IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 17170 of 2009(M)
1. PREMIER STEELS, IRON AND STEEL MERCHANTS
... Petitioner
Vs
1. ASSISTANT COMMISSIONER, COMMERCIAL TAXES
... Respondent
2. DEPUTY COMMISSIONER, COMMERCIAL TAXES,
3. THE COMMISSIONER, COMMERCIAL TAXES,
For Petitioner :SRI.K.I.MAYANKUTTY MATHER
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :19/01/2010
O R D E R
C.K.ABDUL REHIM, J.
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W.P.(C).No.17170 OF 2009
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Dated this the 19th day of January, 2010
J U D G M E N T
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1. Petitioner is a registered dealer on the rolls of the 1st
respondent, under the Kerala Value Added Tax Act, 2003 (KVAT
Act), with effect from 1.4.2005. The petitioner was having
registration under the Kerala General Sales Tax Act, 1963 (KGST
Act) during the previous periods. Challenge in this writ petition
is against Ext.P3 order of the 2nd respondent, whereby
condonation of delay was refused with respect to filing of
application in Form-25A, as contemplated under Rule 12(2) of
the KVAT Rules.
2. It is noticed that, on the advent of the KVAT Act credit
of input tax was permitted against tax paid under the KGST Act,
with respect to goods purchased by them during the period of
one year immediately preceding the date of commencement of
KVAT Act, subject to certain conditions and restrictions
prescribed under Section 11(13). Under Rule 12(2) of the KVAT
Rules, it is prescribed that any dealer claiming credit of input tax
under Section 11(13) has to submit application before the
assessing authority in Form-25A, along with opening stock
inventory of the goods as on the date of coming into force of the
W.P.(C).17170/09-M 2
KVAT Act. It is also insisted that the application in Form-25A
shall be accompanied by a statement showing opening stock
value of goods as on 1.4.2004 and 1.4.2005 in respect of goods
taxable at the hands of the dealer and those exempted at his
hands. Such stock inventory and statement of purchase bills
shall be certified by a Chartered Accountant or a Cost
Accountant, where the dealer submitting the statement was
covered by provisions of Section 27A of the KGST Act during
the year 2004-05.
3. According to the petitioner he had submitted Ext.P1
application in Form-25A as provided under Rule 12(2) claiming
refund of the input tax credit, with respect to the assessment
year 2005-06, amounting to Rs.4,59,287/-. It is an admitted
case that the petitioner had filed the said application on
16.5.2005. But the 1st respondent had returned the said
application for want of certificate by a Chartered
Accountant/Cost Accountant, as required under Rule 12(2). As
per Rule 12(2) of the KVAT Rules the application in Form-25A
claiming input tax credit has to be submitted on or before
31.1.2006 (The date fixed originally was 30.4.05, which was extended to
31.7.05. The date is seen further extended as, 31.1.06 by virtue of
SRO:385/07 dt:24.4.07). But the petitioner could not re-submit the
application after curing the defect within the time stipulated.
W.P.(C).17170/09-M 3
4. By virtue of Finance Act, 2008 a new provision as
Section 20A was introduced in the KVAT Act conferring powers
on the Deputy Commissioner to condone delay in applying for
any refund under the Act and the Rules. Invoking the said
provision, the petitioner submitted application before the 2nd
respondent seeking condonation of delay in submitting Form-
25A, as evidenced from Ext.P2. But the 2nd respondent had
rejected the application holding that there is no provision
under the KVAT Act or Rules to condone delay in filing
application for credit of input tax on opening stock held on
1.4.2005. Hence this writ petition.
5. Question to be considered is as to whether an
application submitted under Section 11(3) and Rule 12(2) in
Form No.25A, can be considered as an application for refund of
tax, coming within the purview of Section 20A(a). Learned
counsel for the petitioner contended that, under Section 11(6)
of the KVAT Act, if the input tax of a dealer for a returned
period is more than the output tax and if the excess input tax
cannot be adjusted against any amount due or demanded under
the Act, the balance shall be carried forward to the next
returned period and if the excess input tax so carried forward
cannot be fully adjusted during the last returned period, the
excess input tax credit remaining unadjusted shall be refunded
W.P.(C).17170/09-M 4
to the dealer, as if it were a refund accrued under Section 13.
The procedure for effecting such refund of input tax remaining
unadjusted at the close of the year is dealt with under Rule 47A
of the KVAT Rules. Contention is that in this case since the
amount of input tax credit reflected in the opening stock of the
year 2005-06 could not be adjusted against the output tax of
that year, it became liable for refund as excess input credit,
and the provisions governing such refund is Section 13 read
with Rule 47 and 47A.
6. Construed on the above basis, the application is one
coming within the purview of Section 20A, for which the 2nd
respondent is vested with jurisdiction to condone delay, is the
contention. In this regard the petitioner had also pointed out
the particulars contained in the Form (Ext.P1) wherein Serial
No:J indicates Sales Tax claimed for refund. Therefore,
according to the counsel, the claim made for credit of tax paid
under KGST Act, is the amount virtually liable for refund and it
can be treated only as a claim for refund.
7. Learned Special Government Pleader opposed the
above view, stating that the question of refund arises only if
credit of input tax is allowed, as provided under law. With
respect to tax paid under the KGST Act, Section 11(13) read
with Rule 12(2) provides a specific procedure and stipulates
W.P.(C).17170/09-M 5
particular time limit. If the application for credit of tax paid
under the KGST Act has not been submitted within the period
stipulated, under Rule 12(2), no condonation can be effected
under Section 20A treating the application for credit as one
coming having characteristics of a refund application
mentioned in Section 20A(a).
8. Having considered the rival contentions, I am of the
view that the question of refund will arise only after the
assessing authority allows the credit. The assessing authority
need to evaluate the statement of accounts and to decide as to
whether there was any actual payment of tax made under KGST
Act, which is liable to be given credit or not. Only after such
verification, the assessing authority can reach at a conclusion
with respect to total amount due for credit. Then only the
question of adjustment or refund will arise. In the case at hand
it is an undisputed fact that the application submitted before
the assessing authority is one coming within the purview of
Section 11(3) read with Rule 12(2) which is an application for
allowing credit of input tax. Therefore I am of the opinion that
Ext.P1 application cannot be considered as an application for
refund coming within the purview of Section 13, which need be
dealt with under the provisions of Rule 47 or 47A of the Act.
Hence the 2nd respondent was justified in rejecting condonation
W.P.(C).17170/09-M 6
of delay holding that there is no provision for condonation of
delay in filing the application for credit of input tax.
9. However, it is noticed that time for submission of
application under Rule 12(2) stood extended till 31.1.2006. It
is an admitted case that the petitioner had submitted the
application in Form 25A as early as on 16.5.2005, which was
within the period allowed. The application was defective
because the certificate of the Chartered Accountant with
respect to the stock inventory and statement of purchase was
not available. The application is returned since the above said
defect existed. But the defect was not cured and re-submitted
thereafter on any date within the time stipulated under Rule 12
(2). The question is whether the failure for re-submission of
application after curing defect within the time stipulated, can
be considered as failure in submitting the application within
such period. Learned Special Government Pleader vehemently
contended that the application received as defective cannot be
considered as an application properly submitted as prescribed
under the Rules. An application which is not properly
submitted cannot be considered as an application at all, is the
contention.
10. Without entering to any decision on the dispute as
above, I am of the opinion that, considering the fact that the
W.P.(C).17170/09-M 7
petitioner was a registered dealer under the KGST Act and he
had effected payment of considerable amount as tax due under
that statute, the question whether he is liable to be given credit
with respect to the subsequent year, is a matter which need
examination, especially when the petitioner had preferred the
application in the prescribed form, eventhough defective,
within the time stipulated. I am inclined to hold that apart
from the technical objections the petitioner need be provided
with substantial relief.
11. Hence the 1st respondent is hereby directed to
receive back the application for credit of input tax which is
necessary to be re-submitted under the amended Form 25A, if
it is submitted within a period of two weeks from today, and to
consider and dispose of the same on merits in order to decide
whether input tax credit can be allowed or not.
12. A decision in this regard shall be taken as early as
possible, at any rate within a period of two months from the
date of receipt of such application.
The writ petition is disposed of as above.
C.K.ABDUL REHIM, JUDGE.
okb