TMI Blog2009 (8) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... es and other amounts as specified in circular No. 53/06, it can never be said that the petitioners are left with "no remedy" because of the fixation of the sale price by the Commissioner vide the impugned circular 28/08 dated June 19, 2008. The contention raised in this regard miserably fails and it is only to be rejected. Thus all the contentions raised by the petitioners against the impugned circulars fixing the "sale price" of "live chicken" and "timber" (exhibit P4 circular/order No. Cl-70910/04CT dated May 15, 2008 in W.P. (C) No. 17708 of 2008 and circular No. 28/2008 dated June 19, 2008 in other cases) are devoid of any merit. The challenge against the above circular/order fails and the validity is upheld as not assailable. Appeal dismissed. - W.P. (C) No. 19930 of 2008 - - - Dated:- 7-8-2009 - RAMACHANDRA MENON P.R. , J. P.R. RAMACHANDRA MENON J. The common issue involved in all these cases is whether the Commissioner is authorised to issue the impugned circulars fixing the minimum sale price for calculating the advance tax realisable under section 47(16A) of the Kerala Value Added Tax Act, 2003 and if it is within the power and competence of the Commissioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g upon the demand-supply ratio, festival season and adverse calamities including bird flu and this being the position, there is absolutely no rationale in fixing the sale price of live chicken as Rs. 60 per kg. and in realising the advance tax at that rate, much prior to the taxable event when the sale may take place for a far lesser price, contends the learned counsel. The learned counsel for the petitioners in other cases contended that the timber being imported is not of standard quality; the prime consumers are persons having lesser income and that the price of such timber even otherwise cannot have a uniform rate, particularly since the price of timber depends upon the quality of timber, size, girth, absence of any holes or hollows, twist/turns, colour and several other vital factors. It is also pointed out that such timber is considered and valued by the authorities of customs in connection with the imposition of the prescribed duties, based on the invoice value and as such, fixation of the sale price by the Commissioner, as per the impugned circular, ignoring the invoice value and the actual expenses incurred, is thoroughly wrong and illogical. As per the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to the administrative affairs and superintendence over the officers, which does not enable the Commissioner to have any legislative power for issuing the circular fixing the sale price and places reliance on the decisions in E.K. Hajee Mohammed Meera Sahib Sons v. Sales Tax Officer [1992] 86 STC 99 (Ker); [1991] 1 KLT 896 and P. T. Enterprises v. Commissioner of Sales Tax, M.P. [1995] 96 STC 434 (MP) as well, in support of the contentions raised. Dr. K.B. Muhammedkutty, learned senior counsel appearing for the petitioners in W.P. (C) No. 19830 of 2008 and connected cases, submits that the value of timber fixed by the Commissioner as per the impugned circular is almost double the actual price, as reflected from the invoice. The actual price of timber, particularly in view of the poor quality, lower girth, lesser colour and such other defects is correctly shown in the invoice and such true state of affairs is supported by the necessary bills of entry, bills of lading, delivery notes, etc. It is also stated that there cannot be any unbridled power for the Commissioner to fix the sale price ignoring the actual facts and figures and that the authorities by virtue of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter considering the request/ suggestion of the All Kerala Timber Importers Association. Shortly thereafter, the enactment was set aside by this court as per the decision reported in Thressiamma L. Chirayil v. State of Kerala [2007] 7 VST 293; [2007] 1 KLT 303. To overcome the situation, the entry tax set aside by this court is stated as brought back in the form of advance tax , incorporating subsection (16A) to section 47 of the VAT Act and followed by circular No. 50/ 2006 dated December 18, 2006 fixing the rate of tax in respect of various items mentioned therein, including timber , live chicken , etc., and later clarified by circular No. 53/2006 dated December 22, 2006. The learned counsel submits that no analogy can be drawn to the fixation of the floor price to paddy/rice as the same in respect of paddy/rice is fixed by the State, where the State itself comes up as a willing purchaser to procure paddy; whereas the position is different in the case of timber and further that fixation of value does not take its origin from entry 54 of List II (State List) in the Seventh Schedule to the Constitution of India. Referring to exhibit P10 series of documents produced along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not satisfied with the value declared in the documents, the goods could very well be purchased by the Department, offering a price ten per cent above the rate shown and in the manner as specified in section 45 of the KVAT Act. It is also pointed out that the petitioners have no objection whatsoever in exercising the said power and that the petitioners had actually suggested the said course when the goods and the vehicles were intercepted, which however was not acceptable to the departmental authorities. Mr. V.K. Shamsuddeen, the learned Government Pleader appearing for the respondents, submits that section 47(16A) providing for collection of advance tax was incorporated in the statute, by virtue of the power derived from entry 54 in List II of the Seventh Schedule to the Constitution of India. It is by invoking the power under section 47(16A), read with power under section 3(2)(c) of the Act, that the Commissioner has chosen to issue the relevant circular, which, hence is very much within the four walls of the law. The learned Government Pleader further submits that the constitutional validity of section 47(16A) and the validity of the circulars 50/2006 and 53/2006 having b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance tax and it was accordingly, that the enabling provision section 47(16A) of the Act and the relevant circulars, viz., 50/2006 and 53/2006 were held as valid and unassailable, pointing out that the decision of the apex court in State of Rajasthan v. Rajasthan Chemists Association [2006] 147 STC 542; [2006] 6 SCC 773 does not stand in the way of collection of advance tax and further that the enactment of such provision was constitutionally permissible in view of the decision of the apex court in State of West Bengal v. E.I.T.A. India Limited [2003] 131 STC 111; [2003] 5 SCC 239. The observations made by this court in Fantacy Sales Corporation v. Sales Tax Inspector, Walayar [2007] 7 VST 323; [2007] 2 KLT 174 show that, going by the scheme of the KVAT Act and Rules, only those goods which can be subjected to tax under the VAT Act can be notified under section 47(16A) of the Act and hence if any particular type of goods which is not evasion prone is also included in the notification, the concerned parties are at liberty to challenge the same. It has also been observed that the Legislature cannot be blamed for not naming the evasion-prone goods , as their list may chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if the tax is got assessed by the assessing authority, the dealers can have necessary certificates and can cross the check-post on the basis of such certificates. This is evident from a plain reading of the circular No. 53/2006 dated December 22, 2006. As per the circular No. 50/ 2006, instructions were issued for collection of advance tax in respect of the specified evasion prone commodities at the entry points into the State such as check-posts, ports, airports and railway stations. But when difficulties experienced by the dealers in remitting the tax at the entry points in respect of their consignments, especially where the entry point was far away from the ordinary place of business, were brought to the notice of the Commissioner, suggestion was made to permit the dealers to remit the tax before the concerned assessing authority . It was accordingly that the said circular, viz., 53 of 2006 was issued, permitting the dealers to remit the tax on the consignment in advance, before the respective assessing authority, if they could provide details of the consignment; such as copy of the bill/ invoice, vehicle number and name of the entry point (check-post/port/ airport/railway ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er , on the basis of the relevant records. Unlike this, in the case of the proceedings at the entry point/check-post, the check-post authorities cannot identify the dealer and there may be circumstances when the goods are brought in even by unregistered dealers, under which circumstances, the chance for evasion of tax in respect of evasion prone items is much more, which can be remedied only by stipulating for collection of tax on the basis of the estimated turnover, based on the sale price of the concerned commodities fixed by the Commissioner, after conducting market study. Since validity of the both the above circulars, viz., 50/06 and 53/06 has already been upheld by this court vide the decision in Fantacy Sales Corporation v. Sales Tax Inspector [2007] 7 VST 323; [2007] 2 KLT 174, the course pursued by the Commissioner by issuing the impugned circulars stipulating the sale price in respect of the concerned commodities on a provisional basis, solely for collection of advance tax at the check-post/entry point, cannot be stated as arbitrary, illegal or beyond the power and competence, to take it outside thepurview of the power derived from section 47(16A), read with section 3(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs are provided with an alternative course to have actual assessment at the hands of the assessing authority and to secure a certificate to cross the border as provided in circular 53/06, validity of which circular has been upheld by this court in Fantacy Sales Corporation v. Sales Tax Inspector [2007] 7 VST 323; [2007] 2 KLT 174. This is more so, when fixation of the sale price by the Commissioner is after a market study, as stated in paragraph 5 of the counter-affidavit and further that the dealers can very well claim the refund, if they sell the commodities for a lesser price and file necessary return. Even otherwise, the dealers need not wait till the sale of the commodities materialises, as the advance tax paid can very well be adjusted/set off against the output tax to be paid along with the filing of the return in respect of the transaction in the very same month. The alleged loss, hardships and apprehension projected to the contrary are quite wrong and unfounded. In this context, it is also very much relevant to note that section 19A of the KVAT Act (which came into effect from July 1, 2006 as per the Kerala Finance Act, 2006) provides for issuance of green card ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds in form No. 46, in duplicate, to the Commissioner through the assessing authority, duly recommended by the concerned Deputy Commissioner. From the above, it is clear, that every bona fide dealer, who is promptly submitting the returns every month as specified, is entitled to obtain the green cards and on such an event, there is absolutely no liability to pay any advance tax at the check-post for clearing his goods. The petitioners herein, having an opportunity to obtain necessary green cards as contemplated under section 19A, read with rule 21A and thus to cross the check-post/ border without any necessity to pay the advance tax or else to remit the advance tax as assessed by the assessing authority on the basis of the invoice/bill price + transportation charges and other amounts as specified in circular No. 53/06, it can never be said that the petitioners are left with no remedy because of the fixation of the sale price by the Commissioner vide the impugned circular 28/08 dated June 19, 2008. The contention raised in this regard miserably fails and it is only to be rejected. In the above facts and circumstances, all the contentions raised by the petitioners against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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