TROPICAL FARMS Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) Rejection of application opting to have registration under Section 6(5) of the KVAT Act, as a 'presumptive dealer' with liability to pay tax at lesser rate and the assessment finalised under Section 25(1) of the KVAT Act, ordering to satisfy the liability under Section 6(1) of the Act, is mainly under challenge; simultaneously challenging the constitutional validity of Section 6(5), particularly with regard to the retrospective amendment (made on 28.08.2005) w.e.f. 01-04-2005. The petitioner firm is running a 'poultry farm' engaged in the sale of broiler chicken, having registration, both under the KGST and CST Acts. In the course of business, the petitioner used to bring the live chicken and such other goods from outside the State, to be sold within the State. However, pursuant to the new enactment, i.e. KVAT Act, which was brought into force with effect from 01.04.2005, the petitioner decided to have the benefit of reduced rate of tax applicable to the 'presumptive dealers', who were not importers or dealers liable to tax under Section 6(2) or dealers effecting first taxable sale of goods within the State and whose total turnover for an year was below Rs. 50 lakhs. The petitioner cut down the taxable turnover, stopped import from outside the State, surrendered the CST registration and confined the business within the State, with a maximum turn over of less than Rs. 50 lakhs, effecting the local purchase, which came to the first sale in the State. It was accordingly, that Ext.P1 application was submitted for registration under Section 6(5), giving the factual particulars and satisfied the tax at the reduced rate for the different quarters ending on 30.06.2005, 30.09.2005 and 31.12.2005, effecting the payments on 16.07.2005, 16.11.2005 and 15.02.2006 respectively.

(2.) While so, the petitioner was served with Ext.P2 notice dated 06.03.2006 issued by the first respondent, observing that, on verification of the application for registration as a 'presumptive tax dealer', it was seen that the turnover of the dealer for the preceding year was Rs. 84.87 lakhs and as such, the petitioner was not eligible for option for payment of presumptive tax; thus requiring the petitioner to file an application in Form I as a VAT dealer under Section 16 of the KVAT Act and to pay tax in terms of Section 6(1). On receipt of Ext. P2, the petitioner submitted Ext.P3 reply pointing out that the tax payment was already effected under Section 6(5) and that, the amendment and incorporation of the new proviso, placing a bar with reference to the turnover of the preceding year, exceeding Rs. 50 lakhs was brought about only on 28.08.2005, though with retrospective effect from 01.04.2005, which according to the petitioner was not applicable to the petitioner's case, who had already filed the application paying the tax in tune with the relevant provision, as it existed then. It was further pointed out that the amendment was not applicable also in view of Sec. 24 of the Act, placing a clear bar, stipulating that, where the rate of tax in respect of any goods has been enhanced as a result of amendments, such enhancement shall be applicable only from the date of such amendment. In respect of the closing stock of the taxable goods worth Rs. 13.45 lakhs on 01.04.2005 (which included materials of import), it was pointed out that the petitioner had not purchased 'taxable goods', Inter- State, during the year 2004-05 and that the entire stock mentioned was in respect of 'Maize', a poultry feed which was feeding the petitioner's poultry and not for sale. 'Maize' being not a taxable commodity, having been exempted as per Entry 12 of the First Schedule to the KVAT Act, the petitioner was not liable to be treated as an 'importer' as defined under Section 2(xxii), obviously since the term 'importer' means only a person who obtains or brings any taxable goods from outside.

(3.) After considering the said reply, the first respondent found that there was no merit in it and by virtue of the statutory prescription, as amended, the petitioner was liable to pay the tax, as prescribed under Section 6(1). In the said circumstance, Ext. P4 pre-assessment notice under Section 25 was issued to the petitioner on 22.08.2006 by Registered Post.