Order
1. These appeals are directed against the judgment and order passed by the High Court of Kerala at Ernakulam in Yesyem Arecanut Co. v. State of Kerala Writ Appeal No. 34 of 2003 dated 31-1-2003, whereby and whereunder the High Court has confirmed the judgment and order passed by the learned Single Judge in Yesyem Arecanut Co. v. State of Kerala Original Petition No. 38435 of 2001 dated 18-12-2002 and dismissed the appeals filed by the appellants herein.
2. The short facts are as follows: the appellants are engaged in the business of dealing in areca nuts as a commission agent. The appellants purchase areca nuts from the local growers and thereafter, dispatch the same to the dealers located outside the State of Kerala. The appellants are entitled for a commission on such sales. The commodity in question viz. areca nut falls under Entry 7 of the First Schedule to the Kerala General Sales Tax Act, 1963 (“the Act”, for short). So far as local purchase of areca nut is concerned, it is liable to tax at the last point of purchase by the dealer liable to tax under Section 5(1) of the Act in the State. Whereas it is taxable at the point of first sale in the State by the dealer liable to tax under Section 5(1) of the Act if imported from outside the State.
3. The dispute relates to Assessment Year 1999-2000, the period commencing from 1-1-2000 to 5-2-2000. The rate of tax for areca nut up to 31-12-1999 was 5%. In Assessment Year 1999-2000, under the Kerala Taxation Laws (Amendment) Ordinance, 1999 the rate of tax was enhanced from 5% to 8% with effect from 1-1-2000. The appellants, pursuant to the aforesaid amendment, had paid tax @ 8% on the purchase turnover of areca nuts to the State. By notification G.O (P) No. 12/2000.TD dated 5-2-2000 published as SRO No. 127 of 2000 (for short “the notification”), the rate of tax on the sale of areca nut was reduced from 8% to 4% with retrospective effect from 1-1-2000. The said notification provisioned for payment of tax collected by the dealers and prohibited the refund of tax already paid. The issue raised in these appeals lies in a very narrow compass and relates to interpretation of the said notification. The same is extracted hereunder:
“Dated 5-2-2000
Government of Kerala Reg. No. KL/TV(N)/12
Kerala Gazette
Extraordinary
Published by Authority
Thiruvananthapuram, 7-2-2000
Monday
Government of Kerala
Taxes (B) Department
Notification
G.O(P) No. 12/2000.TD
dated: Thiruvananthapuram,
5-2-2000
SRO No. 127/2000 — In exercise of the powers conferred by Section 10 of the Kerala General Sales Tax Act, 1963 (15 of 1963) the Government of Kerala having considered it necessary in the public interest so to do, hereby make the following amendment to Notification issued in G.O(P) No. 180/99.TD dated 31-12-1999 and published as SRO No. 1091/99 in the Kerala Gazette Extraordinary dated 31-12-1999, namely:
Amendment
In the said notification in Schedule 1 after serial number 9 and the entries against it in columns (2), (3) and (4), the following serial numbers and entries shall be respectively inserted, namely:
10
Newsprint
8
2
11
Arecanut
8
4
12
Cardamom
8
4
12
Pepper
8
4
This notification shall be deemed to have come into force on the 1st day of January, 2000. Tax, if any, already collected at the higher rate shall be paid over to the Government and tax, if any already paid shall not be refunded.”
4. For the sake of convenience, we would sequentially notice the relevant orders issued only in the case of appellant before us in the first appeal. The assessing authority had carried out the assessment and computed the tax liability for Assessment Year 1999-2000 and passed the assessment order directing that the excess amount paid by the assessee would be adjusted towards the surcharge for Assessment Year 1999-2000 and in the demands for the future assessment years, dated 30-9-2000.
5. The assessing authority being of the opinion that the order of assessment for the aforesaid assessment year requires to be rectified insofar as the order directing the refund of the excess tax paid had issued a notice under Section 43 of the Act, inter alia, directing the appellant assessee to show cause why that portion of the order passed by him should not be rectified and appropriate fresh order be passed. To issue the aforesaid notice, the assessing authority had primarily relied upon the Notification of the State Government dated 5-2-2000. After service of the notice and receipt of the reply from the appellant assessee, the assessing authority has passed an order rectifying the mistake committed by him in the assessment order for Assessment Year 1999-2000 and rejecting the request of assessee for refund of tax paid from 1-1-2000 to 5-2-2000, dated 5-12-2001.
6. Aggrieved by the said order passed by the assessing authority, the appellant assessee had filed an original petition before the learned Single Judge of the High Court. The learned Single Judge has observed that the purport of the notification is clear and covers two situations i.e (a) tax collected at a higher rate by the dealers from buyers should not be recovered, if it is not paid to the Revenue and (b) tax paid to the Revenue whether after collection or not ought not be refunded and concluded that the appellant assessee is not entitled to refund of tax already paid and therefore, dismissed the case of the appellant assessee.
7. Aggrieved by the aforesaid, the assessee had approached the Division Bench of the High Court which also concurred with the finding and conclusion reached by the learned Single Judge and dismissed the writ appeal filed by the assessee. It is this judgment and order Writ Appeal No. 34 of 2003 which is called in question by the appellants assessees in these civil appeals.
8. We have heard the learned counsel appearing for parties to the lis. We have also perused the documents on record including the aforesaid notification and the judgments and orders passed by the courts below.
9. The learned counsel appearing for the appellants would submit that the construction placed by the assessing authority as well as by the High Court is not justified for the reason that at no point of time the appellant had collected the higher rate of tax and therefore, by virtue of strict interpretation of the notification the assessing authority could not have passed the order of rectification of the assessment order for Assessment Year 1999-2000 and similarly, the High Court ought not to have rejected the claim of the assessee.
10. Per contra, the learned counsel for the State Government would submit that the notification issued by the State Government is in clear terms and since there is no ambiguity in the language employed in the notification, no construction is required to be placed by this Court.
11. The question that falls for our consideration and decision is what is the meaning to be assigned to and scope of the expression “tax, if any, already collected at the higher rate shall be paid over to the Government and tax, if any, already paid shall not be refunded” as contained in the notification?
12. We have already noticed the notification so issued by the State Government with retrospective effect from 1-1-2000. The lis herein relates to the latter part of the notification which has two prongs contemplating two different situations in respect of tax payable on erstwhile higher rate of tax. First, that the tax collected at a higher rate shall be paid over to the State Government and second, that if the tax is already paid by the dealer at the higher rate, it shall not be refunded back to the dealer. By implication, the first category would include the tax collected by the dealer from the buyers and retained without remittance to the State Government. Whereas, the second category would refer to the dealers who have remitted the tax at a higher rate to the State Government and are not entitled to the refund.
13. The plain reading of the notification would make it apparent that the State Government has expressly made it clear that if, for any reason, the assessee had collected and had paid the higher rate of tax to the State Government the same shall not be refunded. The prohibition of refund is only in respect of the tax collected at the higher rate by the dealer and remitted to the State Government. Further, the intention of the State Government in issuing the said notification has been reflected in the clarification issued by the Commissioner of Commercial Taxes, Thiruvananthapuram in Order No. C3.33328/01.CT dated 27-9-2001 in application made by the appellant association in Civil Appeal No. 1827 of 2004. It states that the notification is based on the intention of the State Government that retrospective operation given to the notification must not result in outflow of money from the government exchequer.
14. In the instant case, at the relevant point of time the rate of tax for sale of areca nut was 5%. There was an amendment during the relevant assessment year wherein the rate of tax was enhanced from 5% to 8% and the same was given effect from 1-1-2000. Admittedly, pursuant to the aforesaid amendment, the assessee had paid the tax from 8% on his sales. What we deduce from this is that the assessee had paid the tax @ 8% with effect from 1-1-2000. Having paid the higher rate of tax to the State Government, in our considered opinion, in view of the language employed in the notification, the assessee is not entitled for refund of the aforesaid amount. We say so for the reason that the rate of tax at the relevant point of time was 8%. Admittedly, the appellant had paid that amount. By subsequent amendment, though the rate of tax was reduced to 4%, the assessee cannot take advantage of the same and gain undue monetary advantage not due to him.
15. In light of the aforesaid, we are of the considered view that the assessing authority was justified in passing the order of rectification rectifying his earlier order wherein he had ordered for refund/adjustment of the excess tax paid for the future demands. In our considered opinion, the High Court has rightly concurred with the view of the assessing authority and rejected the claim of the assessee. Therefore, we do not find any good ground to interfere with the same.
16. Accordingly, the civil appeals are dismissed. No costs. Ordered accordingly.