Mondelez India Foods Limited (formerly Cadbury India Limited) v State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN** ## **&** **THE HONOURABLE MR. JUSTICE ASHOK MENON** **FRIDAY ,THE 28TH DAY OF SEPTEMBER 2018 / 6TH ASWINA, 1940** **OT.Rev.No. 90 of 2016** **AGAINST THE ORDER/JUDGMENT IN OTHERS 207/2014 of KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM DATED 30-06-2015** ## **REVISION PETITIONER/S:** **MONDELEZ INDIA FOODS LIMITED** **(FORMERLY CADBURY INDIA LIMITED),THRIKKAKARA PIPE LINE JUNCTION,THRIKKAKARA, REPRESENTED BY ITS AUTHORISED SIGNATORY, K.P.MAGUDAPATHY.** **BY ADVS. SRI.SHAJI THOMAS SRI.B.RAJESH (KOTTAYAM) SRI.RAGHAVAN RAMABADRAN** ## **RESPONDENT/S:** **STATE OF KERALA REPRESENTED BY THE SECRETARY,COMMERCIAL TAXES DEPARTMENT,SECRETARIAT, KOCHI - 682 013.** ## **OTHER PRESENT:** ## **SRI P MOHAMMED RAFIQ, SR GP** **THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 28.09.2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** _OTRev.90/2016_ 2 ## **O R D E R** Vinod Chandran, J. The appellant is before this Court challenging the order of the Tribunal. The learned Counsel for the appellant Sri.Raghavan Ramabhadran, at the outset, submits that the Tribunal has not looked into the facts at all and has merely proceeded on the basis that an assessment on identical facts has been carried out including the collection charges and transportation expenses in the turnover of cocoa beans for the purpose of levying purchase tax for the purchase from the unregistered dealers. 2. The facts indicate that the assessee had been purchasing cocoa beans from unregistered dealers, who are farmers. The appellant appoints agents, who collects cocoa beans and transport it to the go-down of the appellant. The contention of the appellant was that collection charges and transportation are incurred by them after delivery by the unregistered dealer to the collection agent, who purchases the same on behalf of the company. The Assessing Officer, however, took a view _OTRev.90/2016_ 3 that the transportation and collection charges has to be included in the turnover. The assessment and penalty orders were passed by the same officer, but separately. 3. The assessment came up before this Court in a revision where an open remand was made for consideration of the particular issue herein before dealt with; by Annexure A12. In Annexure A12, the learned Judges specifically noticed the question which arose for consideration in paragraph 6, as follows:- _“6. We have given our anxious consideration to the rival submissions made at the Bar. In view of the divergent findings of the authorities below and concurrent remand to the assessing authority on different points and directions thereunder, the question of law to be considered is whether the expenses incurred as collection charges, freight charges, loading and unloading charges and warehousing charges are liable to be included in 'purchase turnover' and liable to be assessed to tax under Section 6(2) of the Act.”_ The learned Judges also found that the Assessing Officer had not looked into the facts and had merely proceeded on the definition of turnover and found the aforesaid component also includable in the purchase turnover. There was a remand made to decide the question afresh after looking at the facts; not confining the _OTRev.90/2016_ 4 consideration to the definition clause. We are told that the assessment has now been completed again against the appellant finding the issue against the appellant. However, in the first appeal filed by the appellant, the view of the Assessing Officer has been rejected and the assessment with respect to additions of the aforesaid components were set aside. An appeal has been filed by the State, which is pending before the Tribunal. The First Appellate Authority took the view that the expenses incurred, if at all would be reflected in the sale of the final product, which would enable taxation. The First Appellate Authority remanded the matter for consideration of whether it would be direct expenses or indirect expenses. 4. The learned Senior Government Pleader Sri.Mohammed Rafiq submits that the appeal has been filed before the Tribunal specifically pointing out that the assessee does not have a manufacturing unit within the State and the cocoa beans collected would be transferred inter-state on consignment basis, which would not enable the State to tax the same. Hence, the purchase tax under _OTRev.90/2016_ 5 Section 6(2) assumes relevance in the case of the specific transactions of the appellant-dealer. 5. In any event, since the matter is pending before the Tribunal, the last fact finding authority, we are of the opinion that the issue of penalty would be considered by the Tribunal, since the answer to the question in assessment will have a direct bearing to the issue raised herein. We also notice that the Tribunal has failed to look into the facts and had merely followed the assessment order, which assessment order has been set aside by this Court in Annexure A12. 6. Even on remand, the learned Counsel for the appellant has a contention insofar as the specific provision under Section 67 having been not notified in the notice. The learned Counsel would rely on the decision of the Hon'ble Supreme Court in _**Amrit Foods v.**_ _**Commissioner of Central Excise, UP, 2005 (190) ELT 433**_ _**(SC)**_ and paragraph 5, which reads as follows:- _“5. The Revenue has preferred an appeal from the order of the Tribunal setting aside the imposition of penalty under Rule 173Q of the Central Excise Rules, 1944. The Tribunal has set aside the order of the Commissioner on the ground that neither the show cause notice nor the order_ _OTRev.90/2016_ 6 _of the Commissioner specified which particular clause of Rule 173Q had been allegedly contravened by the appellant. We are of the view that the finding of the Tribunal is correct. Rule 173Q contains six clauses the contents of which are not same. It was, therefore, necessary for the assessee to be put on notice as to the exact nature of contravention for which the assessee was liable under the provisions of the 173Q. This not having been done the Tribunal's finding cannot be faulted. The appeal is, accordingly, dismissed with no order as to costs.”_ We are not informed exactly on what facts the penalty was imposed in the above case. In any event, in the present case, the penalty has been imposed for submission of an untrue or incorrect return as is evidently clear from the facts as stated in Annexure A6. The facts as stated in Annexure A6 clearly shows the collection charges, which was incurred and which component was sought to be included in the total turnover of cocoa beans, which the assessee had failed to include in the turnover as per the return. The specific ground on which the notice was issued was that the collection charges was not included in the turnover, which makes it very clear that the provision invoked was Section 67(1)(d). Section 67 has been specifically noticed in Annexure A6 and we do not _OTRev.90/2016_ 7 find any reason why the penalty proceedings itself should be set aside on the ground of the specific clause of the provision having not been shown; especially when the description in the notice leaves no room for doubt. The O.T.Revision is allowed, remanding the matter to the Tribunal for fresh consideration of the issue along with the identical issue raised on assessment and now pending before the Tribunal. No order as to costs. **Sd/-** ## **K.VINOD CHANDRAN** **JUDGE** **Sd/-** **ASHOK MENON JUDGE** _OTRev.90/2016_ 8 ## **APPENDIX** ||**APPENDIX**| |---|---| |**PETITIONER'S/S**|**EXHIBITS:**| |**ANNEXURE A1**|**TRUE COPY OF THE IMPUGNED ORDER DATED**| ||**30.6.2015 IN T.A. (VAT) 207/2014 OF THE KVAT**| ||**APPELLATE TRIBUNAL ERNAKULAM.**| |**ANNEXURE A2**|**TRUE COPY OF THE AGREEMENT DATED 1ST JULY**| ||**2005 ENTERED INTO BETWEEN THE PETITIONER AND**| ||**THE AGENT BHARAT COCOA AND SPICES.**| |**ANNEXURE A3**|**TRUE COPY OF THE SHOW CAUSE NOTICE DATED**| ||**12.2.2007 ISSUED BY THE ASST. COMMISSIONER**| ||**COMMERCIAL TAXES, ERNAKULAM.**| |**ANNEXURE A4**|**TRUE COPY OF THE REPLY DATED 5.5.2007**| ||**SUBMITTED BY THE PETITIONER.**| |**ANNEXURE A5**|**TRUE COPY OF ORDER DA NO.32/AC-II/2005 DATED**| ||**30.5.2007 PASSED BY THE ASSISTANT**| ||**COMMISSIONER ERNAKULAM.**| |**ANNEXURE A6**|**TRUE COPY OF THE NOTICE DATED 15.10.2007**| ||**ISSUED FROM THE OFFICE OF THE DEPUTY**| ||**COMMISSIONER (AA) COMMERCIAL TAXES,**| ||**ERNAKULAM.**| |**ANNEXURE A7**|**TRUE COPY OF REPLY DATED 25.10.2007**| ||**SUBMITTED BY THE PETITIONER.**| |**ANNEXURE A8**|**TRUE COPY OF THE ORDER DATED 12.5.2008 OF**| ||**THE ASST. COMMISSIONER (AA)-II**| |**ANNEXURE A9**|**TRUE COPY OF THE APPEAL FILED BEFORE DEPUTY**| ||**COMMISSIONER (APPEALS) DATED 19.6.2008.**| |**ANNEXURE A10**|**TRUE COPY OF THE ORDER DATED 2.2.2009 ISSUED**| ||**BY THE DEPUTY COMMISSIONER ERNAKULAM.**| |**ANNEXURE A11**|**TRUE COPY OF THE ORDER DATED 23.12.2011**| ||**ISSUED BY THE KVAT APPELLATE TRIBUNAL T.A.**| ||**(VAT) 146/2009 AND CO.NO.11/2010.**| |**ANNEXURE A12**|**TRUE COPY OF THE ORDER DATED 20.2.2014 IN**| ||**O.T.REV.63/2012 OF THIS HON'BLE COURT.**| |**ANNEXURE A13**|**TRUE COPY OF THE PENALTY ORDER PASSED BY THE**| ||**DEPUTY COMMISISONER (APPEALS) DATED**| ||**16.12.2013.**| _OTRev.90/2016_ 9 |**ANNEXURE A14**|**TRUE COPY OF THE APPEAL FILED ON 20.3.2014**| |---|---| ||**BY THE PETITIONER.**| |**ANNEXURE A15**|**TRUE COPY OF THE REVISED ASSESSMENT ORDER**| ||**DATED 23.2.2015 ISSUED BY ASST. COMMISSIONER**| ||**(ASSMT), ERNAKULAM.**| |**ANNEXURE A16**|**TRUE COPY OF THE JUDGMENT DATED 19.6.2015 IN**| ||**WP(C) NO.15311/2015.**| |**ANNEXURE A17**|**TRUE COPY OF THE EXTENSION OF BANK GUARANTEE**| ||**SUBMITTED FOR THE DEMAND VALUE OF**| ||**RS.17,41,331/-.**| |**ANNEXURE A18**|**TRUE COPY OF THE ORDER DATED 6.10.2017 IN**| ||**KVAT-1890/2015 ISSUED BY THE FIRST APPELLATE**| ||**AUTHORITY.**|