TaxTMI 
TaxTMI 
2023 (12) TMI 109
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....Azees and Mr Mohammed Rafiq, learned Special Government Pleader (Taxes) for the parties. 1.1 This batch of writ petitions has been filed impugning the interest liability on the petitioners for the delay in remitting the turnover tax (for short, 'ToT') in respect of the Financial Years 2020-21 and 2021-22. Common questions of facts and law are involved in these writ petitions. Therefore, the facts of the lead petition, being W.P.(C) No. 32408/2023, are taken note of for the purposes of comprehending and deciding the controversy involved in these writ petitions. Facts in Brief: W.P.(C) No. 32408/2023 2. The petitioner is a Bar-Attached Hotel (4 Star) having FL3/FL11 licenses to sell Indian Made Foreign Liquor (for short 'IMFL'), including beer and wine, only in loose quantity/ peg measurements within their licensed premises as per the provisions of the Foreign Liquor Rules and the Licenses issued to them. 2.1 The petitioner is a dealer under the provisions of the Kerala General Sales Tax Act, 1963. So far as the sale of sealed bottles from retail outlets is concerned, the State Government has created a monopoly in favour of the Kerala State Beverages Corporation (for short, 'KSB....
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.... Indian Made Foreign Liquor de hors, the introduction of VAT laws and GST laws in the State. Section 5, the charging section, provides for payment of total turnover tax for the year by the KSBC through its retail outlets as well as FL3/FL11 licensees. For Bar-Attached hotels, the rate of tax is 10%, and for others, the rate is 5% of the total turnover tax at all points of sale. It would be apt to take note of Section 5 of the KGST Act, which is extracted hereunder: "5. Levy of tax on sale or purchase of goods: - (1) Every dealer (other than a casual trader or agent of a non-resident dealer or the Central Government, or Government of Kerala or the Government of any other state or of any Union Territory, or any local authority) whose total turnover for a year is not less than two lakhs rupees and every casual trader or agent of a non-resident dealer, the Central Government, Government of Kerala, the Government of any other state or of any Union Territory, or any local authority whatever be its total turnover for the year in respect of goods included in the Schedule at the rate mentioned against such goods,- (a) in respect of Petroleum products falling under Sl. No. 1 of the Sched....
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....eting) Corporation shall be liable to pay turnover tax on the turnover of sale of liquor by it to the said Corporation and the turnover for the purpose of this sub-section shall include any duty of excise leviable on such liquor at the hands of such manufacturer whether such duty is paid by the manufacturer or by the said Corporation. Explanation III: For the purpose of this sub-section bar attached hotel shall mean a hotel, restaurant, club or any other place, which is licensed under the Foreign Liquor Rules, to serve foreign liquor specified under clause (b) of Explanation to sub-section (1). (ii) Notwithstanding anything contained in sub-section (1) of Section 22, no dealer shall collect from his purchaser the turnover tax payable by him under this sub-section. (3) Notwithstanding anything contained in sub-section (1), every dealer registered under sub-section (3) of Section 7 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), shall whatever be the quantum of his total turnover, pay tax on his taxable turnover for that year in respect of the sale of the goods, with reference to the purchase of which he has furnished a declaration under sub-section (4) of Section....
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....86,27,206/- during the period 22.05.2020 to 21.012.2020 and regular Bar sales of Rs. 5,02,42,527/- during the balance period at its Bar hotels at Kulanada and Vembayam. 3.4 It is the further case of the petitioner that the Finance Minister, in his Budget Speech on 11.03.2022 on the floor of the Legislative Assembly, announced the extension of the Amnesty Scheme and to enlarge the time to pay the KGST arrears relating to 2021-22 financial year also and the Cabinet decision was taken by the Government on 23.02.2022 to give enlargement of time to file the return as well as to remit ToT by FL3/FL11 licensees. The petitioner did not file the return as well as remittance of ToT in anticipation of necessary notification for the extension of the time limit for filing the return and remittance of ToT up to 31.03.2022 and 30.04.2022, respectively, in view of the policy decision announced on the floor of the Assembly and the Cabinet decision taken. It is further submitted that in the absence of the rate of tax prescribed for the parcel sale by FL3/FL11 licensees, the petitioners were unable to file monthly returns and pay ToT at the rate of 5% on the taxable turnover for the period during wh....
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....ted that in the absence of authorisation by Government Order in Ext. P1, the FL3/FL11 licensees could sell liquor in peg measurements, and the rate of ToT was 10% on such sales. However, when bottle sales were permitted as per Ext. P1, there was no rate of tax provided for such sales by the FL3/FL11 licensees for a limited period, and when there was no rate of tax provided, the petitioner could not have filed the return and paid the tax. In fact, the rate has been prescribed only by the notification in Ext. P2 dated 26.03.2022. 4.3 The rate of tax is one of the components of valid tax legislation, and in the absence of the rate of tax, the charging provision cannot be said to be a valid provision. Because of the confusion prevailing on bottle sales effected through retail outlets of KSBC, the ToT was 5%, and no separate ToT was provided for parcel sale by FL3/FL11 licensees in pursuance of the Government Order in Ext. P1, the petitioners could not have been expected to file return regarding such sale and pay tax in the absence of a clear notification. Furthermore, it is submitted that the Government itself had taken the decision for payment of ToT by the FL3/FL11 licensees up to 3....
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....licensees on parcel sale for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021. It has only reduced the rate applicable for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 to 5%. The submission is that since interest, being a statutory liability has not been waived off by statutory prescription, the petitioners are liable to pay the interest as has been demanded in Ext.P5 Assessment Order. 5.3 Learned Special Government Pleader also submits that the Cabinet Decision, unless and until followed by necessary SRO to implement the said decision, cannot be given effect to by the Court by issuing a writ of mandamus. It comes into effect only when the necessary SRO is issued to give effect to the decision taken by the Cabinet and not otherwise. 5.4 Learned Special Government Pleader has relied on the following decisions in support of his submissions: Voltas Ltd. v. State of A.P. (2004) 11 SCC 569; Chandramani Trades v. State of Kerala (2008) 16 VST 294; JK Synthetics Ltd. Commercial Tax Officer (1994) 94 STC 422; and State of Kerala v. Western India Cosmetic and Health Products Ltd 2020 (10) KLT 786 (FB). Discussion: 6. The facts are not much in dispute....
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.... arrears of tax was extended up to 31.03.2022, and the time for clearing all the dues was also allowed till 30.04.2022. The notification in Ext. P2 has been issued on 26.03.2022 to give effect to the Cabinet Decision dated 22.02.2022. 6.2 I am of the view that the said notification has to be given a purposive interpretation. Under the notification dated 26.03.2022 in Ext. P2, the turnover tax under Clause (i)(a) of Subsection (2) of Section 5 of the KGST Act on sale of foreign liquor sold for the period 22.05.2020 to 21.12.2020 and 15.06.2021 to 25.09.2021 by the Bar hotels has been reduced to 5%. Not only this, if some dealer has paid the excess turnover tax for the said period, the same was to be adjusted towards the existing or future liability. The explanatory note attached to the said notification would read as under: "Explanatory Note (This does not form part of the notification, but is intended to indicate its general purport.) Turnover tax at the rate of ten percent is payable on sale of foreign liquor sold by a bar attached hotel. Whereas, the turnover tax applicable on sale of foreign liquor sold by the Kerala State Beverages Corporation is five percent. During the p....
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....nt in the levy of tax: (i) the character of the imposition known by its nature, which prescribes the taxable event attracting the levy; (ii) a clear indication of the person on whom the levy is imposed and who is obliged to pay the tax; (iii) the rate at which the tax is imposed; and (iv) the measure or value to which the rate will be applied for computing the tax liability. Any uncertainty or vagueness in the legislative scheme defining any of these components could render the levy of tax invalid, as has been held by the Supreme Court in Govind Saran Ganga Saran v. Commissioner of Sales Tax 1985 AIR 1041. 6.6 From the notification in Ext. P1, though the petitioners were permitted to effect the parcel sales, the rate was not prescribed, and the rate has been prescribed only by the notification in Ext. P2 dated 26.03.2022. I am, therefore, of the considered view that in the absence of the rates prescribed before 26.03.2022, any demand and levy of tax could not have been valid. After the rate of the turnover tax has been prescribed, the petitioners ought to have remitted the tax before 30.04.2022. This demand of interest appears to be wholly unjustified and unsustainable for ....