Sivaprasad G. vs Commercial Tax Officer, Chathannoor and Others

Antony Dominic, J.—Heard the counsel for the petitioner and also the learned Government Pleader appearing for the respondents. The petitioner is a dealer registered under the Kerala Value Added Tax Act on the files of the first respondent. According to him, he is dealing in fishing ropes made up of HDPE/PP and the commodity is a non-taxable item. On that basis the petitioner filed his request claiming exemption from payment of sales tax. While so an inspection of the petitioner''s business premises was conducted on May 25, 2010 and the samples of the ropes dealt with by him were taken.

Thereafter he was issued exhibits P1, P1(a) and P1(b) pre-assessment notices, for the assessment years 2005-06, 2008-09 and 2009-10. On receipt of notices the petitioner filed exhibit P2 series of applications before the first respondent contending that the item in question is fishing rope coming under HSN Code No. 5607.49.00 and not under 5607.90.90 as contended by the Department. Accordingly the petitioner reiterated that the commodity in question is exempted from tax and requested that the samples which are available with the Department should be got tested by the Central Institute for Fisheries Technology. He also wanted the respondents to obtain details of the classification adopted by the Central excise authorities of the manufacturer of the commodities.

According to the petitioner, the Department was unwilling to concede to his request, in view of exhibit P3 circular issued by the Commissioner for Commercial Taxes. It is therefore that this writ petition has been filed, to require the respondents to forward the sample for analysis as sought for by him and also to call for the details of the Central excise authorities. There is a further prayer to direct the respondents to keep the assessment proceedings pursuant to exhibits P1, P1(a) and P1(b) in abeyance until the analysis is completed and the details are obtained.

According to the petitioner, in a proceedings of the assessment the first respondent is bound to conduct enquiry which has to be in compliance with the principles of natural justice and that as part of the adjudication he is entitled to adduce evidence in support of his case. It is stated that to disprove the claim of the respondents that the commodity in question is not a fishing rope, it is essential to obtain the analysis report and details from the Central Excise Department.

However, the respondents contended that since it is the case of the petitioner that commodity is a fishing rope, it is up to the petitioner to produce evidence substantiating the same. They also rely on the provisions of sections 9 and 25 of the KVAT Act casting burden on the assessee.

Having considered the rival submissions made, I am inclined to think that the issue raised by the petitioner will have got resolved in a proceedings u/s 94 of the KVAT Act. Section 94 provides for the constitution of an authority consisting of 3 officers in the rank of Joint Commissioner or Deputy Commissioner nominated by the Commissioner for issuing clarification on disputes which are included in section 94(1)(a) to (e). Section 94(1)(d) provides that if any dispute arises, as to whether for the purpose of this Act, any tax is payable in respect of the any sale or purchase or if tax is payable the point and rate thereof.

Admittedly the dispute in question is whether any tax is payable in so far as the commodity dealt with by the petitioner. Therefore, the dispute being one covered u/s 94(1) (d) of the KVAT Act and it is up to the petitioner to make an application to the authority and if such an application is made, it is up to the authority to issue appropriate clarification in the manner as laid down in the Act.

In that view of the matter I direct that it will be open to the petitioner to make such an application and if such application is made within 10 days from today, the authority u/s 94 of the KVAT Act will consider the same in accordance with law and issue appropriate clarifications. In order to obtain the clarifications as above and produce the same before the first respondent in the proceedings pursuant to exhibits P1(a) and P1(b) I direct that proceedings of the assessment be kept in abeyance for a period of two months. Writ petition is disposed of as above.