High Court of KeralaSingle Judge2012-08-01Writ petition disposed of. Directs the VAT appe...

M/S JANATHA SUPER BAZAR v. Assistant Commissioner, Special Circle-1, Commercial Taxes, Kozhikode; Kerala Value Added Tax Appellate Tribunal, Ernakulam; Sale Tax Officer (Recovery), Department of Commercial Taxes, Kozhikode

Case / Petition Number:WPC No. 17916/2012 (L)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: P.R.RAMACHANDRA MENON
Judgment Date: 2012-08-01
Court Decision / Holding: The writ petition is disposed of with directions that the second respondent consider and pass final orders in Exts.P7 to P11 appeals in accordance with law, within three months from the date of receipt of a copy of the judgment. Coercive proceedings under Exts.P20 to P24 are kept in abeyance pending final decision.
Final Disposition: Writ petition disposed of. Directs the VAT appellate authority to decide Exts.P7–P11 appeals in accordance with law within three months; coercive recovery actions under Exts.P20–P24 kept in abeyance pending final decision.

Parties to the Case

Appellants / Petitioners

M/S JANATHA SUPER BAZAR, KOZHIKODE represented by its Managing Partner C.P.KUNHI MOHAMMED

Respondents

The Assistant Commissioner, Special Circle-1, Commercial Taxes, Kozhikode-673006
The Kerala Value Added Tax Appellate Tribunal, Ernakulam-682015
The Sale Tax Officer (Recovery), Office of the Deputy Commissioner, Department of Commercial Taxes, Kozhikode-673006

Legal Representation & Advocates

Counsels for Petitioners

• Sri N. Muraleedharan Nair
• Sri V.K. Shamusudheen

Counsels for Respondents

• Sri Shoba Annamma Eapen

Case Synopsis & Summary

Challenging Exts.P1 to P5 assessment orders for the years 2005-06 to 2009-10 and the subsequent coercive Revenue Recovery notices under Exts.P20 to P24, the petitioner, M/S Janatha Super Bazar, seeks a determination of the correct rate applicable to margarine under the KVAT regime. The petitioner contends that margarine falls within the 4% tax rate under entry 38(18) of the III Schedule as an edible oil, a view supported by earlier Kerala High Court jurisprudence (State of Kerala v. Aluva Sugar Agency, 2008), but the Supreme Court later reversed that position in Aluva Sugar Agency v. State of Kerala (2011). The petitioner notes that appeals are pending before the Kerala VAT Appellate Tribunal (Exts.P7–P11) with related stay petitions (Exts.P12–P16). The State counters that the Supreme Court reversal related to KGST entries, and cites SSD Oil Mills Company Ltd. v. State of Kerala (2011), which states that the commodity has a separate KVAT entry and HSN code 1517.10, justifying a higher rate of 12.5%. After hearing both sides, the High Court disposes of the petition by directing the second respondent to pass final orders in the KVAT appeals in accordance with law within three months, staying coercive recovery proceedings under Exts.P20–P24 until then.

Provisions of Law Cited

Entry 38(18) of the III Schedule (KGST Act)Section 7 of the Revenue Recovery ActKVAT Act (general reference to applicable tax regime)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner submits that margarine should be taxed at 4% under entry 38(18) of the III Schedule as an edible oil. It cites State of Kerala v. Aluva Sugar Agency (2008) which held margarine is not edible oil, a view reversed by the Supreme Court in 2011. The petitioner notes Exts.P7–P11 appeals pending before the 2nd respondent and seeks final disposal consistent with KVAT law, with stays in Exts.P12–P16. The core contention is that KVAT law should reflect the 4% rate for this commodity, aligning with edible oil classification as per current binding precedents.

Contentions of Respondents

The State argues that the Supreme Court reversal concerned KGST entries, not KVAT. It relies on SSD Oil Mills Company Ltd. v. State of Kerala (2011) to argue that the commodity has a separate KVAT entry and HSN code 1517.10, justifying a 12.5% rate. The State urges that only a final decision by the appellate authority, guided by KVAT provisions and binding precedents, will resolve the issue. The petition is thus framed around interpreting KVAT entries and the correct rate.

Cited Precedents (4)

Case Name	Citation	Treatment	Explanation
State of Kerala v. Aluva Sugar Agency	2008 (8) VST 726 (Ker)	Overruled	This 2008 Kerala High Court decision held margarine was not edible oil, a view subsequently reversed by the Supreme Court in 2011 (Aluva Sugar Agency v. State of Kerala).
Aluva Sugar Agency v. State of Kerala	2011 (45) VST 1 (SC)	Positive	Supreme Court reversal of the 2008 decision; used by the Court as binding authority indicating the edible oil classification and tax treatment aligns with the SC view.
SSD Oil Mills Company Ltd. v. State of Kerala	2011 (37) VST 594 (Ker)	Mentioned Only	Cited to support argument that there is a separate KVAT entry and HSN code 1517.10 leading to higher rate; not adopted as binding by the present order.
W.A.No.743/2012	Ext.P17 judgment dated 10/4/2012	Positive	Division Bench judgment directing the Appellate Authority to consider and finalize the appeal so as to give finality to the issue; cited as binding precedent for expediting final decision.

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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 P.R.RAMACHANDRA MENON** **WEDNESDAY, THE 1ST DAY OF AUGUST 2012/10TH SRAVANA 1934** ## **WP(C).No. 17916 of 2012 (L)** **---------------------------** ## **PETITIONER(S):** **------------------------** **M/S.JANATHA SUPER BAZAR, BIG BAZAR, KOZHIKODE REPRESENTED BY ITS MANAGING PARTNER C.P.KUNHI MOHAMMED.** **BY ADVS.SRI.N.MURALEEDHARAN NAIR SRI.V.K.SHAMUSUDHEEN** ## **RESPONDENT(S):** **---------------------------** **1. THE ASSISTANT COMMISSIONER, SPECIAL CIRCLE - 1, COMMERCIAL TAXES, KOZHIKODE-673 006.** **2. THE KERALA VALUE ADDED TAX APPELLATE TRIBUNAL, ERNAKULAM-682 015.** **3. THE SALE TAX OFFICER (RECOVERY), OFFICE OF THE DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCIAL TAXES, KOZHIKODE-673 006.** **R1 TO R3 BY SR.GOVERNMENT PLEADER SMT. SHOBA ANNAMMA EAPEN** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01-08-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **Kss** ## **WPC.NO.17916/2012 L** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1. TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2005-06 DATED 13/10/2010.** **EXHIBIT P2. TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2006-07 DATED 13/10/2010.** **EXHIBIT P3. TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2007-08 DATED 13/10/2010.** **EXHIBIT P4. TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2008-09 DATED 24/09/2010.** **EXHIBIT P5. TRUE COPY OF THE ASSESSMENT ORDER PASSED BY THE 1ST RESPONDENT FOR THE YEAR 2009-10 DATED 13/10/2010.** **EXHIBIT P6. TRUE COPY OF THE COMMON APPELLATE ORDER PASSED BY THE DEPUTY COMMISSIONER (APPEALS)-II, COMMERCIAL TAXES, KOZHIKODE FOR THE YEARS 2005 -06 TO 2009 -10 DATED 15/5/2012.** **EXHIBIT P7. TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2005-06 DATED 4/7/2012.** **EXHIBIT P8. TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2006-07 DATED 4/7/2012.** **EXHIBIT P9. TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2007-08 DATED 4/7/2012.** **EXHIBIT P10. TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2008-09 DATED 4/7/2012.** **EXHIBIT P11. TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2009-10 DATED 4/7/2012.** **EXHIBIT P12. TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2005-06 DATED 4/7/2012.** **EXHIBIT P13. TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2006-07 DATED 4/7/2012.** **EXHIBIT P14. TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2007-08 DATED 4/7/2012.** **Kss** **..2/-** **..2....** ## **WPC.NO.17916/2012 L** **EXHIBIT P15. TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2008-09 DATED 4/7/2012.** **EXHIBIT P16. TRUE COPY OF THE STAY PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT FOR THE YEAR 2009-10 DATED 4/7/2012.** **EXHIBIT P17. TRUE COPY OF THE JUDGMENT IN WA NO.743/2012 DATED 10/4/2012.** **EXHIBIT P18. TRUE COPY OF THE JUDGMENT IN WPC NO.9613/2012 DATED 13/4/2012.** **EXHIBIT P19. TRUE COPY OF THE JUDGMENT IN WPC NO.11037/2012 DATED 11/5/2012.** **EXHIBIT P20. TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE REVENUE RECOVERY ACT ISSUED BY THE 3RD RESPONDENT FOR THE YEAR 2005-06 DATED 19/11/2010.** **EXHIBIT P21. TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE REVENUE RECOVERY ACT ISSUED BY THE 3RD RESPONDENT FOR THE YEAR 2006-07 DATED 19/11/2010.** **EXHIBIT P22. TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE REVENUE RECOVERY ACT ISSUED BY THE 3RD RESPONDENT FOR THE YEAR 2007-08 DATED 19/11/2010.** **EXHIBIT P23. TRUE COPY OF THE DEMAND NOTICE UNDER SECTON 7 OF THE REVENUE RECOVERY ACT ISSUED BY THE 3RD RESPONDENT FOR THE YEAR 2008-09 DATED 19/11/2010.** **EXHIBIT P24. TRUE COPY OF THE DEMAND NOTICE UNDER SECTION 7 OF THE REVENUE RECOVERY ACT ISSUED BY THE 3RD RESPONDENT FOR THE YEAR 2009-10 DATED 19/11/2010.** **RESPONDENT'S EXHIBITS:** ## **N I L** **/TRUE COPY/** **P.A.TO JUDGE** **Kss** # **RESPONDENTS' EXHIBITS** ## **P.R.RAMACHANDRA MENON, J.** - - - - - - - - - - - - - - - - - - - - - ## **W.P.(c) No. 17916 OF 2012** - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 1[st] day of August , 2012 ## **JUDGMENT** Challenging Exts.P1 to P5 assessment orders passed by the first respondent, though the petitioner approached the First Appellate Authority, the same did not turn to be fruitful, as borne by Ext.P6. In the said circumstances, the petitioner preferred second appeals before the second respondent, by way of Exts.P7 to P11 along with Exts.P12 to P16 petitions for stay, which are pending consideration. The grievance is in respect of Ext.P20 to P24 issued in the meanwhile under the Revenue Recovery Act, which is sought to be intercepted in this writ petition. 2. The learned counsel for the petitioner submits that, the basic issue is whether the commodity dealt with by the petitioner i.e. margarine is taxable @ 12.5% or 4% being an edible oil coming under the purview of entry of 38(18) of the III Schedule, which is to be taxed only @ 4%. The law declared to the contrary by this Court WPC.No.17916/2012 2 reported in **State of Kerala v. Aluva Sugar Agency** ( 2008 ( 8) VST 726 (Ker) holding that the said commodity is not an edible oil, was subsequently reversed by the Supreme Court as per the decision reported in **Aluva Sugar Agency v. State of Kerala** ( 2011 (45) VST 1 (SC). This being the position, the challenge raised in respect of similar circumstances has already been dealt with by this Court, particularly, by a Division Bench vide Ext.P17 judgment dated 10/4/2012 in W.A.No.743/2012 directing the Appellate Authority to consider and finalise the appeal itself, to have a finality to the issue. 3. The learned Government Pleader, however, submits that the decision rendered by the Apex Court was with reference to the entry as given under the KGST Act and not under the KVAT Act. The decision rendered by the Division Bench reported in **SSD Oil Mills Company Ltd. v. State of Kerala** ( 2011 (37) VST 594 ( Ker) is pressed into service, contending that, the Bench observed that the above particular commodity has been separately described under a particular entry under the KVAT Act and it is having a separate Harmonised System of Nomenclature (HSN) Code of 1517.10. With WPC.No.17916/2012 3 reference to the said entry, it has been held that the commodity is liable to be taxed at a higher rate of 12.5% and not @ 4%. 4. After hearing both the sides, this Court finds that the issue can be finalised only by passing a proper verdict in the appeal with reference to the binding judicial precedents and the relevant entries under the KVAT Act. In the said circumstances, the writ petition is disposed of, directing the second respondent to consider and pass final orders in Exts.P7 to P11 appeals in accordance with law, as expeditiously as possible, at any rate within 'three' months from the date of receipt of a copy of this judgment. Coercive proceedings pursuant to Exts.P20 to P24 shall be kept in abeyance till such time. ## **P.R.RAMACHANDRA MENON JUDGE** sv. WPC.No.17916/2012 4