O.T.Rev.131 & 136 of 2017

O.T.Rev.131 & 136 of 2017 1 **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE S.V.BHATTI** **&** **THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 1[ST] DAY OF DECEMBER 2021 / 10TH AGRAHAYANA, 1943 OT.REV NO. 131 OF 2017** **AGAINST THE ORDER IN TAVAT 393/2016 DATED 21.11.2016 OF KERALA VALUE ADDED TAX APPELLATE TRIBUNAL,ADDITIONAL BENCH,PKD** ## **REVISION PETITIONER/RESPONDENT/RESPONDENT/Revenue:** THE STATE OF KERALA REPRESENTED BY THE DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SR. GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN ## **RESPONDENT/Appellant/Appellant/Assessee:** M/S. TIPTOP FURNITURE MART BRANCH CHAPPANANGADI, MALAPPURAM DISTRICT-676503, RERPESENTED BY K.T. SAIDALAVI, PROPRIETOR. BY ADVS. SRI.HARISANKAR V. MENON SMT.K.KRISHNA SMT.MEERA V.MENON ## **OTHER PRESENT:** SR GP V.K. SHAMSUDHEEN FOR THE PETITIONER THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 01.12.2021, ALONG WITH OT.Rev.136/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.T.Rev.131 & 136 of 2017 2 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE S.V.BHATTI** **&** **THE HONOURABLE MR.JUSTICE BASANT BALAJI** **WEDNESDAY, THE 1[ST] DAY OF DECEMBER 2021 / 10TH AGRAHAYANA, 1943** **OT.REV NO. 136 OF 2017** **AGAINST THE ORDER IN TAVAT 414/2016 DATED 21.11.2016 OF KERALA** **VALUE ADDED TAX APPELLATE TRIBUNAL,ADDITIONAL BENCH,PKD** ## **REVISION PETITIONER/Responent/Respondent/Revenue:** STATE OF KERALA REPRESENTED BY THE DEPUTY COMMISSIONER(LAW),COMMERCIAL TAXES, ERNAKULAM. BY Sr. GOVERNMENT PLEADER V.K.SHAMSUDHEEN ## **RESPONDENT/APPELLANT/APPELLANT/ASSESSEE:** M/S.TIPTOP FURNITURE KOTTACKAL, MALAPPURAM DISTRICT, 676 503,REPRESENTED BY K.T SAIDALAVI, PROPRIETOR. BY ADV SRI.HARISANKAR V. MENON THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 01.12.2021, ALONG WITH OT.Rev.131/2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: O.T.Rev.131 & 136 of 2017 3 O.T.Rev.Nos. 131 & 136 of 2017 ## **ORDER** ## _**S.V.Bhatti, J.**_ Heard Mr.V.K.Shamsudheen, learned Sr.Govt.Pleader for petitioner and Mr.Harishanker V.Menon, learned counsel for the respondent. 2. State of Kerala represented by the Deputy Commissioner (Law), Commercial Taxes/Revenue is the revision petitioner in these two revisions. M/s Tiptop Furniture, Kottakkal, Malappuram District/Dealer is the respondent. 3. The two revisions involve similar questions of fact and law; hence are disposed of by this common order. The circumstances and the orders leading to the filing of the present revisions are stated in the following table. |**Sl.**<br>**No.**|**Assessment**<br>**year**|**Order**<br>**of**<br>**Primary**<br>**Authority**|**Order**<br>**of**<br>**Appellate**<br>**Authority**|**Kerala Value**<br>**Added**<br>**Tax**<br>**Appellate**<br>**Tribunal**|**O.T.Revision**<br>**in High Court**| |---|---|---|---|---|---| |1|2013-14|Order<br>No.32101087307/<br>2013-14<br>dated|Order dated<br>7.9.2016 in<br>KVATA-|TA(VAT)<br>No.414 of 2016|O.T.Rev.136<br>of 2017| O.T.Rev.131 & 136 of 2017 4 |||26.08.2015|2062/16||| |---|---|---|---|---|---| |2|2013-14|Order<br>No.ML-<br>2992/14 (in OR<br>78/2013/14)<br>dated 16.11.2015|Order dated<br>20.07.2016 in<br>KVATA-<br>59/2016|TA(VAT)<br>No.393/2016|O.T.Rev.No.1<br>31 of 2017| 4. The circumstances noted in O.T.Revision No.131 of 2017 are adverted to for considering and disposing of both the revisions. 5. M/s Tiptop Furniture Pvt.Ltd. is a dealer registered under the provisions of Kerala Value Added Tax Act, 2003 (for short 'the Act'). The dealer is doing business in Furniture at Kottakkal. The Commercial Tax Officer, Works Contract and Luxury Tax, Kollam, intercepted vehicle bearing No.KL-55/J-3567 which was carrying wooden cot valued at Rs.1,75,238/- from Malappuram to Thiruvananthapuram sold by the dealer. The Commissioner, after verifying the invoice and examining the goods under transport, noted that in the invoice the rate of tax against value of goods is shown at 5% and collected tax of Rs.8761.91/-. The physical verification of goods under transit disclosed that the dealer, it was alleged, was O.T.Rev.131 & 136 of 2017 5 transporting furniture and the applicable rate of tax for furniture is 13.5%. Notice was issued to the dealer and finally order dated 16.11.2015 was made by the Inspecting Assistant Commissioner, Manjeri. The dealer aggrieved by said order filed appeal before the Deputy Commissioner (Appeals) and the Appellate Authority by order dated 20[th] of July 2016 dismissed the appeal. The dealer filed appeal before the KVATAA Tribunal, Palakkad and through the impugned order the Tribunal allowed the appeals filed by the dealer. Hence the revisions at the instance of the Revenue. 6. Learned counsel appearing for the parties have made submissions both for and against the order of the Tribunal, in addition have attempted to pursuade this Court to take an independent view on the rate of tax applicable to the furniture sold by the dealer whether is 5% or 13.5%. After appreciating the rival contentions, we are of the view that examining or re-examining classification of goods now subjected to 5% tax would virtually amount to examining and re-examining the circumstances stated by the dealer. The ## O.T.Rev.131 & 136 of 2017 6 totality of circumstances does not warrant such an exercise by this Court. The legal objection raised by the learned Sr.Government Pleader is that Entry 54 of 3[rd] Schedule reads ## as follows: ## “ **54. Handicrafts** |(1)|Worked ivory and articles of Ivory|9601.10.00| |---|---|---| |(2)|Worked horn and articles of horn|9601.90.40| |(3)|Wood marequetry and inlaid wood;|| ||Caskets and cases for jewellery|| ||and cutlery and similar articles,|| ||of wood; Statuettes and other|| ||ornaments of wood|4420| |(4)|Other articles of wood|4421| |(5)|Articles made of jute|5909.00.30| |(6)|Other|****| ## 7. Appendix of KVAT Act deals with Rules of ## Interpretation of Schedules. "The commodities in the schedules are allotted with Code Numbers, which are developed by the International Customs Organization as harmonised System of Nomenclature (HSN) and adopted by the Customs Tariff Act, 1975. However, there are certain entries in the schedules for which HSN Numbers are not given. Those commodities which are given with HSN Number should be given the same meaning as given in the Customs Tariff Act, 1975. Those commodities, which are not given with HSN Number, should be interpreted, as the case may be, in common parlance or commercial parlance. While interpreting a commodity, if any inconsistency is observed between the meaning of a commodity without HSN Number and the meaning of a commodity with HSN Number, the commodity should be interpreted by including it in that ## O.T.Rev.131 & 136 of 2017 7 ## entry which is having the HSN Number. HSN Numbers are allotted int he Schedules either in four digits or in six digits or in eight digits. The four digit numbers indicate the heading in the HSN classification, six digit numbers indicate the subheading and the eight digit numbers indicate the specific commodity number. While interpreting the commodities in the Schedules, the following guidelines may be followed. I. The commodities which are given four digit HSN Number shall include all those commodities coming under that heading of the HSN. II. The commodities which are given six digit HSN Number shall include all those commodities coming under that sub-heading of the HSN. III. The commodities which are given eight digit HSN Number shall mean that commodity which bears that HSN Number. IV. As an exception to the above rules, there are certain entries in the Schedules, which bear the eight digit numbers but the four digit heading numbers of such commodities are given for some other commodities mentioned elsewhere. In such cases, the four digit heading shall include only those commodities under that heading excluding that commodity for which the eight digit numbers are given. Similar cases are available in the case of six digit numbers also. In such cases the above principle shall apply _mutatis mutandis_ . V. Where the term 'other' is used in sub-entries or sub-sub entries, it should be construed by using the doctrine of ejusdem generis. [When specific words are followed by general words, the general words should be interpreted as having the meaning identical to the meaning attributed to the specific words." 8. Therefore, the argument from the above is that the entire consideration of the controversy of classification of goods between the parties, by the Tribunal is illegal and O.T.Rev.131 & 136 of 2017 8 erroneous. The Tribunal, even for limited purpose or atleast for namesake, has not evaluated the claim of dealer in the background of definite set of rules of interpretation of schedules provided under the Act. The failure to refer to the Appendix is illegal. The Tribunal does not have so much discretion or jurisdiction to classify goods on independent assessment of the details given by the dealer. He relies on the judgment reported in _**Reckitt Benckiser (India) Ltd.**_ v _**Commissioner Commercial Taxes**_[1] and argues that non-consideration of description of goods from the perspective schedules under KVAT Act, the finding recorded by the Tribunal is illegal and erroneous. He prays for setting aside the orders under revision and remit the matter to the Tribunal for consideration and disposal afresh. 9. Mr.Harisankar Menon contends that the dealer claimed tax at 5% on the furniture sold which could be classified as wood marequetry and inlaid wood, caskets and cases for jewellery or cutlery. The articles for which concessional rate of tax is claimed by the dealer, are in the 1 2008 (2) KLT 604 SC paras 4 to 7 O.T.Rev.131 & 136 of 2017 9 nature of sophas, cots etc. where the work of marequetry is involved. The issue whether it constitutes handicraft or not is considered by the CESTAT at the instance of the sister concern and the case of the sister of dealer was accepted. The finding recorded by the CESTAT was confirmed by the Supreme Court. The learned counsel fairly states that the adjudication by the CESTAT may not be binding either on this Court or on the Tribunal. But it is argued that the findings recorded as approved by the Supreme Court would definitely have pursuasive purpose on this Court. Firstly, he submits that the order under revision does not warrant interference of this Court and alternatively it is argued that the cases if are remitted to the Tribunal, opportunity may be afforded to the dealer to establish both in law and fact for claiming 5% tax on the turn over claimed under this head. 10. We have had a cursory look at the various schedules prescribed under Customs Tariff Act 1975. The stepwise construction of each one of the Courts is excerpted above. 11. It may be noted that the legislature in its wisdom, O.T.Rev.131 & 136 of 2017 10 practical knowledge and experience coupled with importation of the description from the Customs Tariff Act, 1975 into schedules under KVAT Act, either to guide or to restrict arbitrary exercise of power either in favour of revenue or against the dealer has stipulated the guidelines by referring to which a controversy in the nature of the present one ought to be decided by the primary authority, Appellate Authority and the Tribunal. Guided interpretation of items in the schedules, ensures consistency by all the authorities while implementing the provisions of the Act. The rules of interpretation of schedules are both a guiding denominator and definitely must be referred to by all the authorities under the Act while deciding a dispute relating to schedules under the Act. In the case on hand the said omission is glaring and goes to the root of the findings recorded by the Tribunal. 12. In the case on hand the Tribunal, without referring to the Rules of Interpretation of Schedules under KVAT Act, has independently considered and recorded a O.T.Rev.131 & 136 of 2017 11 finding in favour of the dealer that the dealer is entitled to rate of tax at 5% on the furniture sold under the head 'woodmarquetry'. The judgment of the Supreme Court referred to above has taken note of an omission on the part of this Court while disposing of a matter, where the Rules of Interpretation ought to have been considered but not considered while disposing of the case in the reported judgment and, after taking note of the review involved, set aside the judgment of this Court, remitted the matter to this Court for consideration and disposal afresh. In the circumstances of this case, we are of the view that the adjudication of the CESTAT cannot be treated as the conclusive circumstance in favour of the dealer. The dealer now claims rate of tax at 5% payable on a particular type of furniture sold by the dealer. The dealer will have to establish as a matter of fact and the fact so established in a sequential way corresponds to the HSN Code described in Customs Tariff Act, 1975. Keeping in view the observation of the Supreme Court referred to above and the omission in O.T.Rev.131 & 136 of 2017 12 the common order of the Tribunal, viz. not referring to or considering the rules of interpretation of schedules, the order under revision is liable to be set aside and accordingly set aside. Matter remitted to Tribunal for consideration and disposal afresh in accordance with law. The dealer is given liberty to place on record such material or raise such contentions as may be available in this behalf. **Sd/-S.V.BHATTI** **JUDGE** **sd/-BASANT BALAJI** **JUDGE** css/ O.T.Rev.131 & 136 of 2017 13 ## **APPENDIX OF OT.REV 136/2017** PETITIONER ANNEXURES ANNEXURE A THE TRUE COPY OF ASSESSMENT ORDER ISSUED BY THE COMMERCIAL TAX OFFICER, COMMERCIAL TAX OFFICER, KOTTACKAL BEARING NO.32101087307/2013-14 DATED 26-08-2015 ANNEXURE B THE TRUE COPY OF ORDER IN KVATA NO. 2062/16 DATED 07/09/2016 ANNEXURE C THE TRUE COPY OF THE ORDER DATED 30.09.2016 OF THE KERALA VALUE ADDED TAX ADDITIONAL APPELLATE TRIBUNAL, PALAKKAD IN TA(VAT) NO. 414/2016 O.T.Rev.131 & 136 of 2017 14 ## **APPENDIX OF OT.REV 131/2017** |PETITIONER ANNEXURES|| |---|---| |ANNEXURE A|THE TRUE COPY OF PENALTY ORDER PASSED BY THE| ||INSPECTING ASSISSTANT COMMISSIONER,| ||DEPARTMENT OF COMMERCIAL TAXES, MANJERI| ||BEARING NO. ML-2992/14 (IN or 78/2013/14)| ||DATED 16-11-2015| |ANNEXURE B|THE TRUE COPY OF ORDER DATED 20-07-2016 IN| ||KVATA NO. 59/2016 BY THE DEPUTY COMMISSIONER| ||(APPEALS) KOTTAYAM AT ERNAKULAM| |ANNEXURE C|THE CERTIFIED COPY OF THE ORDER DATED 21-11-| ||2016 OF THE KERALA VALUE ADDED TAX ADDITIONAL| ||APPELLATE TRIBUNAL, PALAKKAD IN TA(VAT)| ||NO.393/2016| |ANNEXURE C-1|THE TRUE COPY OF ANNEXURE c|