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TMI Blog2011 (12) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 695/2003, finding it necessary in the public interest so to do and exempted the manufacturers of centrifuged latex and crumb rubber from payment of tax under the KGST Act, 1963 on the purchase turnover of rubber in any form used for the manufacture of centrifuged latex and crumb rubber. It was also stated that the said notification shall be deemed to have been in force during the period from April 1, 1988 to October 9, 2001. It was further stipulated that, "tax, if any, already paid shall not be refunded". The exemption granted as per the said notification was further extended from October 10, 2001 to March 31, 2004, as per exhibit P3 notification bearing SRO No. 316 of 2005 dated March 31, 2005. In the said notification, it was stipulated that, "tax collected shall be paid over to Government immediately and tax if any, already paid shall not be refunded". As a matter of fact, in respect of the assessment year 2001-02, the petitioner had already remitted purchase tax amounting to a total sum of Rs. 1,09,495. But in view of the subsequent notifications as aforesaid, providing exemption retrospectively with effect from April 1, 1988 to March 31, 2004, the petitioner claimed ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commission Agent Association v. Commissioner of Commercial Taxes [2009] 19 VST 62 (Ker); [2003] 11 KTR 316 (Ker). Dr. K.B. Muhamed Kutty, the learned senior counsel appearing for the petitioner, submits that, unlike sales tax (where the levy is at the point of sale), the liability to pay "purchase tax" arises at the point of purchase from the customers and as such, there is no chance for any unlawful enrichment of the petitioner. By virtue of the mandate under section 22(2) (b) of the KGST Act, there is a prohibition in collecting the purchase tax and if any such attempt is made, the petitioner is liable to pay penalty, under the relevant provisions of law. This being the position, the rider placed in exhibits P2 and P3 notifications can only be regarded as a "drafting error" and such stipulation may be warranted/justified in the case of sales tax, where there is a chance for unlawful enrichment of the dealer, if the tax collected from the customers on behalf of the State is not paid to the State. The learned senior counsel submits that the clause contained in exhibits P2 and P3 notifications, "that the tax, if paid, shall not be refunded", has necessarily to be read and understo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KTR 363 (Ker), the Division Bench of this court was considering the question, whether the petitioner/assessee was entitled to have refund of the turnover tax paid after the date of exemption as per the notification dated October 29, 1992. The State of Kerala, granted exemption in respect of turnover tax payable on the turnover at the first point of sale in the State by dealers coming under sub-clause (g) of clause (i) of sub-section (2A) of section 5 of the KGST Act, except on the turnover relating to goods received on consignment and/or branch transfer. Later, by virtue of the subsequent notification dated March 9, 1993, it was made clear that, the earlier notification dated October 29, 1992 shall be deemed to have come into force on April 1, 1992, however adding a "proviso" that the turnover tax, if any paid, shall not be refunded. The learned single judge declined to grant refund of turnover tax paid, on the ground that the notification dated March 9, 1993 applied to all dealers without discrimination, which was subjected to challenge in the appeal. After considering the facts and figures and the relevant provisions of law, it was held by the Bench, that the persons like the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot file the return and evades payment of tax, if the clause in the notifications is read and understood as done by the first respondent, it would only give premium to the wrong-doer, resulting in patent arbitrariness and violation of article 14 of the Constitution of India. The Bench observed that, the liability to pay tax is irrespective of the fact whether tax is collected by the dealer or not. In respect of the goods which are taxable at the first point of sale in the State by a dealer, he is liable to pay tax under section 5, though by virtue of section 22 of the Act, such dealer can collect tax on his sale. Whether the dealer collects the tax or not, he has to pay tax on his taxable turnover. But in the case of a dealer, whose transaction is liable to pay tax only at the last point of purchase, the Bench observed that, there was no question of collection of tax by that dealer from anybody on that point and he has to pay tax on his taxable turnover; thus making the position clear that, collection of tax is not relevant, so far as the liability to pay is concerned. A similar contention as now put forth by the learned senior counsel for the petitioner to the effect that the claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the relevant clause under the concerned notification that, the tax, if any, paid over to the Government shall not be refunded and the bank was instructed to inform the customer (first respondent) accordingly. On getting the communication from the Bank as to the rejection of the claim, the first respondent approached the High Court of Kerala by filing the writ petition, wherein interference was declined and the party was relegated to approach the Commissioner, Commercial Taxes, for appropriate reliefs. This was challenged by the first respondent by filing appeal before the Division Bench, wherein the Bench observed that, when the Legislature of the Government had given relief with retrospective effect, it should reach the concerned eligible citizens, observing further that, the bank had opportunity to file the return, showing the sales tax liability and claim refund in terms of section 44. The liability was mulcted upon the bank to effect refund with interest at 10 per cent and to claim it later from the Department. This made the bank to approach the apex court, which led to the decision in Corporation Bank v. Saraswati Abharansala [2009] 19 VST 84 (SC). Referring to the factua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue, however taking care to see that the public exchequer, was not let to be dried up. It was exactly a similar situation that was considered by the Division Bench of this court in Kokkala's case [2009] 19 VST 62 (Ker); [2003] 11 KTR 316 (Ker) as well and as such, it stands on a different footing than the position of the appellant in Saraswati Abharansala's case [2009] 19 VST 84 (SC). This court finds that the case in hand is covered by the decision rendered by the Division Bench of this court in Kokkala's case [2009] 19 VST 62 (Ker); [2003] 11 KTR 316 (Ker). Further, the purchase tax paid by the petitioner has already been passed on to the customers, not as purchase tax, collection of which is prohibited under section 22(2)(b), but by including the same in the cost price and then fixing the appropriate "sale price". This is not a case where the liability to pay purchase tax is disputed by the petitioner. The purpose of granting retrospective exemption is stated as in tune with public interest. However, on comparison with the other limb of the "public interest", i.e., the State exchequer who had already obtained the tax paid and had provided necessary budget allocat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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