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AI- MAHAMOOD Versus COMMERCIAL TAX OFFICER AND OTHERS

Denial of concessional rate of tax - KVAT - sales effected by the petitioner are mainly to the Lakshadweep Administration - Held that:- the provisions of the Act read with Rule 112C (1) of the KVAT Rules have to be seen as a complete code in respect of the grant of concessional rate of tax to dealers effecting supply of articles to the Lakshadweep Administration.

Conditions stipulated in Rule 12C (1) have to be interpreted in such a way that they would further the object, that is env .....

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eep Administration, and also produce a copy of the shipping bill or other similar document attested by the Port authority, evidencing the fact of transportation of the goods to the archipelago. It would also follow, on a reasonable construction of the statutory provision, that in a situation where the dealer effecting supplies to the Lakshadweep Administration, is not required in terms of the contract between the parties to effect supplies of the goods in the archipelago, but rather has to effec .....

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rement of Rule 12C for the purposes of claiming the concessional rate of tax envisaged under the 1st proviso to Section 6(1) of the KVAT Act. I am, therefore, of the view that the impugned orders of assessment in all these writ petitions pertaining to assessment year 2012-13 and Ext.P7 in WP(C) No.1331 of 2013 pertaining to assessment year 2008-09, cannot be legally sustained and I therefore, quash the said orders with a direction to the respective assessing authority to redo the assessment in r .....

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SRI.K.N.SREEKUMARAN FOR THE RESPONDENT : GOVT. PLEADER SRI.LIJU V.STEPHEN, SRI.S.RADHAKRISHNAN,SC JUDGMENT Since the issue involved in all these writ petitions is the same, they are taken up for consideration together and disposed by this common judgment. For the sake of convenience, the reference to facts and exhibits is from WP(C) No.8022 of 2011. The petitioner, who is a dealer in consumer items registered under the provisions of the Kerala Value Added Tax Act and Central Sales Tax Act, herei .....

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he Administrator, Union Territory of Lakshadweep, the tax payable under Clause (d) of Section 6 (1), is to be at the rate of 4% (upto 01.04.2012 and 5% after 14.04.2012) subject to such conditions as may be prescribed. The conditions are prescribed in Rule 12C (1) of the KVAT Rules, 2005, which reads as under: "12C. Procedure for claiming exemption or reduction in rates of tax.- (1) Every dealer who makes any sale to the Administrator, Union Territory of Lakshadweep, Laccadive Co-operative .....

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er and shall be provided on demand by any authority under the Act." 3. The grievance of the petitioner in the writ petition is that in the case of supplies effected to the Lakshadweep Administration, the petitioner was facing a practical difficulty in producing a copy of the shipping bill, or similar document duly attested by the Port authorities, since the shipping activity in respect of the products supplied to the Lakshadweep Administrator was not carried out by the petitioner. It is rel .....

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ders duly approved by the competent authorities. The purchases are made by the Executive Engineer as per the provisions of the CPWD Manual and all the stores/articles supplied by the suppliers are delivered to the Store Keeper attached to the Stores Sub Divisions at Kochi and Beypore. The supply for a particular year could last for a year and the stores/articles, procured and stored in the Stores Sub Division, are sent to various Sub Divisions in Lakshadweep islands as and when they indent for t .....

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ppliers, and the items are loaded in ships/cargo vessels subject to availability of space as allotted by the Port authorities. It is further stated that there is no Port in the different islands that constitute the archipelago and the articles are unloaded in Barges in the open sea. It is further clarified that the stores and articles are generally not sent to the individual islands during the monsoon season between May and September, since the unloading of the articles from ship to Barges in th .....

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e items. The letters also indicate that the payment of the price for the articles purchased is made as soon as the supplier supplies the goods to the Lakshadweep Administration by delivering them to the Store Keeper in the mainland. It would appear from the aforesaid letters that, in the matter of effecting supplies to the Lakshadweep Administration, the role of the petitioner supplier ends with the supply of articles to the Store Keeper at Kochi or Beypore. From there, the transportation to the .....

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lies effected to the Lakshadweep Administration and also furnished the necessary declaration in Form-42, duly signed and sealed by the Administrator of Lakshadweep Administration, the petitioner was served with a notice proposing an assessment under Section 25(1) of the KVAT Act by denying the concessional rates of tax in respect of supplies effected to the Lakshadweep Administration on the ground that the petitioner had not complied with the requirement in Rule 12C of the KVAT Rules, of furnish .....

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ssment orders that are impugned in the writ petition, the respondent assessing authority denied the petitioners the benefit of the concessional rate of tax envisaged under the 1st proviso to Section 6 (1) of the KVAT Act. It is under these circumstances, that the petitioners have approached this Court with the present writ petitions impugning the assessment orders as also challenging the provision of Rule 12C of the KVAT Rules to the extent it makes the production of shipping bill duly attested .....

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x to dealers effecting supply to the Lakshadweep Administration. It is his contention that inasmuch as the statute provides for a concessional rate of tax subject to such conditions as may be prescribed, and the prescription under Rule 12C of the KVAT Rules, is to the effect that the concessional rate of tax will be applicable only on the supplying dealer producing Form-42 declaration duly signed by the buyer, along with a copy of the shipping bill duly attested by the Port authorities, the supp .....

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nd fault with and they have to be upheld. 8. On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find that as rightly pointed out by the learned Government Pleader, the provisions of the Act read with Rule 112C (1) of the KVAT Rules have to be seen as a complete code in respect of the grant of concessional rate of tax to dealers effecting supply of articles to the Lakshadweep Administration. The 1st proviso to Section 6(1) mandates that a deal .....

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ords, the conditions stipulated in Rule 12C (1) have to be interpreted in such a way that they would further the object, that is envisaged in the 1st proviso to Section 6(1). When so read, it would follow that in cases where the dealer in question supplies goods to the Lakshadweep Administration in the archipelago, by effecting transportation of the goods from the mainland to the archipelago, then for claiming a concessional rate of tax in respect of the supply so effected, the dealer would have .....

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ot required in terms of the contract between the parties to effect supplies of the goods in the archipelago, but rather has to effect supplies to the Lakshadweep Administration only in the mainland, then the requirement of production of a copy of the shipping bill duly attested by the Port authorities cannot be fulfilled by the supplying dealer, since he is not in any way involved with the transportation of the goods to the archipelago. While it is a settled proposition that, when a statutory pr .....

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ted in subsequent decisions, as meaning that the strict interpretation of the exemption provision is only at the stage of determining whether the assessee is entitled to the exemption. Once it is found that the assessee is entitled to exemption then the provision has to be liberally construed so as to retain the assessee within the scope of exemption. (See Commissioner of Trade Tax, UP v. Kanhai Ram Thekedar [2005 (4) SCC 472], Andra Pradesh Steel Re-Rolling Mill Ltd. v. State of Kerala [2007 (2 .....

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tlement of the petitioners to the concessional rate of tax envisaged under the 1st proviso to Section 6(1) of the KVAT Act, cannot be denied solely for the reason that they had not produced a copy of the shipping bill attested by the Port authorities to evidence the fact of shipping of the goods to the Lakshadweep archipelago. It is trite that an assessee cannot be expected to be perform the impossible. It is not in dispute in the instant cases that the petitioners had produced the necessary dec .....

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of 2013 pertaining to the assessment year 2009-10, Ext.P3 in WP(C) No.12163 of 2015 pertaining to assessment year 2012-13 and Ext.P7 in WP(C) No.1331 of 2013 pertaining to assessment year 2008-09, cannot be legally sustained and I therefore, quash the said orders with a direction to the respective assessing authority to redo the assessment in relation to the petitioners for the said assessment years after granting them the benefit of concessional rate of tax envisaged under the 1st proviso to S .....

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er is required to satisfy the further condition in Rule 12C with regard to production of the shipping bill or other document duly attested by the Port authorities. While passing fresh orders as directed, the assessing authorities shall also take note of the amounts paid by the petitioners during the pendency of the writ petition and give credit to the said amounts, while computing the demand, if any, pursuant to the assessment orders to be passed afresh, as per the directions of this Court. 9. I .....

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