2018 (3) TMI 1412 - HC - VAT and Sales Tax

Court quashes tax assessment orders, clarifies rules for military canteens

L.G Electronics India (P) Limited Versus Assistant Commissioner (Assessment), Department of Commercial Taxes, Special Circle 1, Ernakulam, Kochi and others

L.G Electronics India (P) Limited Versus Assistant Commissioner (Assessment), Department of Commercial Taxes, Special Circle 1, Ernakulam, Kochi and ... Issues Involved:Challenge against assessment orders denying concessional rate of tax to supplies to military canteens.Analysis:The writ petitions challenged assessment orders under the Kerala Value Added Tax Act for the years 2011-12 to 2014-15, disputing the denial of concessional tax rates for supplies to Military, Navy, and Air Force canteens. The petitioners argued that the concessional rate should apply to supplies to Unit run canteens as well, not just the Canteen Stores Department. The assessing authorities rejected the concessional rate for supplies to Unit run canteens, leading to the legal challenge.The statutory provisions under Section 6(1), 5th Proviso, were crucial in determining the applicability of concessional tax rates. Until 2013-14, the benefit extended to sales to or by various canteens, including Unit run canteens. However, an amendment effective from 01.04.2014 restricted the benefit only to sales to specific canteens like Canteen Stores Department, Central Police Canteen, etc. This change reflected the State Government's recognition of the distinction between Canteen Stores Department and Unit-run canteens, as highlighted by the Supreme Court's observations in a relevant case.The judgment emphasized the significance of the amendment and criticized the assessing authority for applying the amended provision retrospectively to earlier assessment years. Consequently, assessment orders for the years 2011-12, 2012-13, and 2013-14 were quashed, directing fresh assessments considering the observations in the judgment. However, for the assessment year 2014-15 (pertaining to a specific case), the petitioner was not entitled to the concessional rate for supplies to Unit-run canteens. The court annulled the assessment order for 2014-15 and instructed a fresh assessment within six weeks, allowing the petitioner to raise other issues during the reassessment process.In conclusion, the judgment clarified the application of concessional tax rates to supplies to military canteens, highlighting the impact of statutory amendments and ensuring fair assessments based on the relevant legal provisions.