Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2015 (11) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (11) TMI 1635 - HC - VAT and Sales TaxTurnover tax - textiles - Validity of tax legislations - whether, the levy of turnover tax under Section 6A of the KVAT Act, which purports to be a levy of tax on the sale of goods, traceable to Entry 54 of List II, would cease to be such solely on account of the fact that the measure of the tax is determined with reference to the sales turnover of the goods, that also constitutes the income of the selling dealer? Held that: - the levy contemplated under Section 6A of the KVAT Act is essentially in the nature of a tax levied on the sale of specified goods, that were earlier enjoying an exemption from tax under the KVAT Act, under circumstances where the selling dealer has crossed a threshold turnover of Rupees one crore in the previous year in respect of the said goods. The rate of tax is 2% and, there is no material on record to suggest that the measure of the tax is so excessive that it assumes the nature of a tax on income. The contention of the petitioners that the levy is confiscatory in nature and violates their rights under Article 19(1)(g) of the Constitution cannot therefore be legally sustained. Besides, merely because the legislature, in its wisdom, has chosen not to permit the dealer in question to pass on the tax to his customer, the tax does not cease to be a tax on the sale of goods. As already noticed, this Court is not to concern itself with the reasons that weighed with the legislature in choosing to insist on a dealer paying the tax to bear the tax burden. The wisdom of the legislature in enacting such a measure cannot be gone into by this court. The State Legislature has the legislative competence to levy turnover tax on specified textile articles through the enacted provisions of Section 6A of the KVAT Act. The levy of tax under the State VAT laws has necessarily to be subject to the restrictions imposed by the Constitutional provision and accordingly, the turnover of the specified textile articles reckoned for the purposes of the levy under Section 6A of the KVAT Act cannot take in such turnover as is attributable to export sales of such goods or sales in the course of inter-state trade as defined under the CST Act. This principle of reading down a statutory provision so as to render it in conformity with the provisions of the Constitution is well settled. The Constitution is the highest law of the land and no statutory provision can violate it. If a statutory provision appears to violate the provisions of the Constitution, the court has two options - either to declare the provision as unconstitutional or to read it down to make it constitutional - It is the latter course that I choose to adopt in this case. I must clarify, however, that the restriction aforementioned applies only in respect of the turnover of sale of specified textile articles as is reckoned for the purposes of the levy, and not to the turnover of the said articles as is taken for determining the threshold turnover, of Rs. One Crore in the previous year, of those dealers on whom the levy is contemplated. Similarly, in the case of those textile articles as are declared to be goods of special importance in interstate trade or commerce under Section 14 of the CST Act, the mandate of Section 15 of the CST Act has necessarily to be followed and the State Legislation has to ensure that the tax payable under the KVAT Act in respect of the sale or purchase of such goods inside the State shall not exceed 5% of the sale price thereof. Section 6A of the KVAT Act is thus read down to the above extent. Assessments made under Section 6A of the KVAT Act for the period between 01.04.2014, when the provisions were introduced through the Kerala Finance Bill, 2014, and implemented through a declaration under Section 3 of the Kerala Provisional Collection of Revenues Act, 1985, and 23.07.2014 when the declared provisions came into force as an enactment – the Kerala Finance Act, 2014-in an amended form - Held that: - when the levy was introduced through the Finance Bill, it contemplated a tax @ 2%, in respect of a specified category of dealers, on their turnover of sale of all textile articles included in the I Schedule to the KVAT Act. In the Finance Act, 2014 which came into effect from 23.07.2014, however, the levy was confined to the turnover of sale of only those textile articles as were specified in Entries 17A, 46A and 51 of the I Schedule to the KVAT Act. Sections 4 and 5 of the Kerala Provisional Collection of Revenues Act, 1985 - the State Government would have to refund such taxes or other revenues as have been collected by them in terms of Section 6A, in respect of textile articles other than those specified in Entries 17A, 46A and 51 of the I Schedule to the KVAT Act. Petition disposed off - decided partly in favor of petitioner.
|