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Judges : JAWAHAR LAL GUPTA,A.K.BASHEER
Seshasayee Paper & Boards Limited - Appellant
Versus
State of Kerala - Respondent
Case No : WA.Nos. 178 of 2003, 185 of 2003, 220 of 2003 etc
Decided On : 07/14/2003
Advocates Appeared :
For the Appellant: A.L.Somayaji (SR), Mohan Parasaran, Thanu Pillai, Advocates. For the Respondents : Raju Joseph, Government Pleader.
Kerala General Sales Tax (Amendment) Act, 2002 –Section 3(c) –Constitution of India –Article 213 , 14–Issue on Tax, Ordinances –On behalf of the appellants, counsel made a two-fold submission – It was contended that even though Ordinance were published in the Government Gazette, the change in the rate of tax was never made known to the dealers of the public – Even the authorities in the department were not aware of the issue of the Ordinances – The State having failed to publicise the change in the rate of tax, the dealers had not collected it – The levy of tax at the higher rate and the notices for recovery are, thus, arbitrary and violative of Art. 14 –Thus, there was no valid reason to re-promulgate the Ordinance – He also contended that the declared reason for the enhancement of the tax was the recommendation of the Sub committee on the Value added Tax –Held, In the present case, it is obvious that the rate of tax had been revised through the Ordinance published –Thereupon, the appellants were entitled to charge tax at the higher rate –Equally, they were also liable to pay the tax at the revised rate – The Act had merely replaced the Ordinance and maintained the continuity – It was really not retrospective in its operation – It was not a curative or a remedial measure – In fact, there was nothing to be cured or remedied – Still further, notwithstanding the repeal of the two Ordinances, the Legislature had really substituted the Act for the Ordinance – It had also saved the action as actually taken or deemed to have been taken – Thus, the contention that the statute is unreasonable is untenable – In the present case, court cannot say that the Government had adopted ‘a methodology – The delay was not a device – The action was not a colourable exercise of power –Actually, the Ordinance was made into an Act – Petition dismissed
Jawaharlal Gupta, C.J.
1) Is Section 3(c) of the Kerala General Sales Tax (Amendment) Act, 2002, by which the rate of tax on the sale of paper has been raised from 4% to 8% with effect from December 31,2001 unconstitutional? This is the short question that arises for consideration in this bunch of ten appeals and one Writ Petition. The learned single Judge having dismissed the petitions, the writ petitioners have filed these appeals. The writ petition Viz. O.P.No. 7973 of 2003 has been posted along with the appeals under an order passed by the leaned single judge.
2) Learned counsel for the parties have referred to the facts in W.A.No. 178 of 2003. These may be briefly noticed.
3) The appellant is a Public Limited Company. It is engaged in the manufacture of paper and paperboards. It has its registered office at Pallipalayam, P.O. Erode, in the state of Tamil Nadu. It is registered as a Dealer under the Kerala General Sales Tax Act, 1963.
4) On December 31, 2001, the Kerala General Sales Tax (Amendment) Ordinance 2001 (Ordinance No.37 of 2001) was published in the Government Gazette. It was declared that during the period of operation of the Ordinance, the Act shall have effect subject to the amendments specified in Sections 3 and 4. The relevant provision is contained in Section 3(c) by which the rate of tax on the sale of paper was raised from 4% to 8%. It was followed by Ordinance No. 4 of 2002, viz., 'The Kerala General Sales Tax Act (Second Amendment) Ordinance, 2002.' It was published in the Gazette on April 11, 2002. In the preamble it was inter-alia mentioned that a Bill to replace Ordinance No. 37 of 2001 by an "Act of the State Legislature could not be introduced in, and passed by the Legislative Assembly of the State of Kerala, during its session which commenced on the 1st day of March 2002 and ended on the 15th day of March 2002." Thus, the second ordinance was promulgated. On July 9,2002, Act No.4 of 2002 was published in the Gazette. It was to be "deemed to have come into force on the 31st day of December 2001." Copies of the Ordinances and the Act have been produced as Exts.P1 to P3.
5) The appellant had filed the "monthly and annual returns taking the rate of sales tax on paper at 4% only." Copies have been collectively field as Ext.P4. The appellant alleges that "several representations were made to the State by the Association and individual dealers about the unreasonableness" of the action in retrospectively raising the rate of sales tax from 4% to 8%. It was a 'colorable exercise' of power by the State. Regardless, it was given a notice dated August 17, 2002 for the payment of tax at the enhanced rate in terms of the Amending Act for the period from April 2002 to July 2002. It had also received another notice dated August 27,2002. Copies of these notices have been produced as Exts.P6 and P7. The reply submitted by the appellant to the fourth respondent on September 16, 2002 has been produced as Ext.P5. Thereafter an order of provisional assessment for the period from April 2002 to July 2002 along with a notice of demand was served on the appellant. A copy has been produced as Ext.P8. It was also served with a notice dated September 11, 2002 calling upon it to deposit differential tax for the month of August 2002 along with interest failing which the amount was to be recovered as arrears of land revenue. Copy of this notice has been produced as Ext.P9. The appellant filed an appeal against the orders of provisional assessment and the notices of demand for the period form April to July 2002. Despite that, two notices dated November 5, 2002 and November 8, 2002 were served on the appellant. Copies have been collectively produced as Ext.P10.
6) The appellant alleges that it was not aware of the increase in the rate of tax as imposed by the issue of the two Ordinances. In fact, "even the assessing officers" were ignorant about it. The Budget session of the Kerala Legislative Assembly was convened on March
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