STATE OF KERALA Vs. KALYAN JEWELLERS

JUDGEMENT

(1.) As all these O.T. Revisions deal with a common issue, they are taken up together for consideration and disposed by this common order.

(2.) The State of Kerala, who is the petitioner in all these O.T. Revisions, has raised the following substantial questions of law:

(3.) The respondents/assessees in these Revisions had opted to pay tax at the compounded rate provided under Sec. 8(f) of the Kerala Value Added Tax Act [hereinafter referred to as the "KVAT Act"]. The assessment years for which they had preferred the option were 2011-12 to 2014-15 in the case of the respondents in O.T. Revision Nos.124, 140, 147 and 156 of 2020 and assessment year 2014-15 in the case of the respondent/assessee in O.T. Revision No.83 of 2018. It would appear that while the respondents/assessees paid tax in accordance with the formula prescribed under Sec. 8(f), they collected tax at rates in excess of what was prescribed under the proviso/table under Sec. 8(f). The details of the tax collected by the respondents/assessees in O.T. Revision Nos.124, 140, 147 and 156 of 2020 are given in the table below: <IMG>JUDGEMENT_186_LAWS(KER)3_2024_1.jpg</IMG> It will be apparent from the above tables that the respondents/assessees had collected tax at rates higher than what was prescribed under Sec. 8(f). The Department therefore initiated action against them for recovery of the excess amounts collected by them by relying on the statutory provisions which made it clear that a dealer who opts for payment of tax under Sec. 8(f) may collect tax at the rate as shown in the table/proviso but where the tax so collected during the year is in excess of the tax payable for the year under the clause, the tax collected in excess shall be paid over to the Government in addition to the tax payable under the said clause. 5. Before the Appellate Tribunal, the case of the respondents/assessees was essentially that notwithstanding the fact that they had collected tax from their purchasers at rates higher than what was prescribed under the Sec. , inasmuch as the total tax collected by them from their purchasers was less than the tax that was payable by them under the said Sec. , there was no requirement for payment of the excess tax collected to the Government. The said contention appears to have appealed to the Appellate Tribunal which found in favour of the respondents/assessees on the said aspect and held that inasmuch as the tax collected by the assessees never exceeded the compounded tax payable by them, there was no obligation on them to pay the excess amounts collected to the Government. It is impugning the said finding by the Appellate Tribunal in the orders impugned in these O.T. Revisions, that the State has approached this Court. 6. We have heard Sri.V.K.Shamsudheen, the learned Government Pleader for the petitioner and Sri.K.M.Firoz, the learned counsel for the respondents/assessees in these Revision Petitions. 7. On a consideration of the rival submissions, we find ourselves unable to accept the interpretation of the Appellate Tribunal of the provisions of Sec. 8(f). The proviso to Sec. 8(f)/Sec. 8(f)(iii) deals with a situation where a dealer in bullion or ornaments or wares or articles of gold, silver or platinum group metals including diamond, who has chosen to pay tax at the compounded rate under Sec. 8 of the KVAT Act, in lieu of the normal rate under Sec. 6 of the KVAT Act, is permitted to collect tax from the person to whom he has sold goods at the prescribed rate. The second limb of the said provision clarifies that if the tax so collected during the year is in excess of the tax payable for the year then the tax collected in excess shall be paid over to the Government in addition to the tax payable under Sec. 8(f). Here, the words "tax so collected" appearing in the second limb assumes importance. In our view, it must be seen as a reference to the tax that is permitted to be collected under the first limb of the provision namely, tax at the rate prescribed therein. Thus, if a dealer collects tax at a rate different from the rate prescribed in the first limb of the proviso/Sec. 8(f)(iii), then it would not answer to the description of "tax so collected" for attracting the second limb of the provision. It is apparent therefore that the finding of the Appellate Tribunal, in the orders impugned in these O.T. Revisions, are contrary to the express provisions of Sec. 8(f)(iii)/proviso to Sec. 8(f). 8. We are also not impressed with the argument of the learned counsel for the respondents/dealers that a registered dealer, as opposed to a dealer simplicitor, who opts to pay tax under Sec. 8(f) of the KVAT Act can nevertheless collect tax as per the rates indicated in Sec. 6 by invoking the provisions of Secs. 30(1) and (2) of the KVAT Act. Sec. 30(1) and (2) of the KVAT Act read as under: