Floor value for evasion-prone commodities upheld only for advance tax and under-valuation purposes.

The Commissioner's supervisory power and the specific power to issue advance tax directions for evasion-prone commodities support fixation of a uniform floor value for valuation purposes, and the circulars were treated as valid only within that statutory purpose. The article also notes that a commodity-wise floor value does not become unconstitutional under Article 14 merely because other commodities or other States are treated differently, and that an expert-based revision was not shown to be arbitrary. The limited effect stated is that floor value may guide advance tax collection and under-valuation proceedings, but cannot be used beyond the purpose authorised by the Act.

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Issues: (i) Whether the circulars fixing floor value for cashew nuts and cashew kernels were ultra vires the Kerala Value Added Tax Act, 2003. (ii) Whether the fixation of floor value was discriminatory or unconstitutional under Article 14 of the Constitution of India.

Issue (i): Whether the circulars fixing floor value for cashew nuts and cashew kernels were ultra vires the Kerala Value Added Tax Act, 2003.

Analysis: Section 3(2)(c) confers supervisory power on the Commissioner to issue orders, instructions and directions for proper administration of the Act, while Section 47(16A) authorises advance tax directions in respect of evasion-prone commodities. The validity of Section 47(16A) had already been upheld, and prior decisions had accepted the Commissioner's power to fix a uniform sale value or floor value for collection of advance tax and to avoid disputes in valuation at the check-post or entry point. The circulars were therefore sustainable so far as they operated within that statutory purpose.

Conclusion: The challenge to the circulars as ultra vires failed.

Issue (ii): Whether the fixation of floor value was discriminatory or unconstitutional under Article 14 of the Constitution of India.

Analysis: A commodity-wise floor value for an evasion-prone item does not become unconstitutional merely because other commodities do not have such a floor value or because other States have not adopted the same measure. The Court accepted that floor value was based on an expert study and found no material to hold that the revised rates were illegal or arbitrarily fixed. The equality challenge was therefore not established.

Conclusion: The challenge under Article 14 failed.

Final Conclusion: The writ petition was rejected on the main challenge, and the circulars were upheld only to the limited extent of advance tax collection under Section 47(16A) and use of floor value as a guideline for under-valuation proceedings.

Ratio Decidendi: A statutory power to direct advance tax collection on evasion-prone commodities includes authority to fix a uniform floor value for valuation purposes, but such circulars cannot be used beyond the limited statutory purpose for which the power is conferred.

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