TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 668
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the 3rd Schedule to the KVAT Act, 2003, attracting tax @ 4%; iii) declare that the Amendment vide Kerala Finance Act, 2014, brought u/s. 55, taking away the two stages of appellate remedies and the right of revision on a substantial question of law before this Hon'ble Court, as unconstitutional, insofar as it deprives the assessees of the already accrued statutory rights in respect of the proceedings initiated prior to 1.4.2014" The main reliefs sought for in WP(C) No. 23630/2016 are as follows: "i) call for the records leading to Exhibits P7, P8 & P9 orders issued by the 3rd respondent and quash the same by the issuance of a writ of certiorari or such other writ, order or direction; ii) declare that the "Multi-Function Printer" traded by the petitioner, falls under Entry 69(22)(c)(i) of the 3rd Schedule to the KVAT Act, 2003, attracting tax @ 4%/5% as applicable in the respective year." 2. The petitioners are Companies engaged in the business of sales of IT products. These writ petitions pertain to the assessment years 2011-12, 2012-13 and 2013-14. The petitioner in WP(C) No. 22343/2015 had purchased two models of machines, 'TaskAlfa 180' and 'TaskAlfa 22....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Brothers v. Assistant Commissioner, Commercial Taxes [2014 (3) KHC 55], after giving an opportunity of hearing to the petitioner. 5. The Intelligence Officer in compliance of the directions issued by this Court in Ext.P10 judgment heard the petitioner in WP(C) No. 22343/2015 and issued Exts.P11 to P13 orders of penalty, which are under challenge before this Court in WP(C) No. 22343/2015. The Intelligence Officer also distinguished the decision of this Court in Chakkiath Brothers (supra). The Intelligence Officer was of the view that the petitioner/dealer in the case had wilfully misclassified the commodity and therefore is liable to be proceeded with for imposition of penalty. 6. This Court would have relegated the petitioners to the alternate remedy of appeal under the provisions of the KVAT Act. However, considering the fact that, earlier, this Court had entertained WP(C) No. 33728/2014(M) filed by the petitioner in WP(C) No. 22343/2015 and remanded the matter back to the intelligence officer for reconsideration, and that these writ petitions have been admitted long back and pleadings are complete and, therefore, at this stage, relegating the petitioners to the alternate stat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a catena of decisions rendered by the Hon'ble Supreme Court in several cases. 10. Sri. Mohammed Rafiq, learned Special Government Pleader (Taxes), submitted that the machines did not have more than one functions, viz. 'printing' and 'copying'. The goods/products are covered under Entry 30 of the list of goods taxable @ 13.5% as published in SRO 88/2006. It is submitted that Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act would be applicable to machines answering twin parameters, viz., (1) machine shall perform two or more functions viz. (i) printing or (ii) copying or (iii) facsimile transmission and (2) capable of being connected to an automatic data processing machine or to a network. The product in question is 'photocopier' and it can be used as a printer by adding optional equipments as provided in the 'Operation Guide' of the said machines. The optional equipments, which can be added to the machines as given in the operation guide, are : 1. Document processor 2. Paper feeder 3. Duplex Unit 4. Key counter 5. Printer kit/Printer server 6. Additional memory 11. The machines in question were copier and not printer. Th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings would get attracted. In support of this submission, the learned Special Government Pleader has placed reliance on a Division Bench judgment of this Court in Little Flower Hospital Trust v. State of Kerala [2019 (3) KLT 242] which was rendered in respect of Section 17A of the Kerala Tax on Luxuries Act, 1976. The provisions of Section 67(1) of the KVAT Act are in pari materia to the provisions of Section 17A of the Kerala Tax on Luxuries Act. 15. I have considered the submissions. 16. It is not in dispute that the Customs authorities had accepted classification of the machines under HSN Code 8443 3100 under the head 'Digital Multifunctional Device' under the provisions of the Customs Act and the Customs Tariff Act, which is corresponding to Entry 69(22) (c)(i) of the Third Schedule to the KVAT Act. The importer-seller itself had classified the said products under Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act with HSN Code 8443 3100 under the Customs Act and the Customs Tariff Act. When the importer-seller had classified its machine under HSN Code 8443 3100, which falls under Chapter 84 of the Customs Tariff Act corresponding to Entry 69(22)(c)(i) of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e KVAT Act reads as under: "67. Imposition of penalty by authorities.- (1) Notwithstanding anything contained in section 71 if any authority empowered under this Act is satisfied that any person, - (a) being a person required to register himself as a dealer under this Act, did not get himself registered; or (b) has failed to keep true and complete accounts; or (c) has failed to submit any return as required by the provisions of this Act or the rules made thereunder; or (d) has submitted an untrue or incorrect return; or (e) has made any bogus claim of input tax credit, special rebate or refund; or (f) has continued the business during the period of suspension of registration; or (g) has failed to return the unused statutory Forms and Declarations under this Act after the cancellation or suspension of the registration; or (h) has not stopped any vehicle or vessel when required to do so; or (i) has failed to comply with all or any of the terms of any notice or summons issued to him by or under the provisions of this Act or the rules made there under; or (j) has acted in contravention of any of the provisions of this Act or any rule made thereunder, for the con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e present cases, when the importer- seller had classified the said machines as 'Digital Multifunctional Devices' with HSN Code 8443 3100 under the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975 at the time of import and the said HSN Code is identical to Entry 69(22)(c)(i) of the Third Schedule to the KVAT Act, the petitioners cannot be said to have wilfully classified the machines under a wrong head with the intention to evade payment of correct/higher rate of tax at 13.5%. The penalty proceedings has to be initiated when there is wilful or contumacious act on the part of the assessee to evade payment of correct tax. The petitioners had reason to adopt the said classification as 'Digital Multifunctional Devices', as they being re-sellers could not have classified the machines to a different classification. 20. In view of the aforesaid, I am of the opinion that the initiation of penalty proceedings against the petitioners in WP(C) Nos. 22343/2015 & 23630/2016 are not justified and therefore, the penalty orders (Exts. P11 to P13 and Exts.P7 to P9 in WP(C) Nos. 22343/2015 & 23630/2016, respectively) impugned in these cases are hereby set aside. ....