K.G.Rejimon vs. State Of Kerala

Facts

The revision petitioner, K.G. Rejimon, proprietor of M/s. Thermal Tech Engineers, was assessed for the year 2009-10 by the Commercial Tax Officer. The assessing authority initially levied tax at 12.5% on Thermic Fluid Heaters, relying on a clarification order dated 12.08.2006. The petitioner appealed, and the 1st Appellate Authority, noting that the said clarification order was set aside by the High Court, remitted the matter for fresh assessment. The assessing authority then passed a fresh order dated 16.10.2015, levying tax at 4%. Subsequently, the Deputy Commissioner, Commercial Taxes, cancelled this order and remitted it for fresh disposal, relying on a clarification order dated 07.04.2016 which fixed the tax rate at 14.5%. The petitioner challenged this before the Commissioner of Sales Tax, who dismissed the revision by an order dated 28.12.2020. This revision is filed against the Commissioner's order.

Held

The Court held that the Commissioner of Sales Tax erred in dismissing the revision petition without considering the grounds raised by the petitioner, particularly the expert opinion. The Court found that the Commissioner ought to have taken into consideration the report of the expert, as per the decision in State of Kerala v. M.R.F. Ltd. Furthermore, the Court noted the petitioner's contention that the Deputy Commissioner could not invoke jurisdiction under Section 56(3) of the KVAT Act since the 1st Appellate Authority had already decided the issue of the applicable tax rate. Based on these findings, the Court concluded that the order of the Commissioner of Sales Tax had to be set aside and redone. The substantial questions of law were answered in favour of the assessee. The order of the Commissioner dated 28.12.2020 was set aside and remitted for fresh consideration on all grounds raised by the petitioner.

Key Issues

1. Whether the revisional authority (Commissioner) erred in dismissing the revision petition filed by the petitioner without considering the grounds raised? (Question of law) 2. Whether the revisional authority erred in leaving the grounds of revision without any finding? (Question of law) 3. Whether the order passed by the Commissioner violated the principles of natural justice? (Question of law) 4. Whether the revisional authority erred in applying the clarification dated 07.04.2016 for the assessment of the year 2009-10, especially in light of the decision in Sreedhareeyam Ayurvedic Medicines (P) Ltd. & Others v. State of Kerala? (Question of mixed law and fact, turning on the applicability of a clarification to a past period) 5. Whether the revisional authority erred in applying the higher rate of tax for the product sold by the petitioner between 15.02.2008 and 07.04.2016? (Question of mixed law and fact, concerning the correct tax rate for a specific period) Petitioner's arguments: The petitioner argued that the Commissioner failed to consider the 8 grounds raised in their revision, including an expert opinion on the nature of the product. They contended that the Deputy Commissioner wrongly invoked Section 56(3) of the KVAT Act as the issue of tax rate was already decided by the 1st Appellate Authority. The petitioner relied on the decision in State of Kerala v. M.R.F. Ltd. for the proposition that expert evidence must be considered. They also argued that the clarification dated 07.04.2016 should not be applied retrospectively to the assessment year 2009-10. Revenue's arguments: The judgment does not record any specific arguments made by the respondent (State of Kerala).