SHARON INSUL INDIA LTD Vs. ASSISTANT COMMISSIONER (ASSESSMENT)

JUDGEMENT

(1.) The petitioner, who is a registered dealer and an assessee on the files of the 1st respondent, under the Kerala Value Added Tax Act, hereinafter referred to as the 'KVAT Act', is engaged in the business of glass fibre and glass wool. During the assessment year 2005-06, he had filed returns and paid tax on the said item at the rate of 4%, going by the inclusion of the item "glass wool" under entry 31(11) of the third Schedule to the KVAT Act. It would appear that, by virtue of the Kerala Value Added Tax (Amendment) Act, 2005, which was published in the Gazette on 28.8.2005, the third Schedule was amended and various entries therein substituted with new entries. In that process, the item dealt with by the petitioner was deleted from the entries in the third Schedule and came to be classified under the residual head attracting tax at the rate of 12.5%. In the assessment that was completed against the petitioner for the said assessment year, by Ext. P2 assessment order, the rate of tax on glass wool was assessed at 12.5% even for the period from 1.4.2005 to 28.8.2005, the latter being the date on which the amendment Act came into force. The Assessing Authority proceeded on the assumption that the amendments brought about by the Amendment Act of 2005 were retrospective in nature and would take effect from 1.4.2005 and not from 28.8.2005. It is apparent that the Assessing Authority did not notice Section 24 of the Amendment Act of 2005, which reads thus under:

(2.) It was under these circumstances, and on the erroneous assumption that the amendment was retrospective with effect from 1.4.2005 that the Assessing Authority completed the assessment in Ext. P2 order.

(3.) Aggrieved by Ext. P2 assessment order, the petitioner carried the matter in appeal before the 2nd respondent, who, vide Ext. P4 order, confirmed the demand against the petitioner on this issue. It is relevant to note that even while the petitioner had preferred an appeal before the First Appellate Authority, the petitioner approached this Court through the present writ petition aggrieved by the stand taken by the respondents in demanding amounts that were not legally due from him since, according to the petitioner, the Amendment Act of 2005 did not contemplate a retrospective enhancement of the rate of tax applicable to the commodity dealt with by the petitioner. It was during the pendency of the writ petition that the 2nd respondent Appellate Authority proceeded to pass Ext. P4 order. This led the petitioner to incorporate a challenge against the said appellate order also in the present writ petition. The writ petition essentially impugns both Exts. P2 and P4 orders to the extent they confirm a demand against the petitioner based on the adoption of a higher rate of tax for the commodity "glass wool" for the period between 1.4.2005 to 28.8.2005.