M/S. PRIMA INDUSTRIES LIMITED Vs. THE ASSISTANT COMMISSIONER (ASSESSMENT) SPECIAL CIRCLE, DEPARTMENT OF COMMERCIAL TAXES

JUDGEMENT

(1.) Since common questions arise for consideration in these writ petitions, these are decided together. These writ petitions are filed challenging the vires of Section 1(2)(d) of Finance Act, 2007 giving effect to the provisions which were not in the Finance Bill, 2007 from a date prior to the promulgation of the Finance Act, 2007 and also seeking for a writ of certiorari to quash the assessment order and demand notice passed pursuant to the same.

(2.) The short facts involved in WP(C) No. 22181/2009 would show that the petitioner, an assessee on the rolls of the 1st respondent, is engaged in the business of processing of coconut oil and allied products. Petitioner was served with notice under Section 25(1) of the KVAT Act, 2003, proposing to reject the returns filed for the months of May, June, July, August and September, 2007. In the notice, it was stated that their purchases were not eligible for input tax claim from May, 2007 to September, 2007 which represents purchases of solvent extracted coconut oil , copra cake etc,. In the notice, it is stated that as per Kerala Finance Act, 2007, coconut oil and copra cake were exempted from tax w.e.f. 1/5/2007 and therefore, the input tax claimed on purchases for the period from 1/5/2007 are to be disallowed. Pursuant to the said notice, Ext.P2 order had been passed by which the input tax claim has been denied. According to the petitioners, before financial year 2007 -08, coconut oil was liable to tax at the rate of 4% as per Entry 8 of Schedule III of the Act. The exemption was given as per Finance Act of 2007 by incorporation of Entry 12B in Schedule 1 to the Act. Simultaneously, Entry 8 in Schedule III was deleted. The Finance Act was promulgated through Gazette dated 28/7/2007. However, the amendment was given effect from 1st of May, 2007. According to the petitioners, since the exemption was not in the Finance Bill and was available only under the Finance Act, there was no means for the petitioners to know about such a provision from 1st of May, 2007. Thus, they collected tax from their purchasers and the same was incorporated in the periodical returns for the said period. Though a representation was given, no action was taken in the matter and hence this writ petition is filed.

(3.) Learned counsel for the petitioner submitted that during the pendency of the writ petitions, a new provision had been incorporated w.e.f. 01/04/2010 in KVAT Act as Section 11 (3A), which reads as under;