TMI Blog2022 (4) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... LD THAT:- There is hardly any scope for ambiguity in the language of Section 7(b) of the Act. We would apply the golden rule of construction and the principle of noscitur-a-sociis for arriving at the meaning and scope of Section 7(b). The golden rule of interpretation is nothing, but literal construction where the words of a statute are, first, understood in their natural, ordinary or popular sense and phrases and sentences are construed, according to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary . Noscitur-a-sociis as explained by Lord Macmillan, means, the meaning of a word is to be judged by the company it keeps . For the purpose of explaining these two groups of constructions, we would not burden our order with precedents. Payment of tax at compounded rates is an alternate method of payment of tax. The legislature in lieu of collection of turnover tax at applicable or specified percentage gives an option to the dealer who is eligible for such option to opt for payment of tax at compounded rates. An application specifying the nature of business, in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Aida is the petitioner. The petitioner herein runs a hotel attached with a Bar and is an assessee under the Kerala General Sales Tax Act, 1963 (for short the Act ) in respect of Indian made foreign liquor served in the Bar. The petitioner opted for payment of tax at the compounded rate under Section 7 of the KGST Act. The petitioner satisfied the turnover tax on IMFL for the years 2006-2007 to 2008-09 as follows: 2006-07 Rs.6,67,722.83 2007-08 Rs.10,26,024.00 2008-09 Rs.11,79,924.00 3. The petitioner applied for payment of tax at compounded rate for the assessment year 2009-2010. The petitioner reckoned tax at compounded rate payable at 115% under Section 7(b), on Rs.11,79,924/- and arrived at Rs.13,56,912/-. The petitioner claims to have satisfied compounded rate tax. The Assessing Officer, on 14.01.2010, fixed the tax at the compounded rate payable by the petitioner at Rs.15,27,007/-. The calculation made by the Assessing Officer helps us in understanding the issue in law between the petitioner and the respondent arising under Section 7(b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay, at its option, instead of paying turnover tax on foreign liquor in accordance with the provisions of the said sub-section pay turnover tax on the turnover of foreign liquor calculated at the rates in clause (a) or (b) whichever is higher: (a) at one hundred and forty per cent of the purchase value of such liquor, in the case of those situated within the area of a municipal corporation or a municipal council or a cantonment, and at one hundred and thirty five per cent of the purchase value of such liquor, in the case of those situated in any other place, or (b) at one hundred and fifteen per cent of the highest turnover tax payable by it as conceded in the return or accounts or the turnover tax paid for any of the previous consecutive three years. 7. Referring to the syntax, place of words viz. payable and paid employed in Section 7(b), it is argued that the dealer shall pay turnover tax on the turnover of foreign liquor at 115% of the highest turnover tax paid for, in any of the previous three consecutive years. To understand the petitioner, it may be stated that for the period 2006- 2007 to 2008-09, the petitioner opted and paid tax at compounded rates, based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 7(a) or 7(b) of 1963 Act operates in different spheres is, no doubt, no more res integra, in view of the judgment of this Court in Hotel Alakananda (supra). The Division Bench, while considering the scope and ambit of the manner of calculation under Section 7(b), has taken note of the calculation of tax at the compounded rate only by referring to turnover tax paid by the dealer in the previous consecutive three years. In other words, the argument is that by taking the example of the case on hand for the year 2009-2010, the previous consecutive three years are 2006-2007 to 2008-2009 and the compounded rate of tax paid for the year 2008-2009 since is the highest, 115% tax at compounded rate is payable. Stated briefly, the turnover conceded in the return or accounts by the dealer is immaterial or tax payable on such turnover. It is argued that Alphonsa case considered the unamended Section 7. The principle in Alphonsa does not have persuasive force before the Full Bench in view of the amendment to Section 7 of the KGST Act. Referring to the decision in Commercial Tax Officer v Hotel Breezeland Ltd. (2019(2) KLT 432), it is argued that Breezeland has not interpreted Section 7(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had opted for compounding, based on the provision as it was existing on the first day of the commencement of the assessment year, ie on 01.04.2006, which was accepted by the Department As it stands so, the subsequent amendment brought about wef 01.07.2006 cannot in any manner be applied to the case of the assessees for the year 2006-07. It is further contended that Clause (b) of Section 7 operates in a different sphere, than the field governed by Clause (a) of Section 7 and as such, there cannot be any instance to compare the tax to be worked out under Section 7(a) and the quantum payable under Section 7(b), it is pointed out that, to work out the figures under Clause (b) of Section 7, accounts have to be maintained, which is totally alien to the concept of compounding as the purpose of the compounding itself is to relieve the assessee from the duty to maintain the accounts. It is contended that no machinery to work out the tax under Clause 7(b) is provided by the Legislature, which in fact has been contributed only by the Commissioner as per Ext. P2 Circular, which cannot be a substitute to the legal provision. It is also pointed out that, interpretation of a provision in a taxin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant to note that the legal position is not as if the dealer/assessee is not supposed to maintain any books of accounts, if he opts for satisfaction of tax by way of alternate method, ie by compounding. Even if the dealer/assessee seeks to satisfy the tax under the compounding system, he is bound to maintain the accounts and file proper returns on time, also satisfying the tax as worked out in terms of relevant provisions under the Act and supported by the rules prescribed. 36.*** *** *** 37. This being the position, the term whichever is higher used in Section 7(b) is not in respect of the three instances of the tax shown payable in the return, shown in the accounts or the tax paid in respect of the previous three consecutive years, but something else, which has to be dealt with more meticulously it is in this context that the expression used the highest turnover in the very same provision requires consideration. Even going by the grammatical peculiarities and interpretations, super relative degree is used in the first limb of the provision, qualifying the same with the word the . In English language, comparative degree is used only to compare between two instances, wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he words of a statute are, first, understood in their natural, ordinary or popular sense and phrases and sentences are construed, according to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary . Noscitur-a-sociis as explained by Lord Macmillan, means, the meaning of a word is to be judged by the company it keeps . For the purpose of explaining these two groups of constructions, we would not burden our order with precedents. 15. Payment of tax at compounded rates is an alternate method of payment of tax. The legislature in lieu of collection of turnover tax at applicable or specified percentage gives an option to the dealer who is eligible for such option to opt for payment of tax at compounded rates. An application specifying the nature of business, in the case on hand a bar attached to a hotel is made. The basis for payment of tax at compounded rates would be in terms of Section 7. The tax is calculated at the higher rate specified in Sec.7(a) or (b). Tax attracted or applicable is decided between Section 7(a) and 7(b), whichever is higher. Section 7(b) deals with ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
