RECKITT BENCKISER (INDIA) LTD Vs. COMMISSIONER, COMMERCIAL TAXES

JUDGEMENT

(1.) Common questions arise for consideration in all these cases and hence we are disposing of these cases by a common judgment.

(2.) Appellant in O.T.A. No. 6 of 2006 is the petitioner in W.P.C. No. 16721 of 2006. Appeal was preferred under Section 62(1) of the Kerala Value Added Tax Act, 2003 read with Rule 80(1) of the Rules challenging the clarificatory order dated April 7, 2006 passed under Section 94 of the VAT Act by the Commissioner of Commercial Taxes, Trivandrum. W.P.C. No. 16721 of 2006 was preferred seeking a declaration that serial number 66 inserted as per exhibit P2 notification dated January 21, 2006 is inoperative and unenforceable so far as it varies from HSN Code 8516.79.20.

(3.) Appellant, hereinafter referred to as "the company", is engaged in the manufacture, sale and marketing of household insecticide, pesticides such as Mortein mosquito coils, mat vaporisers, liquid vaporisers, multi-insect killers and disinfectants such as Harpic and Lizol and Dettol antiseptic. From April 1, 2005 to September 30, 2005 the company conceded a total and taxable turnover of Rs. 7,15,06,109 and Rs. 6,85,10,555, respectively. According to the company, it had collected VAT at the rate of four per cent of Rs. 27,40,376 and the same was deposited with the Commercial Tax Department. The company was however served with a notice under Section 67, VAT Act, 2003 dated April 25, 2005 staring that on verification of the returns for the months from April, 2005 to September, 2005 it was noticed that the turnover mentioned therein related only to mosquito repellent and related devices and not involving rodenticides/pesticides. It was stated that mosquito repellent and electronic mosquito repellent devices are taxable at 12.5 per cent vide entry 66 of S.R.O. No. 82 of 2006. Further it was also stated that the commodity sold by the company bears HSN Code 8516.79.20. Prior to the publication of the list by Notification S.R.O. No. 82 of 2006 attracting 12.5 per cent tax, mosquito repellents and related devices, warranted levy of VAT at the rate of 12.5 per cent, vide Section 6(1)(d) of the VAT Act, 2003. It is stated that what is contained under entry 44 of the Third Schedule to the VAT Act and taxable at four per cent is insecticides bearing HSN code 3808. It was stated that the rate of tax of four per cent conceded by the dealer is, hence, incorrect. Filing of untrue return and evading tax at the rate of 8.5 per cent is an offence punishable under Section 67 of the VAT Act, 2003. Evasion of tax, therefore, worked out to Rs. 6,85,10,555. It was also proposed to impose a penalty of Rs. 1,16,46,886 being double the tax evaded and the company was asked to file its objections and was given an opportunity to get the offence compounded departmentally under Section 74 of the Act in lieu of prosecution.