M/S. V.K. Cement and Steels 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** **TUESDAY, THE 9TH DAY OF JANUARY 2018 / 19TH POUSHA, 1939** **OT.Rev.No. 22 of 2015** **AGAINST THE ORDER/JUDGMENT IN TAVAT 397/2013 OF KERALA VALUE ADDED TAX ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD DATED 29-03-2014** **REVISION PETITIONER(S)/APPELLANT** **M/S.V.K.CEMENT AND STEELS NEAR P.W.D. REST HOUSE, PERAMBRA** **BY ADV.SRI.R.RAMADAS** **RESPONDENT(S)/RESPONDENT** **STATE OF KERALA REPRESENTED BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM** **BY SRI.MOHAMMED RAFEEQ, SR.GOVERNMENT PLEADER** **THIS OTHER TAX REVISION (VAT) HAVING BEEN FINALLY HEARD ON 09-01-2018, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:** **OTREV.22/15** ## **APPENDIX** ## **PETITIONER'S ANNEXURES** **ANNEXURE-A : COPY OF ORDER DATED 19.9.2009 PASSED BY THE ASSISTANT COMMISSIONER, SPECIAL CIRCLE I, KOZHIKODE IN RESPECT OF THE ASSESSMENT YEAR 200506. ANNEXURE-B : COPY OF ORDER DATED 9.3.2010 IN VATA 629/2009. ANNEXURE-C : COPY OF ORDER DATED 29.3.2014 IN TA(VAT) 397/2013.** **//TRUE COPY//** **PS TO JUDGE.** jg-16/1 ## K.VINOD CHANDRAN & ASHOK MENON, JJ. ------------------------------------------- O.T.Rev.No.22 of 2015 ------------------------------------------Dated this the 9[th] day of January, 2018 ## O R D E R Vinod Chandran, J. The petitioner, a dealer under the Kerala Value Added Tax Act, 2003 ('Act', for short) concerned with the assessment year 2005-06; specifically claims input tax credit between 2.2.2006, the alleged date of commencement of business, and 8.2.2006, the date of registration. The question of law arising from the order of the Tribunal is re-framed as follows:- “Whether the Tribunal was justified in denying the benefit of the first proviso to Section 16(2) for claiming input tax credit and thus rejecting the claim of input tax credit from the date of commencement of business; and ought not the Tribunal have granted the benefit as held in the binding precedent of Sales Tax Officer v. Kerala Curry House [2010(3) KLT 26(SN)].” 2. On facts, suffice it to notice that the petitioner/assessee, as submitted by its learned counsel, filed an application for registration on 28.2.2006 and the registration certificate showed the date of registration as 8.2.2006. On a specific query raised by OTRev.22/15 -2- this Court and on instruction obtained from the assessee, the learned counsel for the revision petitioner would submit that the said registration was related back to 8.2.2006 deeming it to be the date of commencement of business. Actually, the business commenced on 2.2.2006. At the outset, we have to notice the proviso to Section 16(2) of the Act as it existed at the time of application for registration and the grant, which reads as follows: _“_ Provided that the date of the registration shall be the date of filing of the valid application before the _”_ registering authority _**.**_ 3. Hence, at the time when the registration was granted, the Assessing Officer could have registered the applicant as a dealer only from the date of filing of the application. Rightly or wrongly, the registration was granted from the deemed commencement of business i.e. 8.2.2006 and we would not interfere with that as of now. If the assessee had a claim that the commencement of business was prior to the date indicated in the registration certificate, then certainly he ought to have challenged the same. The learned Counsel would submit that the decision in Kerala Curry OTRev.22/15 -3- House held that there could be no correction made of the registration certificate. But that is not to say that an appeal, if provided, or a challenge by a petition under Article 226 of the Constitution of India, could not be availed of. The said contention is also baseless, since when the registration was granted the decision had not come. 4. The compelling argument raised is on the basis of the substitution made by the Kerala Finance Act, 2009 to the proviso to Section 16(2) of the Act, which reads as follows:- “Provided that registration shall be deemed to have been granted with effect from the date of commencement of business irrespective of the date of application, for the purpose of.- (a) paying tax under sub-section (5) of section 6, subject to eligibility, and; (b) opting for payment of tax under section 8 for the relevant years subject to eligibility: Provided further that new dealers applying for registration and existing dealers having registration may avail this benefit subject to the condition that they shall pay tax under the respective provisions along with interest and will not be entitled for any refunds relating to the period prior to filing of application for registration: Provided also that in the case of dealers against whom an offence has been detected under section 67 of the Act before filing application for registration, registration shall be granted under this sub-section OTRev.22/15 -4- subject to the finalisation of the proceedings in respect of the offence so detected.” 5. The learned Senior Government Pleader in defence, relied K.K.Abraham & Company v. Sales Tax Officer and Others [(2013) 64 VST 122 (Ker)] to argue that, if at all, the registration has to relate back to the date of commencement of business only for the purposes of clause (a) & (b) of the proviso. 6. We have carefully gone through the Division Bench judgment cited. We find that in that case, as in the present case, the registration was made prior to the amendment made. The Department had opposed the claim of the assessee vehemently, but however, the Court accepted it and granted registration from the date of commencement of business as provided in the substituted proviso which came into effect only in 2009. We find it difficult to accept the proposition as propounded by the Division Bench. Judicial discipline would have required reference of the matter to a larger bench; but however, we find that in the facts of the present case, even going by the aforecited decision of the Division Bench, the petitioner cannot maintain a claim. OTRev.22/15 -5- 7. The Division Bench in the aforecited decision had categorically found that the deemed retrospective effect of registration granted from the date of commencement of business would only be for availing the benefit of clauses (a) and (b) of the proviso to Section 16(2). Clauses (a) and (b) are confined to payment of tax under Section 6(5) and opting for payment of tax under Section 8. This would not take in the input tax credit as claimed by the petitioner. 8. We find that a learned Single Judge in K.K.Abraham & Company considered the specific issue of a dealer, a firm, registered under the KVAT Act, on reconstitution claiming input tax credit under the KVAT Act. Section 11 of the KVAT Act was extracted and noticed to find that input tax credit is only available to a registered dealer. We see that the learned Single Judge had also noticed the aforementioned Division Bench judgment in Kerala Curry House and held in paragraph No.9 thereof as follows:- “9. The above amendment actually came into effect only from April 1, 2009, whereas the dealer was granted registration on September 24, 2008 with effect from April 1, 2008. It was the said certificate which was sought to be OTRev.22/15 -6- corrected, for getting the registration with effect from April 1, 2007. This was vehemently opposed by the appellant/Department, which in turn was virtually accepted by the Division Bench in principle. However, analysing the scope of the "proviso", it was made clear that, as per the new proviso, the registration granted will have retrospective effect from the date of commencement of the business, only for the purpose of "clauses (a) and (b)" of the said proviso which enabled the eligible dealer to pay the tax on presumptive basis under section 6(5) of the Act, and also dealers eligible for payment of tax under section 8, irrespective of the fact whether the dealer was carrying on business during that year without registration. Subject to the said limited benefit conferred under clauses (a) and (b) of the proviso, it was categorically held that, a dealer had no right to claim retrospective registration, by making an application for correction of the certificate of registration. From the above, it is clear that the above decision does not come to the rescue of the petitioner, who claims the benefit of input-tax credit without being a registered dealer as on March 31, 2005.” 9. We approve the finding of the learned Single Judge, which is squarely applicable here. A reading of Section 11 would indicate that only a registered dealer would have the benefit of input tax credit. The benefit conferred under the proviso to Section 16(2) as substituted in the statute book in 2009 only grants benefit for payment of tax under Section 6(5) and exercising an option for payment of tax under Section 8. The benefit of input tax credit OTRev.22/15 -7- does not flow necessarily from the proviso as substituted in 2009. In such circumstances, we approve the judgment of the learned Single Judge in K.K. Abraham & Co. and reject the revision filed by the dealer answering the question in favour of the Department and against the assessee. Parties are left to suffer their respective costs. K.VINOD CHANDRAN JUDGE ASHOK MENON JUDGE jg