UNITED DISTILLERIES Vs. STATE OF KERALA

JUDGEMENT

(1.) REVISION Petitioner challenges Annexure-E order passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kozhikode (hereinafter referred to as the tribunal) which is impugned in this revision filed under section 41 of the Kerala General Sales Tax Act. According to the petitioner, petitioner is the licensee under the Kerala Abkari Act for the manufacture etc. of Indian made foreign liquor. It is the further case of the petitioner that under the law in force, the whole of the liquor so produced can be sold within the State of Kerala only to the Kerala State Beverages Corporation (for short, KSBC). KSBC would pay the duty. Under the scheme of the Act, according to the petitioner, it was not liable to include the excise duty. Petitioner was made liable to pay turnover tax with effect from 1.7.1987. By Judgment in Kerala Distilleries and Allied Products Ltd. V. Assistant Commissioner (Assessment) (I), Commercial Tax, Special Circle Palakkad (117 STC 553), this Court held that inclusion of excise duty turnover is unconstitutional and void, treating it as privilege price. Ultimately, the matter culminated in the Judgment of the Apex Court in State of Kerala V. Maharashtra Distilleries Ltd., (2005) 11 SCC 1). Therein, the Apex Court declared that the manufacturers are liable to include in their turnover the amount of duty paid by KSBC with effect from 5.1.1999 and to pay the turnover tax accordingly.

(2.) IT is the further case of the petitioner that pursuant to the same, the petitioner included excise duty in the turnover and started payment of turnover tax. In the meantime, section 23B was introduced providing for settlement of outstanding arrears. Petitioner submitted application for payment of arrears of tax and interest as per the Amnesty scheme on 31.12.2008 on the basis of the records. It is their further case that there was some inadvertent errors and the petitioner submitted revised application. By Annexure-A proceedings, the amount payable by the petitioner was determined as Rs.1,11,02,214/= to be paid in four instalments. Annexure-B purports to be the notice issued under section 35 of the KGST Act. Referring to Annexure-A order and noting that it is learnt that the actual arrear position as on the date of opting Amnesty Scheme is Rs.4,83,52,764.00 as stated in the notice, the Deputy Commissioner, Commercial Taxes, Kozhikode proposed to invoke the powers under section 35 of the KGST Act. Annexure-C is the order passed under section 35. Rejecting the contention that the power is not available under section 35 and noting that the petitioner has no dispute regarding section 55C of the KGST Act which provides that payment shall be appropriated first towards interest and only the balance be appropriated towards principal, it was found that in the calculation made by the assessing authority, principles of section 55C was not applied. It was noted that the only argument of the petitioner was that it was a settled matter and it could not be revised. But, this argument did not weigh with the authority. The contention regarding liability to pay turnover tax on the excise duty element was not gone into, as it could not be done in the proceedings. The settlement was found to be based on incorrect figure which was found prejudicial to the Revenue. The Tribunal in appeal has affirmed the order passed by the Deputy Commissioner. It is against the same that the revision is filed.

(3.) LEARNED counsel for the petitioner submits that the Deputy Commissioner has no power to reopen the matter under section 35 of the KGST Act. It is submitted that the petitioner had paid a huge sum of over rupee one crore and all the others were fighting cases. It is also submitted that it is after one year of the petitioner availing the benefit of Amnesty Scheme that power under section 35 of the KGST Act was invoked by the Deputy Commissioner. It is further submitted that the decision of this Court in State of Kerala V. Kaycee Distilleries, (2011) 19 KTR 158 (Ker.), has not become final, as the matter is pending before the Apex Court. It is contended that finding about section 55C of the KGST Act is not correct. Learned Spl. Government Pleader would support the order of the Tribunal.