Bejoy Cyriac vs. The Commissioner Of Commercial Taxes

Facts

These appeals were filed by Bejoy Cyriac, proprietor of Cochin Carton Manufactures, and M/s. Cochin Blister Pack, represented by Bejoy Cyriac. The appellants challenged a clarification issued by the Commissioner of Commercial Taxes, Kerala, dated 30.08.2013, which declared that sales by registered dealers within the Domestic Tariff Area (DTA) to units within Special Economic Zones (SEZ) do not qualify as deemed exports. The appellants argued that their statutory entitlements and benefits should be governed by Section 8 of the Central Sales Tax Act and Section 6 of the Kerala Value Added Tax (KVAT) Act. The appeals were considered alongside previous judgments on the same clarification, specifically OTA Nos. 8 and 10 of 2013 and OTA 5/2014.

Held

The Court held that the impugned clarification, dated 30.08.2013, is valid and that sales by registered dealers within the Domestic Tariff Area (DTA) to units within Special Economic Zones (SEZ) do not qualify as deemed exports. The Court affirmed the reasoning in previous judgments (OTA Nos. 8 and 10 of 2013 and OTA 5/2014) that such sales are governed by Section 8 of the Central Sales Tax Act and Section 6 of the KVAT Act. Crucially, the Court reiterated that the impugned clarification has no retrospective effect. Therefore, for the period up to 30.08.2013, the appellants are governed by the earlier clarification dated 15.09.2007. The Court found that the appellants are entitled to the benefits under the earlier clarification for the period prior to the impugned clarification, including exemption and refund of Input Tax Credit, if any amounts have been remitted in excess of the prescriptions therein. The appeals were dismissed in so far as they challenged the impugned clarification, but the benefit of the earlier clarification for the pre-30.08.2013 period was confirmed.

Key Issues

1. Whether sales made by registered dealers within the Domestic Tariff Area (DTA) to units within Special Economic Zones (SEZ) qualify as deemed exports, and thus are governed by provisions other than Section 8 of the Central Sales Tax Act and Section 6 of the KVAT Act? Petitioner's contention: The appellants argued that their sales to SEZ units should be considered deemed exports and that their entitlements and benefits are governed by Section 8 of the Central Sales Tax Act and Section 6 of the KVAT Act. They sought to rely on an earlier clarification dated 15.09.2007, asserting that the impugned clarification should not have retrospective effect and that for the period prior to its issuance, they should be governed by the earlier clarification, entitling them to exemption under Section 6(7)(b) and refund of Input Tax Credit under Section 13(2) of the KVAT Act. Revenue's contention: The respondents contended that the issue of whether sales to SEZ units qualify as export sales had already been decided by this Court in Lalitha Muralidharan v. Commissioner of Commercial Taxes, [(2016) 91 VST 175(Ker)], which was confirmed in W.A. No.2665/2015. They argued that the benefit of the earlier clarification, which prevailed until the impugned clarification in 2013, cannot be given to the appellants, citing Commissioner of Central Excise v. Ratan Melting & Wire Industries [2008 (4) KLT 607(SC)] to assert that court decisions on statutory interpretation override executive circulars. They also distinguished the present cases from earlier ones by noting that no refund was sought to be recovered, but rather exemptions were being claimed.