VINOD CHANDRAN, J.

1. The revisions have been referred to us by a Division Bench, doubting the sustainability of the findings of another Division Bench; with respect to forfeiture of tax under Section 72 of the Kerala Value Added Tax Act, 2003 [for brevity "KVAT Act"] and Section 46A of the Kerala General Sales Tax Act, 1963 [for brevity "KGST Act"]. The question arose in the context of the challenge raised against the levy of service tax under the Finance Act, 1994 and sales tax under the KGST Act on sale of SIM Cards. A Division Bench of this Court found, on the strength of 'aspect theory', that both taxes are leviable on the sale price of SIM Cards, which includes activation charges also. Later, by a judgment of the Hon'ble Supreme Court it was held that activation charges cannot be included for levy of sales tax for reason of there being no transfer of property in goods; either by way of sale or lease.

2. Some of the Telecom Companies challenged the levy under the Finance Act, 1994 and some others the levy under the Sales Tax enactment; alternatively subjecting themselves to the other levy. Here, we have an assessee-respondent who had challenged the service tax levy on sale of SIM Cards. They paid sales tax under the KGST Act after collecting the same from their customers. The issue spanned over a number of years and sales tax was collected and paid under the KGST regime as also the KVAT regime. After the judgment of the Hon'ble Supreme Court, the State conceded to the position that there is no sale of goods involved in the sale of SIM cards and, hence, there could be no levy made under the KGST Act and KVAT Act. A batch of writ petitions pending before this Court which challenged the levy under the KVAT Act was placed before a Division Bench. The writ petitions were allowed, directing the Assessing Officer [for brevity “AO”] to exclude the value of SIM Cards and Recharge Coupons from taxable turnover. The Division Bench, however, made it clear that tax if any collected, on SIM Cards and Recharge Coupons, should be forfeited under Section 72 of the KVAT Act. Refund was directed to be considered strictly in terms of Form 21D as furnished by the customers in terms of Rules 55 and 56.

3. The present revisions arise from assessments completed under the KGST Act, which desisted from imposing the levy under that Act for the years 2002-03, 2003-04 and 2004-05. However, the tax collected and paid already by the respondent-assessee were directed to be forfeited under Section 46A of the KGST Act. The assessment was carried out under Section 17D of the KGST Act by a Fast Track Team. The appeal from the order under Section 17D lie directly to the Tribunal. The Tribunal found that the collection of tax in the subject assessment years were perfectly legal; the same being a direct consequence of a declaration made by a Division Bench of this Court. There being no illegality in the collection, it was found that there can be no forfeiture under Section 46A for reason of there being no violation under sub-section (2) of Section 22. The order forfeiting the tax was set aside. There was also an observation made that question of unjust enrichment does not arise in the case since the assessee has a plea that they remitted this amount by way of service tax to the Government. We are not concerned with the second observation made, since we are only called upon to decide as to whether the forfeiture under Section 46A was proper. As noticed above, the reference has been made by a Division Bench, since an earlier Division Bench had directed forfeiture under Section 72 of the KVAT Act under identical situation and Section 46A of the KGST Act is in pari materia with the provision for forfeiture under the KVAT Act.

4. The learned Senior Government Pleader Sri.Mohammed Rafiq has taken us through the various judgments placing in perspective the history of the litigation. Escotal Mobile Communications v. Union of India [(2002) 126 STC 475] dated Februar