the case is not the revisional authority, the Commissioner, erred in leaving the grounds of revision raised in the revision petition without any finding? ``` ``` c. Whether on the facts and in the circumstance of the case is not Annexure-H order passed by the ``` OT.Rev.22/2021 6 ``` Commissioner violated the principles of natural justice? ``` ``` d. Whether on the facts and in the circumstance of the case is not the revisional authority, the Commissioner, erred in applying Annexure-D clarification dated 07.04.2016 for the assessment of the year 2009-10 completed on 16.10.2015 especially in view of the decision in Sreedhareeyam Ayurvedic Medicines (P) Ltd. & Others v. State of Kerala, (2011) 19 KTR 561(Ker.)? ``` ``` e. Whether on the facts and in the circumstance of the case is not the revisional authority, the Commissioner, erred in applying the higher rate of tax for the product sold by the petitioner in between the period from 15.02.2008 to 07.04.2016? ``` ``` 8. The learned counsel argues that, it is settled law that the evidence of experts is tendered, and the statutory authority is bound to rely on it unless such material can be rebutted with contra evidence which has more evidentiary value on comparison of both the reports of the expert. The learned counsel relies on the decision of this court in State of Kerala v. M.R.F. ``` ``` Ltd., (2016) 90 VST 304 (Ker.),to support this proposition. He also raised another contention that the Deputy Commissioner has passed the order involving Section 56(3) of the KVAT Act. The Section clearly provides that, if an issue has been a subject matter of ``` OT.Rev.22/2021 7 ``` an appeal and the said subject matter has been decided by the appellate authority, the Deputy Commissioner cannot invoke the jurisdiction under Section 56(1). He also contends that, since the first appellate authority has already decided in favour of the petitioner regarding the rate of tax applicable, the same issue cannot be reopened by the Deputy Commissioner invoking the powers under Section 56(3). Be that as it may, going by the decision cited (supra), the Commissioner has not gone into the expert opinion produced before it, in arriving at the conclusion that dismissing the petition. Having gone through the judgment of the Division Bench of this Court in MRF’s case, we are of the considered opinion that the Commissioner ought to have taken into consideration the report of the expert and the order should have been passed thereafter. Moreover, there is yet another contention of the petitioner that under Section 56(3) of the KVAT Act, the Deputy Commissioner cannot invoke the jurisdiction, since the 1[st] Appellate Authority has already taken a ``` OT.Rev.22/2021 8 ``` decision in respect of the rate of tax applicable. In view of the matter, we are of the considered opinion that the order of the commissioner has to be set aside and to be redone. ``` ``` In the result, the O.T.Revision is allowed and the substantial questions of law raised are answered in favour of the assessee, and the order of the Commissioner of Sales Tax dated 28.12.2020 is set aside and remitted for fresh consideration on all the grounds raised by the petitioner in the memorandum of revision and in the hearing note. ``` ``` Sd/- ``` ## **`S.V.BHATTI, JUDGE`** ``` Sd/- ``` ``` BASANT BALAJI, JUDGE ``` ``` ss ``` OT.Rev.22/2021 9 ## **`APPENDIX OF OT.REV 22/2021`** ``` PETITIONER ANNEXURES: ``` ``` ANNEXURE A ``` ``` ANNEXURE B ``` ``` ANNEXURE C ``` ``` ANNEXURE D ``` ``` ANNEXURE E ``` ``` ANNEXURE F ``` ``` ANNEXURE G ``` ``` ANNEXURE H ``` ``` COPY OF THE CLARIFICATION NO.C7-28881/06/CT DATED 12.8.2006 ISSUED BY THE COMMISSIONER. COPY OF THE ORDER OF THE IST APPELLATE AUTHORITY IN KVATA 99/2014 DATED 31.1.2014. COPY OF THE REVISED ASSESSMENT ORDER NO.32151392932/2009-10 DATED 16.10.2015 ISSUED BY THE ASSESSING AUTHORITY. ``` ``` COPY OF THE CLARIFICATION ORDER NO.C3- 28881/06/CT DATED 7.4.2016 ISSUED BY THE AUTHORITY FOR CLARIFICATION. ``` ``` COPY OF THE SUO MOTU REVISION ORDER ISSUED BY THE DEPUTY COMMISSIONER, COMMERCIAL TAXES, MATTANCHERRY FOR THE YEAR 2009-10. TRUE COPY OF THE GROUNDS OF REVISION RAISED BEFORE THE COMMISSIONER IN THE REVISION PETITION. ``` ``` TRUE COPY OF THE HEARING NOTE ALONG WITH THE COPY OF EXPERT OPINION AND COPY OF THE CASE LAWS RELIED ON BY THE PETITIONER FILED BEFORE THE COMMISSIONER. ``` ``` COPY OF THE REVISION ORDER ISSUED BY THE COMMISSIONER OF STATE TAX, SGST DEPARTMENT, THIRUVANANTHAPURAM. ```