KMP TIMBERS Vs. COMMERCIAL TAX INSPECTOR

JUDGEMENT

(1.) THE common issue involved in all these cases is whether the Commissioner is authorised to issue the impugned circulars fixing the "minimum sale price" for calculating the advance tax realisable under section 47(16A) of the Kerala Value Added Tax Act, 2003 and if it is within the power and competence of the Commissioner, whether the sale price fixed in respect of "live chicken" as involved in W.P. (C) No. 17708 of 2008 and that of "timber" involved in other cases is based on the actual market value and legally reckonable, for quantifying the advance tax. The minimum factual position for adjudication of the cases is as follows : The "live chicken" brought by the petitioner in W.P. (C) No. 17708 of 2008, stated as purchased for an invoice value of Rs. 29 per kg. from Tamil Nadu, was intercepted by the concerned respondents at the check -post insisting that the goods could be transported only if advance tax was remitted reckoning the value at the rate of Rs. 60 per kg. as notified by the Commissioner. The goods as well as the vehicle were ordered to be released, pursuant to the interim order passed by this court on June 13, 2008, on condition that the petitioner remitted advance tax on the price provisionally fixed as Rs. 60 per kg. making it clear that the payment will be subject to the result of the writ petition.

(2.) IN all the other cases, "timber" of different types has been brought into the State as imported from abroad and otherwise. When the vehicles were intercepted at different places/check -posts insisting for payment of advance tax as contemplated under section 47(16A) of the Act on the minimum sale price notified by the Commissioner as per circular No. 28/08 dated June 19, 2008, the power, competence and jurisdiction of the Commissioner to issue such circular and as to the sustainability of the sale price fixed therein, have been subjected to challenge, seeking for appropriate reliefs. The vehicles and the goods have been released pursuant to the interim orders directing payment of advance tax reckoning the "provisional sale price" as ordered by this court. The learned counsel for the petitioner in W.P. (C) No. 17708 of 2008 submits that the price of "live chicken" fixed by the Commissioner as per exhibit P4 circular at Rs. 60 per kg. is exorbitant and it does not have any nexus with the market price. It is also pointed out that the price of "live chicken" varies from place to place and from day to day, as evident from exhibit P2 notification published by the Tamil Nadu Poultry Farmers' Association in various dailies, which shows that the maximum rate even as on May 25, 2008 was only Rs. 30 per kg. The price is very much liable to be fluctuated depending upon the "demand -supply" ratio, festival season and adverse calamities including "bird flu" and this being the position, there is absolutely no rationale in fixing the sale price of "live chicken" as Rs. 60 per kg. and in realising the advance tax at that rate, much prior to the taxable event when the sale may take place for a far lesser price, contends the learned counsel. The learned counsel for the petitioners in other cases contended that the "timber" being imported is not of standard quality; the prime consumers are persons having lesser income and that the price of such timber even otherwise cannot have a uniform rate, particularly since the price of timber depends upon the quality of timber, size, girth, absence of any holes or hollows, twist/turns, colour and several other vital factors. It is also pointed out that such timber is considered and valued by the authorities of customs in connection with the imposition of the prescribed duties, based on the "invoice value" and as such, fixation of the sale price by the Commissioner, as per the impugned circular, ignoring the invoice value and the actual expenses incurred, is thoroughly wrong and illogical. As per the impugned circular, the Commissioner has obviously adopted a uniform figure without any regard to the nature of timber and the actual market value, which, hence is stated as wrong and unsustainable.

(3.) DR . K. B. Muhammedkutty, learned senior counsel appearing for the petitioners in W.P. (C) No. 19830 of 2008 and connected cases, submits that the value of timber fixed by the Commissioner as per the impugned circular is almost double the actual price, as reflected from the invoice. The actual price of timber, particularly in view of the poor quality, lower girth, lesser colour and such other defects is correctly shown in the invoice and such true state of affairs is supported by the necessary bills of entry, bills of lading, delivery notes, etc. It is also stated that there cannot be any unbridled power for the Commissioner to fix the sale price ignoring the actual facts and figures and that the authorities by virtue of section 47(16A) of the Act only to impose/collect advance tax and not to fix any sale price and compute the tax on such imaginary value. The learned counsel further submits that even though the circular No. 50/2006 dated December 18, 2006 and circular No. 53/2006 dated December 22, 2006 have been upheld by this court, simultaneously upholding the constitutional validity of section 47(16A), as per the decision in Fantacy Sales Corporation v. Sales Tax Inspector, Walayar [2007] 7 VST 323 (Ker), the said decision is not enough to hold that the Commissioner is having power to issue circulars fixing the sale price, for the purpose of realising the advance tax. It is also brought to the notice of this court that the value of the commodity is having nexus with the charge/levy under section 6 of the Act and as such, the value is to be decided by the assessing authority and not by the Commissioner, particularly, since the essential legislative power, which is conferred on the Government cannot be delegated to the Commissioner in this regard. The learned senior counsel asserts that the power under section 3(2)(c) of the Act is only with regard to the administrative affairs, which, even by the farthest stretch of imagination, can never be pressed into service for fixing the "sale price" in view of the dictum in Choice Plywood Industries v. State of Kerala [2006] 147 STC 72 (Ker); [2006] 2 KLT 513. This is also sought to be supported in the light of the observations made by the apex court in State of Kerala v. Travancore Chemicals and Manufacturing Co. [1999] 112 STC 191; [1999] 1 KLT 91, where a provision was set aside, holding that the same conferred unbridled power on the Government, which is stated as squarely applicable to the cases in hand as well and the only difference is that such unbridled power is now vested with the Commissioner.