Mrf LTD vs. The State Of Kerala
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The petitioner, MRF Ltd., filed a Review Petition (RP) No. 70 of 2022 with a delay of 164 days, seeking review of an order in OT Appeal No. 3 of 2010. The original appeal arose from an order under Section 94 of the Kerala Value Added Tax Act, 2003 (KVAT Act). The State contested the condonation of delay and the maintainability of the review. The petitioner argued that its claim was for direct export under Section 5(1) of the CST Act, 1956, and sought input tax credit for raw materials purchased by its manufacturing unit in Kottayam, Kerala, for tyres exported from its godown in Tamil Nadu. The State contended that the review was not maintainable as there was no discovery of new or important facts and the attempt was for a rehearing.
Held
The Court held that the review petition was not maintainable on two grounds: delay and merits. Regarding the delay, the Court found that the scheme of the KVAT Act, particularly Sections 55, 57, 59, 60, 62, and 63, indicated that while powers to condone delay were provided for appeals and revisions within specified shorter periods, the provisions for review (Section 60(7), Section 62(7), and Section 63(8)) granted a larger period of one year without any provision for condonation of delay. The Court concluded that the declaration in Hongo India (P) Ltd. squarely applied, meaning there could be no condonation of delay under Section 62(8) of the KVAT Act. On merits, the Court found no discovery of new or important facts. It reiterated its earlier finding that no clarification could be granted without examining facts and sufficient documentation to prove taxable purchases were in pursuance of an export order. The Court agreed with the State that the stock transfer to Tamil Nadu could not be considered in the course of export because the foreign buyer was not clear at the time of transfer, and the transfer was not based on a specific export order. Therefore, taxable purchases of raw materials at the manufacturing unit could not be based on an export order.
Key Issues
1. Whether the High Court has the power to condone the delay of 164 days in filing the review petition under Section 62(8) of the KVAT Act, considering the scheme of the Act and the Supreme Court's decisions in Commissioner of Customs and Central Excise v. Hongo India (P) Ltd. and Superintending Engineer, Dehar Power House Circle v. Excise and Taxation Officer? 2. Whether the review petition is maintainable on merits, specifically concerning the petitioner's claim for input tax credit on raw materials for goods exported from Tamil Nadu, when the stock transfer was not based on a specific export order and the foreign buyer was not identified at the time of stock transfer? Petitioner's arguments: The petitioner relied on the Supreme Court decision in Dehar Power House Circle to contend that the situation was similar and the Court had sufficient power to condone the delay. They also argued that their claim was for direct export under Section 5(1) of the CST Act, 1956. Respondent's (State) arguments: The State relied on Hongo India (P) Ltd. and the Constitution Bench decision in National Insurance Company v. Pranay Sethi to argue that the dicta in Hongo India (P) Ltd. would prevail. They contended that there was no discovery of new or important facts, and the review was an attempt for a rehearing, which is not permissible under Section 63(8) of the KVAT Act. They also relied on Ajith Kumar Rath v. State of Orissa.
Sections Cited
Section 94, Section 62(8), Section 63(8), Section 5(1), Section 5(3), Section 35-H, Section 35-B, Section 35-EE, Section 35-G, Section 4, Section 45, Section 46(1), Section 48(1), Section 55, Section 56, Section 57, Section 58, Section 59, Section 60, Section 60(7), Section 62, Section 63, Section 63(8), Section 62(7), Section 60(9), Section 63(9), Order 47 Rule 1
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
O R D E R K.Vinod Chandran, J.
The appeal arises from an order issued under Section 94 of the Kerala Value Added Tax Act, 2003. The order passed in the application for clarification was upheld, but with certain observations regarding the consideration of the claim of the appellant, by the Assessing Authorities. The review is filed with a delay of 164 days. The State contests the application for condonation of delay and also the maintainability of the review, on the specific grounds raised, which, according to them do not satisfy the contours of a review.
Shri. Kuryan Thomas, learned counsel appearing for the review petitioner, would place the decision of the Hon'ble Supreme Court reported in 2019 71 GSTR 1 (SC) Superintending Engineer, Dehar Power House Circle Bhakra Beas Management Board (PW Slapper) v. Excise and Taxation Officer, before us to contend that the RP NO. 70 OF 2022 -3- situation is similar in the instant case. It is also the contention that Commissioner of Customs and Central Excise v. Hongo India (P) Ltd 2009 (4) SCR
1197 was specifically referred to and distinguished. The facts being similar, the decision, later in point of time is applicable on all fours and there is sufficient power in this Court to condone the delay occasioned. The learned Special Government Pleader (Taxes), Shri. Mohammed Rafiq, on the other hand, opposes the said contention with specific reliance placed on Hongo India (P) Ltd (supra). It is the submission of the State that both the aforesaid decisions where by coordinate benches and in that circumstance, going by the Constitution Bench decision in National Insurance Company v. Pranay Sethi (2017) 16 SCC 680 the dicta in Hongo I
ndi
a (P) Ltd (supra) would prevail.
On merits, Shri Kuryan Thomas argues that the claim of the appellant was under Section 5 (1) of the CST Act, 1956, as a direct export and not a claim under Section 5(3) which is of a last sale or purchase, preceding the sale or purchase occasioned in the export. Shri. Mohammed Rafiq, on the other hand points out that there is no discovery of new or important facts, which, after exercise of due diligence, could not have been produced by the applicant or was not RP NO. 70 OF 2022 -4- within their knowledge, and in that circumstance, there is no question of the review being maintainable. It is pointed out that the attempt is for a rehearing of the matter which cannot be entertained under the juri iction conferred by Section 63 (8) of the KVAT Act. Reliance is also placed on Ajith Kumar Rath v. State of Orissa (1999) 9 SCC 596. 4. We will first consider the aspect of delay condonation and the power available to the court under Section 62 (8) in the context of the two decisions placed before us. Hongo India (P) Ltd (supra) considered the power to condone the delay beyond the period specified in Section 35-H of the Central Excise Act. As per the provision, application for references to the High Court ought to be made within 180 days from the date of communication of the decision or order. In considering whether the provisions of the Limitation Act stand excluded; when there is no such express exclusion, the Hon'ble Supreme Court looked at the scheme of the special law, which in that case was the Central Excise Act. It was held that 'even in a case where the special law does not exclude the provisions of Sections 4 to 24 of the Limitation Act by an express reference, it would nonetheless be open to the court to examine whether and to what extend the nature of those provisions or the nature of the subject matter and scheme of RP NO. 70 OF 2022 -5- the special law exclude their operation' (sic). The applicability of the provisions of the Limitation Act hence, had to be judged from the provisions of the special law and not merely of the Limitation Act.
Looking at the Central Excise Act, it was found that S. 35, appeal to the Commissioner and S. 35-B, appeals to the Appellate Tribunal, were to be preferred within 60 and 90 days, respectively, from the date of communication of the order, with an express provision to condone the delay upto 3o days in the former, and anytime beyond the prescribed period, if there is sufficient cause shown, in the latter case. S. 35-EE, revision by the Central Government was to be preferred within 90 days from the date of communication, with further power conferred on the revisional authority to condone the delay for a further period of 90 days, if sufficient cause is shown. However, S. 35-G, providing an appeal to the High Court and S. 35-H, which speaks of application for reference to the High Court, were to be made within a period of 180 days with no provision for condonation of delay. The Hon’ble Supreme Court held that the scheme of the Act makes the position clear that whenever the legislature intended an Authority, Tribunal or Court, to entertain a proceeding by condoning the delay, the same was specifically
RP NO. 70 OF 2022 -6- provided. Hence when there is a provision which only specifies the period in which the proceeding has to be initiated; in the absence of any clause permitting condonation of delay for sufficient cause shown, then there is complete exclusion of the Limitation Act; even if the exclusion is not expressly provided.
Dehar Power House Circle (supra) was a co-ordinate bench of three judges which noticed Hongo India (P) Ltd. (supra). Therein the delay was under the Himachal Pradesh VAT Act. In the provision for appeal under Section 45 of that Act, the appeal was to be filed within 60 days or within such extended period as the Appellate Authority may allow for reasons to be recorded in writing. A suo- motu revision by the Commissioner, under S.46(1) could be within five years and a challenge from that order, to the Tribunal could be made in 60 days. The power to entertain a challenge to the revisional order by the Commissioner before the Tribunal, was within 60 days from the date of communication of the order and S. 48(1) provided for a revision to the High Court within 90 days of the communication of the order. Section 48 did not expressly exclude the Limitation Act, and since S. 45(4) expressly made applicable S.5 of the Limitation Act; it was held; the scheme of the Act permitted condonation of delay and S.
RP NO. 70 OF 2022 -7- 5 of the Limitation Act is not excluded. It was held that the scheme of the Himachal Pradesh Vat Act was materially different from the Excise Act which later act was considered in Hongo India (P) Ltd. (supra).
In the present case, we cannot find such a distinction from Hongo I
ndia (P) Ltd. (supra), especially looking at the provisions of the Kerala Value Added Tax Act, 2003 ('KVAT Act' for brevity). Chapter VI of the KVAT Act deals with appeals and revisions and settlement of cases. An appeal to the Deputy Commissioner/Assistant Commissioner under S. 55 has to be filed within a period of 30 days from the date of communication of the order and the second proviso empowers the appellate authority to admit an appeal after the expiration of the period specified, if sufficient cause is shown (as in Section 35-B of the Central Excise Act referred to in Hongo India (P) Ltd (supra). S. 56 permits a suo-motu revision by the Deputy Commissioner and S.58 by the Commissioner within four years. S.s 57 & 59 deals with the power of revision of Deputy Commissioner and Commissioner, respectively, on application, which again has to be within a period of 30 days from the service of the order, with the respective provisos under S.s 57 & 59 conferring power on the authority to condone delay on sufficient cause being shown. Section RP NO. 70 OF 2022 -8- 60 provides an appeal to the Appellate Tribunal within a period of 60 days and on expiry of the said period, at any time, on satisfaction of the appellate tribunal, about the reason for the delay occasioned. Similarly, an appeal to the High Court, under S. 62, or a revision under S.63, is to be made within 90 days from the date of communication of the order and the High Court is empowered to condone the delay, at any time after the period, if sufficient cause is shown as per the respective provisos. However, when it came to the application for review as provided under S. 60 (7), S. 62 (7) & S. 63(8), a larger period of one year is granted under the respective sub-sections (8) & (9) without any provision for condonation of delay. The scheme of the Act is that, when the time provided for instituting a proceeding is 30 days (S.s 55, 57 & 59), 60 days (S. 60), and 90 days (Section 62 and 63), the authorities/courts were granted power to condone delay without specifying a further period, on being satisfied about the cause shown. However, when it came to the power of review under sub-section (8) of S.s 60 & 62 & sub-section (9) of S. 63, a larger time of one year i.e., 365 days was provided for institution without any provision for condonation of delay. We are of the opinion that looking at the scheme of the KVAT Act, the declaration in Hongo India (P) Ltd
RP NO. 70 OF 2022 -9- (supra) squarely applies in the above case, there can be no condonation of delay under Section 62 (8) of the KVAT Act.
Now coming to the merits, suffice it to notice that the assessee claimed input tax credit for the raw materials purchased by its manufacturing unit at Vadavathur, Kottayam; for reason of the tyres manufactured having been exported from its godown at Puzhal in Tamil Nadu; to which godown the finished products were transferred from Vadavathur, on stock transfer. This Court, in the order sought to be reviewed, categorically held that there can be no such clarification granted by the authority without examination of the facts and without production of sufficient documents to prove that the taxable purchases made were in pursuance of an export order. As alertly pointed out by the learned Special Government Pleader, this court found that even the stock transferred to Tamil Nadu cannot be said to be in the course of export for two reasons. One, that the foreign buyer is not clear at the time the stock transfer originated and two, the stock transfer itself is not based on any specific export order. The assessee having not established an export order prior to the stock transfer, it is obvious that there cannot be taxable purchases of raw materials having been made, based on an export order at its manufacturing unit at RP NO. 70 OF 2022 -10- Vadavathur.
We are convinced that there is no discovery of a new or important fact which after due diligence was either, not within the knowledge of the applicant or could not have been produced by the assessee, when the order was made. In this context, it has to be specified that in Ajit Kumar Rath (supra) Order 47 Rule 1 of the Civil Procedure Code was found to have used the expression 'any other sufficient reason’ which expression as has been held in the cited decision should be a reason sufficiently analogous to those specified in that rule. The subject provision under the KVAT Act does not use the expression and does not enable review, but for the specific grounds of discovery of new or important facts, which after exercise of due diligence, could not either be produced or was not in the knowledge of the applicant.
What is attempted by the petitioner is to have a clarification that the export made from their godown at Tamil Nadu is of the manufactured goods at Vadavathur, Kottayam, enabling the manufacturing unit to claim input tax credit within the State of Kerala, which blanket order cannot be made under the clarificatory power and the consideration has to be on the individual facts of every transaction
RP NO. 70 OF 2022 -11- with documentary evidence produced to substantiate a claim. The Review Petition stands rejected on the aspect of delay and on the ground of the review petition not coming within the contours of a review, as contemplated by the statute. K. VINOD CHANDRAN, JUDGE C.JAYACHANDRAN, JUDGE uu
Reproduced from the public record of the Kerala High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.