TaxTMI 
TaxTMI 
2012 (11) TMI 1055
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.... sold by the banks within the State of Kerala, these cases are considered together and disposed of through a common judgment. 2. The petitioner-banks have conceded turnover on the sale of gold bars during the relevant period and paid tax at one per cent, on the premise that the commodity sold will fall within the relevant entry of gold bullions. But the returns were rejected and the turnover was assessed at four per cent treating the commodity as one falling within entry 4(4) of the Third Schedule to the KVAT Act. In this regard, the Commissioner of Commercial Taxes had issued a clarification in exercise of power vested under section 94 of the KVAT Act (exhibit P7 produced in W.P (C) No. 4635 of 2009). In the said clarification, issued on September 29, 2008, it is held that 10 grams of rectangular gold bars, being semi-manufactured gold would fall within entry 4(4) of the Third Schedule with HSN Code 7108.13.00. The assessing authorities found that the rectangular gold bars dealt with by the petitioner-banks cannot be regarded as bullion since they are not raw or unwrought gold or gold in mass. According to the petitioner such an interpretation given by the assessing authority r....
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....e prima facie the abovesaid decision is binding on this court since the issue involved is one and the same. 4. But Sri. M. Pathrose Mathai, learned Senior Counsel appearing for the petitioner in W.P. (C) Nos. 4635 of 2009 contended that the clarification issued as well as the assessment made are against the law declared by the honourable Supreme Court in the case reported in Deputy Commissioner of Sales Tax v. G.S. Pai and Co. [1980] 45 STC 58 (SC). According to him, it is ignoring the binding force of law laid by the honourable apex court that the decision is taken to assess the gold bars classifying the same as commodity not coming within description of bullion. In the said decision the honourable Supreme Court held that, in its plain ordinary meaning bullion means gold or silver in the mass. It connotes gold or silver regarded as raw material and it may either in the form of raw gold or silver or ingots or bars of gold or silver. Ornaments and other articles cannot be regarded as bullion because even if old and antiquated they are not raw or unwrought gold or gold in the mass, but they represent manufactured or finished product of gold. On the facts of the said case, the hono....
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....ustoms Organisation as "Harmonised System of Nomenclature (HSN)" and adopted by the Customs Tariff Act, 1975. Those commodities which are given with HSN code numbers in the Schedules to the KVAT Act should be given the same meaning as given in the Customs Tariff Act, 1975. With respect to those commodities which are not given HSN code numbers should be interpreted in common parlance, or commercial parlance as the case may be. 6. In the case at hand, entry No. 1 in the Second Schedule with respect to gold bullion the HSN Code is 7108.12.00. Whereas, with respect to entry 4(4) in the Third Schedule the commodity "gold, semi-manufactured" is described by HSN Code 7108.13.00. The Division Bench while interpreting nature of the commodity had referred to the Customs Tariff Act with respect to description of various items with HSN Codes and found that rectangular bars of gold sold by the petitioner-banks is "gold in semimanufactured forms", falling under HSN Code 7108.13.00. Learned judges observed that similar size of minted gold cannot be treated as gold in unwrought form, because it has undergone a manufacturing process from gold obtained in unwrought form through casting. Therefore....
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....y to "other unwrought forms". But as held by the Division Bench, the gold bar dealt with by the petitioner-banks cannot be treated as gold bullion coming within entry 1(2) of the Second Schedule to the KVAT Act with HSN Code 7108.12.00. But it can only be considered as "semi-manufactured" form of gold coming within HSN Code 7108.13.00 as described in the Customs Tariff Act. Hence I am inclined to follow the decision in HDFC Bank's case [2010] 36 VST 338 (Ker); [2011] 19 KTR 242 (Ker) which is binding on me. Accordingly the challenge in W.P. (C) No. 4635 of 2009 against exhibits P5 and P6 series assessments deserves no merit. 9. With respect to W.P. (C) Nos. 16478 of 2009 and 16479 of 2009, the petitioner is the HDFC Bank Ltd., who suffered the decision rendered by the Division Bench, reported in HDFC Bank Limited v. Assistant Commissioner [2010] 36 VST 338 (Ker); [2011] 19 KTR 242 (Ker). It is stated that, pursuant to the judgment of the Division Bench, tax amount due with respect to years 2006-07 and 2007-08 has already been paid. But penalty was imposed under exhibit P4 order invoking section 67(1) of the KVAT Act on the premise that there was deliberate attempt on the par....
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....-inclusion of the turnover cannot be termed as intentional. Even if it is held by any court of law that the turnover in question is taxable, it would not be correct to say that the assessee had acted deliberately in defiance of law that their conduct was dishonest or that they have acted in conscious disregard to its application. On the facts of the said case it is evident that the petitioner-company had omitted inclusion of turnover with respect to planting and transport subsidies on the bona fide belief that such items are excluded. Even though the court decided against the assessee and held that such turnover is taxable, the findings rendered upholding imposition of penalty was reversed by the honourable Supreme Court. 11. In Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC); AIR 1970 SC 253, the honourable Supreme Court held that liability to pay penalty does not arise merely upon the proof of default. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasicriminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumac....