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Issues: (i) Whether, for the assessment years up to and including 2013-14, the concessional rate of tax under the 5th proviso to Section 6(1) of the Kerala Value Added Tax Act applied to sales made to unit-run canteens of the Military, Naval and Air Force. (ii) Whether, for the assessment year 2014-15, the amended proviso continued to extend the concessional rate of tax to supplies made to unit-run canteens.
Issue (i): Whether, for the assessment years up to and including 2013-14, the concessional rate of tax under the 5th proviso to Section 6(1) of the Kerala Value Added Tax Act applied to sales made to unit-run canteens of the Military, Naval and Air Force.
Analysis: The pre-amendment text of the proviso extended the benefit to sales to or by Military, Naval, Air Force or NCC canteens, Indian Naval Canteen Service, Canteen Stores Department, Central Police Canteen and certain subsidiary canteens. The amendment brought in with effect from 01.04.2014 narrowed the scope and indicated that the earlier wider coverage had been available during the prior period. On that basis, the earlier assessments could not be tested by the amended restriction.
Conclusion: The concessional rate of tax was available for supplies made to unit-run canteens for the assessment years up to and including 2013-14, and the assessment orders denying that benefit for those years were not sustainable.
Issue (ii): Whether, for the assessment year 2014-15, the amended proviso continued to extend the concessional rate of tax to supplies made to unit-run canteens.
Analysis: The amended proviso, operative from 01.04.2014, confined the concession to sales to Canteen Stores Department, Central Police Canteen, Indian Naval Canteen Service and National Cadet Corps Canteen, and separately referred to sales by Military, Naval and Air Force canteens only in respect of goods purchased from the specified suppliers. The amended provision therefore excluded direct supplies to unit-run canteens from the concession for the later period.
Conclusion: The concessional rate of tax was not available for supplies made to unit-run canteens for the assessment year 2014-15.
Final Conclusion: The assessments for the earlier years were set aside and sent back for fresh assessment, while the later assessment was also quashed but the assessee was held ineligible for concessional tax treatment on supplies to unit-run canteens for that year.
Ratio Decidendi: A taxing concession confined by amendment to specified canteens operates prospectively, and for the prior period the wider unamended proviso governs the availability of the concessional rate.
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