TMI Blog2023 (12) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... for the said period, the turnover tax would be 5%. Thus, it has been given effect to for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. Since the rate has been prescribed for parcel sale by the Ext. P2 notification for the said period, the tax paid on the said sale at the rate of 5% on or before 30.04.2022 should be deemed to be within time as per the Cabinet Decision and no interest would be payable on the turnover tax in respect of the said sale up to 30.04.2022. However, if any dealer has paid the tax after 30.04.2022, he would be liable to pay interest and penalty as may be determined by the competent authority. From the notification in Ext. P1, though the petitioners were permitted to effect the parcel sales, the rate was not prescribed, and the rate has been prescribed only by the notification in Ext. P2 dated 26.03.2022 - in the absence of the rates prescribed before 26.03.2022, any demand and levy of tax could not have been valid. After the rate of the turnover tax has been prescribed, the petitioners ought to have remitted the tax before 30.04.2022. In cases where the returns are filed by 31.03.2022, and ToT was cleared on or before 30.04.2022, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets is concerned, the State Government has created a monopoly in favour of the Kerala State Beverages Corporation (for short, KSBC ). Kerala State Beverages Corporation owns these retail outlets. 2.2 During the year 2020-21, the petitioner filed the annual return disclosing a total turnover of Rs. 28,78,94,876/-. The Assessing Authority, however, noticed certain anomalies. Hence, a notice dated 11.07.2022 was sent to the petitioner to file a reply and appear for a personal hearing. The petitioner received the notice on 13.07.2022. The petitioner had filed the reply on 22.07.2022 along with the books of accounts. It was noticed that the interest for the period with effect from 22.12.2020 to 31.03.2021 was remitted along with the return, and the interest for the period with effect from 01.04.2020 to 21.12.2020 was not remitted. In view thereof, Ext.P5 order dated 30.07.2022 imposing total tax and interest payable at Rs. 22,49,821/- was issued, which is impugned in the writ petition. 3. With the spread of the COVID-19 pandemic, the entire service industry, including hospitality, was badly affected, and restrictions were imposed on the opening of Bar Attached hotels and Beer and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded in the Schedule at the rate mentioned against such goods,- (a) in respect of Petroleum products falling under Sl. No. 1 of the Schedule, at the point of sale in the State by an oil company liable to tax under this section, except where the sale is by an oil company to another oil company and at the point of first sale in the State by a dealer liable to tax under this section when the sale is not by an oil company. (b) in respect of Foreign liquor, at the point of sale by the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited and at the point of first sale in the State by a dealer liable to tax under this section except where the sale is to the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited. (c) In respect of other goods included in the Schedule, at the point of first sale in the State by a dealer liable to tax under this section. Explanation : - For the purpose of this section (a) Oil Company means Kochi Refineries Ltd., Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd., Indo-Burma Petroleum Company Ltd., Bharat Petroleum Corporation Ltd and includes such other company as the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal turnover, pay tax on his taxable turnover for that year in respect of the sale of the goods, with reference to the purchase of which he has furnished a declaration under sub-section (4) of Section 8 of the said Central Act. (4) Notwithstanding anything contained in sub-section (1) but subject to sub-section (5), where goods sold are contained in containers or are packed in any packing materials, the rate of tax and the point of levy applicable to such containers or packing materials, as the case may be, shall, whether the price of the containers or the packing materials is charged separately or not be the same as those applicable to goods contained or packed, and in determining the turnover of the goods, the turnover in respect of the containers or packing materials shall be included therein. (5) Where the sale or purchase of goods contained in any containers or packed in any packing materials is exempt from tax, then, the sale or purchase of such containers or packing materials shall also be exempt from tax. Explanation :- For the purposes of sub-section (4) and sub- section (5), the word containers includes gunny bags, tins, bottles or any other containers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the absence of the rate of tax prescribed for the parcel sale by FL3/FL11 licensees, the petitioners were unable to file monthly returns and pay ToT at the rate of 5% on the taxable turnover for the period during which they were authorised to effect parcel sales of IMFL from their premises. 3.5 The 2nd respondent, in the meantime, proposed completion of assessment for the year 2020-21 vide Assessment Order dated 30.07.2022 fixed taxable turnover of Rs. 23,83,52,647/- in respect of parcel sale of IMFL for the period 22.05.2020 to 21.12.2020 and Rs. 5,02,42,527/- in respect of the Bar sale for the remaining period. On the basis of the estimation of the aforesaid turnover, the ToT liability was fixed and the balance amount was demanded with interest. The petitioner had paid the balance ToT payable as shown in Ext. P5 Assessment Order, i.e., Rs. 35,325/- except for the interest amount. Submissions: Petitioners : 4. Learned Counsel appearing for the petitioners have submitted that as the rate for effecting parcel sale by FL3/FL11 licensees in view of the Government Order dated 18.05.2020 for the limited period, i.e., 22.05.2020 to 21.12.2020 and 15.06.2021 to 25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have been expected to file return regarding such sale and pay tax in the absence of a clear notification. Furthermore, it is submitted that the Government itself had taken the decision for payment of ToT by the FL3/FL11 licensees up to 30.04.2022 and to file the return up to 31.03.2022 by providing the Amnesty Scheme. Therefore, the demand of interest vide Ext.P5 order is wholly unjustified and liable to be quashed in respect of the parcel sales of IMFL by FL3/FL11 licensees during the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. The State Government s: 5. Mr Mohammed Rafiq, learned Special Government Pleader (Taxes), appearing for the State, has submitted that vide notification in Ext. P2 issued under Section 10 of the KGST Act providing the rate of ToT on parcel sale by Bar-Attached hotels/FL3/FL11 licensees for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 at the rate of 5%. However, the notification does not provide for retrospective deduction of the rate applicable under Section 5(2)(i)(a), the Government has also not extended the time for payment of tax vide Ext. P2 order, which is prescribed under the provisions of the KGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndramani Trades v. State of Kerala (2008) 16 VST 294; JK Synthetics Ltd. Commercial Tax Officer (1994) 94 STC 422; and State of Kerala v. Western India Cosmetic and Health Products Ltd 2020 (10) KLT 786 (FB). Discussion: 6. The facts are not much in dispute and the controversy involved is in a narrow compass. The issue which requires consideration is whether the petitioners are liable to pay the interest for delayed payment of turnover tax on parcel sales of IMFL during the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021, in view of the authorisation given to them by Ext. P1 Government Order. It is not in dispute that, but for the Government Order in Ext. P1, the petitioners would not have been able to effect parcel sales of IMFL for the limited period for which they were authorised, as mentioned above. The tax levied on such sales by the retail outlets of KSBC was at the rate of 5%. The petitioners are liable to pay turnover tax at the rate of 10% on sales effected in peg measurements. However, Ext. P1 notification, which authorises the sale of IMFL by FL3/FL11 licensees, did not provide the rate of tax on such sale. As no rate of tax was provided, the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to indicate its general purport.) Turnover tax at the rate of ten percent is payable on sale of foreign liquor sold by a bar attached hotel. Whereas, the turnover tax applicable on sale of foreign liquor sold by the Kerala State Beverages Corporation is five percent. During the period from 22nd May, 2020 to 21 December, 2020 and for the period from 15th June, 2021 to 25th September, 2021, bar hotels as well as Kerala State Beverages Corporation were permitted for takeaway only. The Government of Kerala, having considered it necessary in the public interest so to do, decided to reduce turnover tax payable under clause (a) of b section (2) of section 5 of the Kerala General Sales Tax Act, 1963 (Act 15 of 1963), on sale of reign liquor sold for the period from 22nd May, 2020 to 21 December, 2020 and for the period from 5th June, 2021 to 25th September, 2021 to five percent to the bar hotels also. The notification is intended to achieve the above object. 6.3 The notification itself prescribes that for the said period, the turnover tax would be 5%. Thus, it has been given effect to for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. Since the rate has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of the rates prescribed before 26.03.2022, any demand and levy of tax could not have been valid. After the rate of the turnover tax has been prescribed, the petitioners ought to have remitted the tax before 30.04.2022. This demand of interest appears to be wholly unjustified and unsustainable for the alleged delay in paying tax on the taxable turnover of parcel sales by the FL3/FL11 licensee. 6.7 In one of the cases, the FL3/FL11 licensee has approached the Appellate Authority against such demand of interest. The said licensee, namely, M/s Matha Enterprises (Hills Park), Angamaly, Ernakulam, had challenged the similar demand of interest on late payment of turnover tax at the rate of 5% for the parcel sale effected from 22.05.2020 to 21.12.2020. The Appellate Authority noted the fact that the notification, i.e., SRO 294/2022, is dated 26.03.2022, two years after the end of the related financial year and there were technical issues with the Bar-attached hotels to file monthly returns for the above period with a turnover tax levy at the rate of 5% while the system permitted the remittance only at the rate of 10%. These ambiguities were clarified only by the publicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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