Kerala General Sales Tax Act 1963.(Act 15 of 1963)

 

 Sec. 2 (xxi) - Interpretation of Explanation 4 of - Whether sale is in the course of interstate trade or outside sale has to be examined with reference to documents and such documents cannot be ignored by means of Explanation.[ Siemens Ltd vs State of Kerala. ILR 2001 (1) Ker. 283. S.Sankarasubban & A.Lekshmikutty (J&J)]

 S.2(xxi) - Sale - Whether the forfeiture of security deposit can be treated as taxable turnover and whether there was sale of goods - It cannot be said that forfeiture of security does not amount to damages - Transaction is a loan transaction and hence there was no sale.  [Southern Cable & Engineering Works Vs. State of Kerala, 2002 (1) KLT SN.67, Page No.56.  (S.Sankarasubban & C.N.Ramachandran Nair (JJ)]

Sec. 2(xxvii) . Taxable turnover - Excise duty imposed under the Kerala Abkari Act -Sec. 2(xxvii) which provides or for authorising levy of turnover tax on amounts of excise duty paid by the Kerala State Beverages Corporation is declared unconstitutional and void. Levy of turnover tax on such amounts of excise duty is ultra vires , beyond legislative competence and unconstitutional . [   OP.No. 23008/98, 23903/98 and connected cases. Dated 27-11-1999. AR..Lakshmanan & S.Sankarasubban(J&J)]

S.2(xxvii) - Expenses, carriage inward and freight inward form part of the purchase turnover liable to tax under K.G.S.T.Act and C.S.T. Act.   [Kwality Cocoa Products Vs. State of Kerala, 2002 (1) KLT SN 60 Page No.50(P.K.Balasubramanyan & C.N.Ramachandran Nair (JJ)]

 
Sec. 5 - Assessment to tax "Mosquito Repellents " like "Goodknight" "Banish" etc to be taxed under Entry 87 and 137 as the case may be as pesticides before it was more specifically classified from 1st April, 1991 onwards. [ Mahendran vs State of Kerala. ILR 2001(1) Ker 28. J.B.Koshy & M.Ramachandran (J&J)]

Sec. 5D - Notification SRO 1091/99 is not applicable to additional sales tax - Additional Sales Tax is an independent levy at 15% on the total tax payable by the dealer under Secs 5 & 5A under Sec. 40 - Any person objecting to an order affecting him passed under Sec. 59A can file appeal before the authority - [P.O.Abraham vs C.I.T., 2002 (2) KLT 121, C.N.Ramachandran Nair (J)]

S.7 - Right to enjoy benefits of composition - No option submitted as per the prescribed former - Had been submitting returns and an amount of Rs.52178/- already paid - There was compounding facility offered and accepted - The Department could not and should not have turned round after years. [Surya Rock Products Vs. Additional Sales Tax Officer, 2002 (2) KLT SN 84, Page No.69.  M. Ramachandran (J)]

Sec. 7(7A) - Option exercised by filing application in Form 21A under Sec.7(7A) - Cannot simultaneously avail another concession under SRO/722/93 which is not contemplated in the scheme of assessment under Sec.7(7A).  [Pioneer industries Vs. Additional Sales Tax Officer, 2002 (2) KLT SN 81, Page No.67.  C.N.Ramachandran Nair (J)]

Sec. 10 - "Kozhu" means polugh-share and "plough" is an implement for cutting furrows in soil and turning it up. As per SRO 342/63 it is an item of agricultural implement of agricultural implement [ Poulose vs State of Kerala. 2000(1) KLT 92. G.Sivarajan & A.Leskhmikutty (J&J)]

Sec. 10 - Exemption granted to poultry farmers within the State of Kerala on their turnover of sale of poultry reared by them in their own farm within the State and sale of meat obtained there from - Subsequent restriction limiting it only poultry farmers within the State - Restriction is valid - Not violative of Art. 301 .[ P.P.Baby vs The Addl. Sales Tax Officer. 2002 (1) KLJ 355. K.S.Radhakrishnan & K.Balakrishnan Nair (JJ)]  

Sec. 19 - Appellate authority directs the assessing authority to act in a particular way, that cannot be set at naught by the assessing authority by invoking the power under Sec. 19. [ Veekesy Rubber Industries vs. Sales Tax Officer. OP.No. 3518 of 1993. Dated 25-10-1999.S.Sankarasubban(J)]

 

Sec.10(3) Leviability of penalty - Mere statement no malafide is involved and the purchaser was ignorant is not sufficient. A vague statement by the Tribunal that the assessee was proceedings under the bonafide belief was brought on records in support of the stand of bonafide belief. Not justified.  Falsity of representation when accepted makes it necessary for the assessee to show existence of bona fides and abscence of mens rea. Representation is clearly related to state of mind. [Deputy Commissioner vs C.Mohandas. TRC .No. 71 OF 1998. Dated 23-9-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]
 
Sec. 17(3) - Running stock method is one of the permissible methods of fixing the enhancement. Revenue authorities have recorded findings to the effect that the turnover of the assessee did not commensurate with the stock and stock variations were of a considerable amount. That being the position, it cannot be said that resort to running stock estimation method was improper. If the basis adopted is held to be relevant basis, the estimate made by the assessing authrity cannot be disturbed even though the courts may think that it is not the most appropriate basis. [Sreenivas Jeweller vs State of Kerala .TRC.No. 276 OF 1998. Dated 12-10-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan(J)]
 
Sec. 17(3) Running Stock method - Where the accounts are not acceptable and resort to best judgment assessment is intended, guess work is permissible in making such assessment. In fixing the estimate in a best judgment assessment, one of the basis adopted is the multiple of running stock. If the circumstances in a particular case do not warrant the adoption of that basis, but any other alternative basis, it is open to the fact-finding authority to make a best judgment assessment on any other tenable or valid alternative basis. While making the best judgment, several factors have relevance, i.e., the place where the business is situated,  capital employed in the business, goodwill and other such relevant factors. [P.Subramanian Achary vs State of Kerala.T.R.C.No. 376 of 1998. Dated 22-10-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]

Sec. 17(3). Demand notice issued by post- Returned with an endorsement unclaimed - Not sufficient notice of service - No proper opportunity had been afforded to the assessee to substantiate his objections. Revenue Recovery stayed to afford sufficient opportunity to assessee to avail remedies under the statute. [V.K.Sreenivasan vs S.T.O. (1999) 7 KTR 356. G.Sivarajan {J}}
Sec. 23(3) & 5(3) - Penal interest. Assessee cannot be called upon to pay interest if the return was bonafide and if there is no wilful omission on his part. [ Navabharath Cashew vs C.I.T. (1999)7 KTR 418 .P.Shanmugham (j)]

Sec. 27.  Books of accounts not maintained in regular course of business. What would be the appropriate multiplier is a question of fact, to be decided by taking into account the quantum of suppression , types of articles dealth with, period for which the suppression continued and other such relevant factors. [ B.Jayachandran vs State of Kerala. T.R.C.No. 176 OF 1997. Dated 22-9-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]
 

Sec.29(a)(b). Works Contract .The negative film is not undergoing any improvement or enhancement in its value by the process of treatment employed thereto by the photographer and that the negative remains as before even after the process and treatment and therefore there could be no works contract . The second and third categories would come within the works contract since the photographer is working upon the exposed film or the negative supplied by the customer and produce the positive prints in the desired size. [Ajantha Colour Laborartary Vs. State of Kerala. 1999(1) KLJ 957. = ILR 1999 (2) Kerala 675 . AR. Lakshmanan & G. Sasidharan, JJ.] 
 

Sec. 29A - Vehicle in goods were transported possess the necessary documents in terms of Sec. 29A- Contention that goods were undervalued - Proceedings are in exercise of the powwers .   [Indana Trading Co. and another Vs. Intelligence Inspector and another, 2002 (1) KLT 534. (K.A.Abdul Gafoor(J)]

Sec.30C - On furnishing of bank guarantee for the value of two lorries and goods released. Late the appellant seeking to substitute bank guarantee by security on immovable property. Unencumbered immovable property to be accepted as security as an exceptional case. [ M/s. Gajananan Agencies vs State. (1999)7 KTR 423. AR.Lakshmanan (Ag.CJ) & K.Narayana Kurup(J)]

Sec. 34 - Production of proof of payment of tax is an indispensable requirement as being conditions precedent for entertaining appeal. Once an appeal is entertained notwithstanding the above, then notice shall be issued to the assessee before rejecting the appeal on that ground. [N.Achuthan Pillai vs State of Kerala. T.R.C.NO. 113,114 & 115 of 1999. P.A.Mohammed & M.R.Hariharan Nair {JJ}] 

S.34(3)(a)(i) - Exercise of power under the section is independent of any power available to the authority under section 19 or under any other  provision of the Act.Sec.34 is not controlled by the period of limitation prescribed under sec.19 [ Kerala Hides and Skins Vs. State, 2002 (1) KLT SN 62 Page No.52 =  ILR 2001 Ker  460   P.K.Balasubramanyan (J) & C.N.Ramachandran Nair (J)   ]

 S.35 - Revision lies only if the Order is erroneous and prejudicial to the Revenue - On the basis of disclosure before the Income Tax Authorities, proceedings should not be taken. [Alukas Jewelleries v. State of Kerala, 2001 (3) KLT 917 (S.Sankarasubban & S.Marimuthu (J)]

Sec. 40 - Concession made before the Tribunal - Remedy. When a plea is taken by the assessee that there was not concession as indicated in the order, the proper course for the affected party is to move the concerned court of Tribunal which had recorded the concession. [ M/s.K.Sreedharan & co vs State of Kerala. T.R.C.No. 258 OF 1998, Dated 14-10-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]
 
Sec. 40 - Non-speaking order . A speaking order means an order speaking for itself. To put it simple, every order must contain reasons in support of it.  a party has a right to know not only the decision but also the reasons in support of the decision. Reasoned orders are necessary if judicial review is to be effective. The condition to record reasons introduces clarity and excludes arbitariness. [ Razia Greens vs State of Kerala. T.R.C.No. 152 of 1999. Dated 6-10-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J) ]
 
Sec. 41 - After pre-assessment notice was issued to assessee indicating the details of third parties whose records  revealed suppression on the part of the assessee, he asked for supply of photostat copies of relevant documents which were given. Assessee's explanation in respect of certain parties was also accepted. Before the Tribunal the point relating to alleged denial of opportunity was not pressed. There is no denial of opportunity of examining third parties. [ M.Doraiswamy vs State of Kerala. T.R.C.No. 203 of 1997. Dated 5-10-1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]
 
Sec. 41.- What would be the appropriate enhancement when suppression of turnover is established is a question of fact. Only when there is no nexus between the quantum of suppression and the enhancement madde, a question of law arises. Where the determination of an issue depends upon the appreciation of evidence or material resulting in ascertainment of basic facts without application of any principle of law, the issue  depends upon the appreciation of evidence or material resulting in ascertainment of basic facts without application of any principle of law, the issue raises more question of fact. [ P.Sudhakaran vs State of Kerala. T.R.C.No. 285 OF 1998 .Dated 4-10-1999. Arijit Pasayat (CJ) & K.S.Radhakrishan (J)]
Sec. 41 - Best judgment assessment. There is no hard and fast rule with regard to assessment on the basis of average running stock.  It would depend upon circumstances of each case.  If estimate is arrived at bona fide after taking into account relevant factors and there is absence of caprice,  jurisdiction under Section 41 of the Act will not be exercised.  Fixation of turnover is not an inflexible method and depends on the nature of trade, system of according, stock value, nature of discrepancies noticed and such other relevant factors.  Unless the order passed by Tribunal is erroneous, revisional jurisidiction cannot be exercised. [S. Selvarajan v. State of Kerala.  T.R.C.No.352 of 1998, dated 10-11-1999.  Mr Arijit Pasayat, C.J. and  K.S. Radhakrishnan, J.]
 
Sec.41 - Revisional jurisdiction when can be exercised - The power can be resorted to only if the High Court finds that the Appellate Tribunal has either decided erroneously or failed to decide any question of law.  In other words, where a question of law which has been erroneously decided, or there has been failure to decide the same can be dealt with while adjudicating on a petition filed under Section 41 of the Act.  Adjudication of factual disputes or those relatable to conclusions of facts do not come within the ambit of Section 41 of the Act. [Nazir Trading Company v. State of Kerala, TRC.No.316 of 1998, dated 14-12-1999.  Arijit Pasayat (CJ) & K.S. Radhakrishnan (J)]


Sec.45A - Maintaining of untrue and incomplete accounts - Dealer in jewellery . Vouchers maintained by the dealer corroborate the issues with the Goldsmith and their non-co-operation in the enquiry. No grounds for interference. [M/s. Vanitha Jewellery vs Intelligence Officer . (1999)7 KTR 427(Ker). P.Shanmugham {J}]

45A - Writ petition challenging the imposition of penalty on the ground of violation of the principles of natural justice - Alternate remedy is not an absolute law for the maintainability of writ petition. [ South Travancore Distilleries and Allied Products vs Asst.Commissioner of Income Tax. (1999) 7 KTR 364 ]  Secs.45A & 47 - Once an offence is compounded and the Department has accepted the maximum compounding fee of rupees one lakh, no further penalty under Sec. 47 can be imposed. [Varkey & Co vs. S.T.O. 1999(2) KLT 430 = 1999(2) KLJ (NOC) 4 . J.B.Koshy {J}]

Sec.45A - Penalty Imposition - Whether penalty should be imposed for failure to perform statutory obligations has to be adjudged by exercise of judicious discretion.  But considering the fact that the revised returns were filed before verification and detection of any omission by the assessing officer, it can certainly be said to be a mitigating factor while deciding the quantum of penalty to be levied. [K.K. Gopalan v. Asst. Commissioner (Assmt.) II. W.A.No. 124 of 1999, dated 5-11-1999.   Arijit Pasayat (CJ) & K.S. Radhakrishnan,. (J)]

Sec.45A(1)(d) - Penalty - Atta, Maida and Sooji, tax is liable to pay at the first stage as per High Court Decision - Return filed - Subsequently Supreme Court has reversed the above view - Subsequently revised return filed and tax paid - No penalty is leviable.  [M/s.Sree Rama Roller Flour Mills Vs. The Assistant Commissioner (ASSMT) and others, 2002 (2) KLT SN 107, Page No.91.   J.B.Koshy (J)]

 
First Schedule - Entry II - Cement Bricks includes Hollow Bricks.  Presence of Cement is not of minimal quantity.  Cement on of the essential components of finished product. [M/s. Cochin Agencies and Bricks v. State of Kerala. TRC.No.143 of 1998, dated 29-10-1999.  Arijit Pasayat, (CJ) & K.S. Radhakrishnan (J)]


Entries 4 and 138 Schedule -I . "Cage Wheel " is not an essential part of tractor and is taxable only at six per cent. [Dy.Commissioner (Law) vs. C.K.Industries. 1999 (2) KLT 223.= 1999(2) ILR Kerala 694 = (1999) KTR 383 .K.Narayanakurup & T.M.Hassan Pillai.{JJ}] 

First Schedule - Entry 86- Seat Covers of Motor Vehicles - Accessories - Liable to taxation -Tax has to be levied from 1-4-1993 to 31-12-1993 at the rate of 15% and thereafter 6% in view of the subsequent notification. Distinction between "Spare Parts" and "Accessories". [M.Salim vs State of Kerala. TRC.No. 382/1998. Dated 5-11-1999.Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]

Turmeric and turmeric power are not same goods. Whereas Chilli and Chilli powder and coriander and coriander powder are same.[ M/s. Tatson Food Industries vs State of Kerala. [ .T.R.C.No. 198 of 1994 and connected cases. Dt. 15-7-1999. K.K.Usha & R.Rajendra Babu {JJ}. ]

Entry 15 - Rate of tax applicable to taxable turnover - On item of work which is treated as works contract - Only if sanitary fittings and articles for pumping, drainage etc. are supplied in the course of execution of contract, the contract can come under Item 15 of Fourth Schedule.  [Philipose Vs. State of Kerala, 2002 (1) KLT SN 65, Page No.55, dated 10th December, 2001. (S.Sankarasubban & C.N.Ramachandran Nair (JJ)]

 Entry 32 First Schedule - Pickle not packed in air tight containers are taxable at the rate of 6 per cent under Entry 32 of the 1st Schedule and not under Entry 75 of the 1st Schedule.  [Bymore Food Products Vs. State of Kerala, 2002 (1) KLT 379. . (P.K.Balasubramanyan & C.N.Ramachandran Nair (JJ)]

Entry 156 - Indian Made Foreign Liquor had suffered tax as contained in the containers. There is no distinct sale of liquor and bottles seperately. Levy of tax in bottles is in order. [ M/s. K.Sreedharan & Co vs State of Kerala. T.R.C.No. 258 of 1999. Arijit Pasayat (CJ) & K.S.Radhakrishnan (J)]
Schedule I -  Item 14 - Poultery farmers within state - usage of words" within the State " for the purpose of determining the turnover is not unconstitutional and is valid  - The notification was intended to boost interstate trade, as there is likilihood of a rejuvenation in transport of chicken by the incentive granted, and it does not therefore offend Part III of the Constitution . [ P.P.Baby vs The Addl. Sales Tax Officer .  2001 (1) KLT. 944. M.Ramachandran (J)]

Schedule I Entry 87 - " Soda and Cola sold as second sales are not taxable . [ Vilasini vs State of Kerala. 2001(1) KLT. 320.S.Sankarasubban & A.Lekshmikutty (J&J)]

Items 119 & 182 - Stainless steel gas stove cannot be a steel product -  The stainless steel body of the stove is only an accessory which gives more convenience, beauty and protection to the stove.  \undisputedly, the burner, pipe and knobe attached to the pipes are all made of either cast iron or brass or other alloys.  Stove cannot be said to be a stainless steel product. [M/s. APPPLICO v. State of Kerala, TRC.No.401 of 1998, dated 14-12-1999.  Arijit Pasayat (CJ) & K.S. Radhakrishnan (J)]

 

 Estimating purchase turnover by best judgment on the ground that the assessee failed to maintain manufacturing  account - Not justified.  [Dy. Commissioner (Law) Commercial Taxes Vs. Krishna Plastics, 2002 (2) KLT SN 85, Page No.70. .  V.P.Mohan Kumar & K.K. Denesan (JJ)]

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