MEDILAND DRUG HOUSE Vs. STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY TO THE GOVT. OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM

JUDGEMENT

(1.) The petitioner is a proprietary concern dealing in medicines. As part of its business activities, the petitioner purchases medicines from registered dealers, who have opted for payment of tax on the MRP value, and therefore, the petitioner is exempted from payment of tax on medicines by virtue of Proviso (b) to Section 8 (e) of the Kerala Value Added Tax Act (hereinafter referred to as 'the KVAT Act'). In respect of sales turnover of non-medicinal items, the petitioner opted to pay tax on presumptive basis under Section 6(5) of the KVAT Act. The provisions of Section 6(5) of the KVAT Act enable a person, whose total turnover for a year is below 60 lakhs, to opt for payment of tax at the rate of 1/2 % of the turnover of sale of taxable goods as presumptive tax instead of paying tax under Sub section 1 of Section 6. In the case of the petitioner, for the assessment year 2014-2015, it opted for payment of tax on presumptive basis in respect of non-medicinal items. During the course of the year, the turnover exceeded Rs. 60 lakhs and in the return submitted by the petitioner the turnover of non-medicinal items for the year was declared at Rs. 63,89,651/-. The Assessing officer while completing the assessment for the said year found that inasmuch as the petitioners turnover in respect of nonmedicinal items had exceeded Rs. 60,00,00/-, the entire turnover pertaining to non-medicinal items would have to suffer tax in accordance with Section 6(1) of the KVAT Act. Accordingly, by Ext. P5 assessment order, the petitioner was assessed on a total turnover of Rs. 63,89,651/- at the rate of 14.5%, which is the rate of tax applicable under Section 6(1) of the KVAT Act. The petitioner was also denied input tax credit that was applicable to assessees, who were paying tax in accordance with Section 6 (1) of the KVAT Act. Ext.P5 assessment order is impugned in the writ petition, inter alia, on the ground that, the Assessing officer erred in subjecting even the turnover of Rs. 60,00,000/- to tax at the rate of 14.5% as against the presumptive rate of tax of .5%.

(2.) A counter affidavit has been filed on behalf of the respondents, wherein the stand taken is that once the turnover of a person, who opted for payment of tax on presumptive basis exceeds the limit of Rs. 60,00,000/-, then the said person loses the benefit of the option exercised and the entire turnover for the year in question become liable to tax at the rate applicable under Section 6(1) of the Act. Ext.P5 assessment order is sought to be justified on the said contention.

(3.) I have heard the learned counsel appearing for the petitioner as also the learned Government Pleader appearing for the respondents.