State Of Kerala Represented By Additional Chief Secretary(Taxes) vs. Vazhakulam Hotels And Resort PVT LTD

Facts

This case involves a review petition filed by the State of Kerala and its tax authorities against a judgment dated 30.11.2023 passed by the High Court of Kerala in a batch of writ petitions, including W.P.(C) No. 42730 of 2022. The original writ petitions concerned the liability of FL3 licensees (hotels and resorts) to pay interest for delayed filing of returns and payment of turnover tax during specific periods of the Covid-19 lockdown. The High Court had previously held that these licensees would not be liable for interest if returns were filed by 31.03.2022 and turnover tax was cleared by 30.04.2022, for periods from 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021, for financial years 2020-21 and 2021-22. The State sought review of this order, alleging an error apparent on the face of the record.

Held

The High Court dismissed the review petition. The Court reiterated that the review jurisdiction is to be exercised only in cases of an error apparent on the face of the record. It found that the original judgment dated 30.11.2023 in W.P.(C) No. 42730 of 2022 and connected matters had considered all documents and submissions placed on record by both sides. The Court noted that the documents now relied upon by the review petitioners (Annexures A and B) were not part of the original pleadings. The Court emphasized that review is not a process for rehearing or appeal and that there must be finality to litigation. Based on the submissions, documents, and evidence considered in the original judgment, the Court concluded that there was no error apparent on the face of the record that warranted reconsideration. Therefore, the review petition lacked substance and was dismissed.

Key Issues

1. Whether there is an error apparent on the face of the record in the High Court's judgment dated 30.11.2023, warranting a review, specifically concerning the liability of FL3 licensees for interest on delayed turnover tax payments during the Covid-19 lockdown periods (22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 for FY 2020-21 and 2021-22)? Petitioner's Arguments (State of Kerala): The State argued that the reduction of tax from 10% to 5% was not an exemption from paying the full tax, but rather a reduction in the applicable rate. They contended that the licensees were liable to pay tax at 10% and could claim a refund of 5%, thus remaining liable for interest on the delayed payment of the full turnover tax. The State relied on a Cabinet Note (Annexure A) and a Cabinet decision (Annexure B) which, they claimed, indicated a proposal to amend Section 7A of the Kerala General Sales Tax Act, 1963, and extended the time for filing returns and payment of arrears, but did not absolve them of interest liability. They argued that the original judgment mistakenly interpreted the reduction as an exemption from interest. Respondent's Arguments (Vazhakulam Hotels and Resort Pvt Ltd): The respondent argued that the Cabinet Note specifically stated that Bar attached Hotels and shops were required to pay 5% of the turnover tax, as applicable to retail outlets of the Beverages Corporation, for the specified lockdown periods. They asserted that a notification was issued pursuant to this decision, and they remitted the tax within the extended time. They maintained that the High Court had considered all aspects, submissions, and documents in its original judgment and found no error.