MADRAS CEMENTS Vs. ASSISTANT COMMISSIONER AUDIT ASSESSMENT

JUDGEMENT

(1.) The petitioners in these Writ Petitions, except the petitioner in W.P.(C) 16114/2006, are manufacturers of cement. The petitioner in W.P.(C) 16114/2006 is a dealer in heavy vehicles. They have approached this Court, mainly, challenging Clause (ii) of Explanation 111 to Section 2(lii) of the Kerala Value Added Tax Act. 2003. The said explanation has been introduced by an amendment (Act 39 of 2005) published on 28.8.2005 with retrospective effect from 1.4.2005. The brief facts pertaining to each of the cases are summarised below:

(2.) The petitioner is a public limited company, incorporated under the Companies Act. It is a registered dealer under the K.V.A.T and C.S.T. Acts. It is engaged in the manufacture and sale of cement in the southern States, including Kerala. The petitioner used to allow trade discount to the wholesale dealers and retail dealers, according to the practice, normally prevailing in the trade. The normal trade practice was to allow discount for prompt cash payments, target achievements etc. The above discounts, allowed as a regular trade practice, were being deducted from the total turnover, as per the provisions of the Kerala General Sales Tax Act. Even if the discount was allowed not at the time of actual sale, but on a later date, say, at the end of the month, which did not make any difference, it was treated as a trade discount and deducted from the total turnover. The said practice, concerning diminution of the sale price by the grant of discount, was recognized and the benefit was enjoyed by the dealers under the K.V.A.T. Act 2003 also. The definition of "sale price" contained in Section 2 (xliv) of the said Act reads as follows:

(3.) The contentions of the petitioner herein, who is a manufacturer of cement, are identical to those of the petitioner in W.P.(C) 12809/2006. In this case, apart from challenging the amendment introduced to Clause (ii) of Explanation III to the definition of turnover, it also challenges the deletion of Rule 10(a) of the K.V.A.T. Rules with retrospective effect from 1.4.2005. In this case, the 1st respondent rejected the monthly returns filed by the petitioner for the period from April 2005 to August 2005, overruling its objections and passed the assessment orders Exts,P3 to P7, on 17.4.2006. The petitioner also seeks to quash those assessment orders.