M.V.Muhammed Kutty vs. State Of Kerala

Facts

The petitioner, Sri.M.V.Muhammed Kutty, trading as M/s. Keerthi Trading Company, filed an Other Tax Revision Petition before the Kerala High Court. The revision challenges an order dated 09.08.2019 passed by the Kerala Value Added Tax/Agricultural Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Kozhikode. The dispute concerns the demand of purchase tax under Section 6(2) of the Kerala Value Added Tax Act (KVAT Act). The petitioner had effected inter-state sales of rubber, which were exempted from tax under the Central Sales Tax Act (CST Act) due to State Government exemption notifications issued under Section 8(5) of the CST Act. The Appellate Tribunal had directed the petitioner to pay 5% purchase tax, allowing credit for the 2% tax already paid on inter-state sales.

Held

The Court held that the issue in this revision petition is similar to that considered in other connected O.T.Revisions disposed of by a separate judgment. In those other cases, the Court found the direction of the Appellate Tribunal to be legally unassailable. Therefore, applying the same reasoning, the Court found that the questions of law raised in this O.T.Revision should be answered against the assessee (petitioner) and in favour of the Revenue. The Court's reasoning, as indicated by its reference to prior judgments, suggests that the Appellate Tribunal's direction to allow credit of the 2% tax paid on inter-state sales towards the 5% purchase tax demand was considered correct. However, the ultimate finding is that the petitioner is liable to pay purchase tax. The Court did not expressly leave any issue undecided, but the operative directions are implied by the answering of the questions of law in favour of the Revenue.

Key Issues

1. Whether, on the facts and circumstances, the Appellate Tribunal erred in law by holding the petitioner liable to pay purchase tax on the turnover of rubber purchased from unregistered dealers and sold interstate, after paying 2% tax under the CST Act, based on an interpretation of SRO.No.804 of 2008, SRO.No.753 of 2011, and clarifications thereon? 2. Whether, on the facts and circumstances, the Appellate Tribunal erred in law by holding the petitioner liable to pay purchase tax based on the notifications and clarifications relied upon in its order? 3. Whether, on the facts and circumstances, the Appellate Tribunal erred in law by denying the petitioner's claim for exemption from purchase tax on the ground of having paid tax under the CST Act? Petitioner's Arguments: The petitioner contended that they are liable to pay purchase tax only on the turnover of rubber purchased from unregistered dealers and sold interstate. They argued that the 2% tax paid under the CST Act on inter-state sales should be considered towards the purchase tax liability. The petitioner relied on SRO.No.804 of 2008 and SRO.No.753 of 2011 and clarifications issued thereon. Revenue's Arguments: The Revenue contended that the petitioner is liable to pay purchase tax under Section 6(2) of the KVAT Act. The Revenue argued that the exemption notifications under the CST Act do not absolve the petitioner from the purchase tax liability under the KVAT Act. The Revenue supported the findings of the Appellate Tribunal.