Suvarna N.T. vs State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 16[TH] DAY OF MARCH 2022 / 25TH PHALGUNA, 1943 OT.REV NO. 114 OF 2019 AGAINST THE ORDER IN TAVAT 338/2017 OF AGRL.I.T.ADDITIONAL BENCH,KOZHIKODE REVISION PETITIONER/S: SUVARNA N.T. AGED 46 YEARS (FORMER PARTNER OF M/S. KABANI LOGISTICS), 'SOUDHA', SANKARANELLUR P.O, KUTHUPARAMBA, KANNUR DISTRICT-670 643 BY ADVS.JOSEPH MARKOSE (SR.); SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS; SRI.ISAAC THOMAS SHRI.ALEXANDER JOSEPH MARKOS SHRI.SHARAD JOSEPH KODANTHARA RESPONDENT/S: STATE OF KERALA REPRESENTED BY THE SECRETARY (TAXES), TRIVANDRUM-695 001 BY SR GOVERNMENT PLEADER V.K.S.HAMSUDHEEN THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR HEARING ON 16.03.2022, ALONG WITH OT.Rev.120/2019, 121/2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **O.T.Rev. Nos.114, 120 & 121/2019** **-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 16[TH] DAY OF MARCH 2022 / 25TH PHALGUNA, 1943 OT.REV NO. 120 OF 2019 AGAINST THE ORDER IN TAVAT 340/2017 OF S.T.A.TRIBUNAL,ADDITIONAL BENCH,KZD. ## REVISION PETITIONER/S: SUVARNA N.T. AGED 46 YEARS (FORMER PARTNER OF M/S.KABANI LOGISTICS), SOUDHA, SANKARANELLUR.P.O., KUTHUPARAMBA, KANNUR DISTRICT-670643 BY ADVS. JOSEPH MARKOSE (SR.); SRI.ABRAHAM JOSEPH MARKOS SRI.ISAAC THOMAS; SHRI.ALEXANDER JOSEPH MARKOS SHRI.SHARAD JOSEPH KODANTHARA; SRI.V.ABRAHAM MARKOS ## RESPONDENT/S: STATE OF KERALA REPRESENTED BY THE SECRETARY(TAXES), TRIVANDRUM-695001 BY SR GOVERNMENT PLEADER V.K.S.HAMSUDHEEN THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR HEARING ON 16.03.2022, ALONG WITH OT.Rev.114/2019 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **O.T.Rev. Nos.114, 120 & 121/2019** **-3-** IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR.JUSTICE BASANT BALAJI WEDNESDAY, THE 16[TH] DAY OF MARCH 2022 / 25TH PHALGUNA, 1943 OT.REV NO. 121 OF 2019 AGAINST THE ORDER IN TAVAT 339/2017 OF AGRL.I.T.ADDITIONAL BENCH,KOZHIKODE REVISION PETITIONER/S: SUVARNA N.T., AGED 46 YEARS (FORMER PARTNER OF M/S. KABANI LOGISTICS), SOUDHA, SANKARANELLUR P.O., KUTHUPARAMBA, KANNUR DISTRICT-670643. BY ADVS. JOSEPH MARKOSE (SR.); SRI.V.ABRAHAM MARKOS SRI.ABRAHAM JOSEPH MARKOS; SRI.ISAAC THOMAS SHRI.ALEXANDER JOSEPH MARKOS; SHRI.SHARAD JOSEPH KODANTHARA RESPONDENT/S: STATE OF KERALA, REPRESENTED BY THE SECRETARY (TAXES), TRIVANDRUM-695001. BY SR GOVERNMENT PLEADER V.K.S.HAMSUDHEEN THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR HEARING ON 16.03.2022, ALONG WITH OT.Rev.114/2019 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **O.T.Rev. Nos.114, 120 & 121/2019** **==> picture [16 x 10] intentionally omitted <==** ## O R D E R [OT.Rev Nos.114/2019, 120/2019, 121/2019] S.V. Bhatti, J. Heard learned Senior Advocate Mr Joseph Markos and learned Senior Government Pleader Mr V K Shamsudheen for the parties. 2. Suvarna N T, a Partner of M/s. Kabani Logistics, challenges the common order dated 05.03.2019 of the Kerala Value Added Tax/Agrl. Income Tax and Sales Tax Appellate Tribunal, Kozhikode, (for short ‘the Tribunal’). The petitioner was one of the partners of M/s. Kabani Logistics, Thalassery (for short ‘the Firm’). The petitioner states that the Firm was registered under the Kerala Value Added Tax Act, 2003 (for short ‘the Act’) as a dealer in milk. The Firm, since incurred **O.T.Rev. Nos.114, 120 & 121/2019** **-5-** losses, was dissolved and the business not continued. The remedy under Section 63 of the Act is worked out against the common order dated 05.03.2019 since the order referred to in the Revisions stares at the petitioner with recovery consequences of the amount demanded in various assessment orders. 2.1 According to the petitioner, the product sold by them is Ultra Heat Treated (UHT) Milk. The product substantially comes under cow milk. The fat content is 3.5%. The Firm declared the UHT Milk sold by it under HSN Code 04012020 corresponding to Entry 19 of the First Schedule of the Act. The Assessing Officer categorized the product sold by the Firm under Entry 118 of the Third Schedule. Hence, the controversy on the applicable Entry and Schedule. 3. The counsel appearing for the parties, by referring to the product, its properties, code number, etc., tried to **O.T.Rev. Nos.114, 120 & 121/2019** **-6-** categorize either Entry 19 of the First Schedule or Entry 118 of the Third Schedule, as per their respective versions. 4. The arguments may invite this Court to examine the applicable Entry in terms of Appendix, Rules of Interpretation of Schedules and pass an order finally; and, as an alternate submission, to remand the matter to the Tribunal, for which we agree. We are not examining the matter, as the Tribunal would have examined while looking at the Rules of Interpretation of Schedules. The Tribunal, in the operative portion, held as follows: “So the intention of the legislature is crystal clear that the UHT Milk is taxable @ 4%. The mistake, if any, in showing the HSN code number is not at all a sufficient ground to hold that UHT Milk shown as item No.118 along with skimmed milk powder in 3rd schedule is not liable to be assessed as taxable item. Unless and until the UHT Milk is deleted from item No.118 of the 3rd schedule of the KVAT Act 2003, the concerned dealers are liable to pay tax @ 4% for the relevant years. Since the UHT Milk is continued in item No.118 of the 3rd schedule of the KVAT Act **O.T.Rev. Nos.114, 120 & 121/2019** **-7-** 2003, we find no reason to accept the contention of the appellant that the UHT Milk is to be treated as an exempted item. Reckoning the above aspects, we find no reason to interfere in the impugned orders passed by the authorities below.” 5. Sr Advocate Mr Markos submits that the Tribunal has made out a new case in favour of the Department, cannot examine what is absent in the Schedules, and Schedules are interpreted as per the principles laid down in the Appendix. He relies on paragraph nos. 8 and 9 in the judgment _Reckitt Benckiser (India) Limited v. Commissioner, Commercial Taxes_[1] , which read thus: “ 8. The basic controversy, therefore, which arose before the High Court was whether the above items fell within the subHeading 3808.10.91. In this connection, we find that Kerala VAT Act is aligned with Customs Tariff which in turn is aligned with HSN and consequently each product in question was required to be seen in the context of HSN Code and judgments based thereon. 1 (2015) 7 SCC 126 **O.T.Rev. Nos.114, 120 & 121/2019** **-8-** 9. Keeping in mind the above controversy, we set aside the impugned judgment and remit the matter to the High Court for fresh consideration in accordance with law. We may add that we express no opinion on the merits of the case. We keep contentions on both sides expressly open.” 6. Mr Shamsudheen justifies the findings, not by relying on them but by giving additional reasons in support of the conclusions recorded by the Tribunal. 7. We are reluctant to examine the correctness of conclusions recorded by the Tribunal. The excerpted portion from the order of the Tribunal would disclose that the Rules of Interpretation of Schedules, as noted in Appendix of the Act, are not followed in the manner stipulated by the Rules. The Apex Court while considering the need for adhering to the stated Rules of Interpretation, remitted the matter. In the case on hand, we are of the view that the Tribunal, being the final authority of facts, be directed to re-examine the issue. Hence, **O.T.Rev. Nos.114, 120 & 121/2019** **-9-** the order of the Tribunal is set aside. Matter remitted to the Tribunal for consideration and disposal afresh. The O.T. Revisions are disposed of as indicated above. Sd/S.V.BHATTI JUDGE Sd/BASANT BALAJI JUDGE jjj **O.T.Rev. Nos.114, 120 & 121/2019** **-10-** ## APPENDIX OF OT.REV 120/2019 PETITIONER ANNEXURES ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED 29.03.2016 FOR ASSESSMENT YEAR 2007-08 PASSED BY THE COMMERCIAL TAX OFFICER, II CIRCLE, THALASSERY ANNEXURE B TRUE COPY OF THE COMMON ORDER DATED 07/07/2017 PASSED BY THE ASSISTANT COMMISSIONER (APPEALS) COMMERCIAL TAXES, KANNUR FOR ASSESSMENT YEAR 2007-08 ANNEXURE C TRUE COPY OF THE COMMON ORDER DATED 05/03/2019 PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE FOR ASSESSMENT YEAR 2007-08 IN T.A.(VAT) NO.340/2017 **O.T.Rev. Nos.114, 120 & 121/2019** **-11-** ## APPENDIX OF OT.REV 114/2019 PETITIONER ANNEXURES ANNEXURE A ANNEXURE B ANNEXURE C ANNEXURE D - ANNEXURE E TRUE COPY OF THE ASSESSMENT ORDER DATED 29.03.2016 FOR ASSESSMENT YEAR 2005-06 PASSED BY THE COMMERCIAL TAX OFFICER, II CIRCLE, THALASSERY. TRUE COPY OF THE JUDGMENT DATED 26.08.2016 PASSED BY THE DIVISION BENCH OF THIS HON'BLE COURT IN W.A. NO. 1690/2016 IN W.P.(C) NO. 21415/2016. - TRUE COPY OF THE COMMON ORDER DATED 07.07.2017 PASSED BY THE ASSISTANT COMMISSIONER (APPEALS) COMMERCIAL TAXES, KANNUR FOR ASSESSMENT YEAR 2005-06. TRUE COPY OF THE DETAILED ARGUMENT NOTE FILED BY THE PETITIONER/APPELLANT BEFORE THE KERALA VALUE ADDED TAX APPELLANT TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE IN T.A. (VAT) NO. 340/2017 CERTIFIED COPY OF THE COMMON ORDER DATED 05.03.2019 PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE FOR ASSESSMENT YEAR 2005-06 IN T.A. (VAT) NO. 338/2017 **O.T.Rev. Nos.114, 120 & 121/2019** **-12-** ## APPENDIX OF OT.REV 121/2019 PETITIONER ANNEXURES ANNEXURE A TRUE COPY OF THE ASSESSMENT ORDER DATED 29.03.2016 FOR ASSESSMENT YEAR 2006-07 PASSED BY THE COMMERCIAL TAX OFFICER, II CIRCLE, THALASSERY ANNEXURE B TRUE COPY OF THE COMMON ORDER DATED 07/07/2017 PASSED BY THE ASSISTANT COMMISSIONER (APPEALS) COMMERCIAL TAXES, KANNUR FOR ASSESSMENT YEAR 2006-07 ANNEXURE C TRUE COPY OF THE COMMON ORDER DATED 05/03/2019 PASSED BY THE KERALA VALUE ADDED TAX/AGRICULTURAL INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOZHIKODE FOR ASSESSMENT YEAR 2006-07 IN T.A.(VAT) NO.339/2017