Denial Of Credit For Non-Registration Thiruvabhranam Commissioner Of Under KVAT Act Is Unjust: Kerala High Court

The Kerala High Court has held that the petitioner/assessee has paid tax at the prescribed rate on the materials procured by him from the Travancore Devaswom Board, and since this amount has already been paid over to the State Exchequer, any denial of credit to the assessee solely on the ground that the Travancore Devaswom Board/Truvabharanam Commissioner was not registered under the KVAT Act would be unjust.

The bench of Justice Gopinath P. has observed that the definition of 'casual trader' under Section 2(xi) of the KVAT Act will also indicate that the Travancore Devaswom Board may not even fall within the definition of a casual trader for the purposes of the KVAT Act. The provisions of Section 3(2)(c) of the KVAT Act indicate that the Commissioner shall have superintendence over all officers and persons employed in the execution of the Act, and the Commissioner may issue such orders, instructions, and directions to such officers and persons as he may deem fit for the proper administration.

The petitioner/assessee is a registered dealer under the Kerala Value Added Tax Act, 2003. The business of the petitioner involves the purchase and sale of scrap materials. During the period from September 20, 2013 to January 30, 2014, the petitioner purchased certain scrap materials from the Travancore Devaswom Board. The Board had sold these scrap materials after obtaining permission from this Court in DBA No. 54/2012 and had also collected 5% as tax under the KVAT Act on the amounts remitted by the petitioner towards the auction amount. The petitioner's claim is that since the Travancore Devaswom Board was not a registered dealer, the credit of the amounts paid by the petitioner as tax has not been given to him while completing the assessment for the years 2013–2014.

The amount of tax collected from the petitioner has been remitted to the State Exchequer by the Travancore Devaswom Board. It is clear from a reading of the modified order of assessment that the denial of credit to the petitioner was on the basis that the Travancore Devaswom Board was not a registered dealer, and therefore the petitioner is not entitled to input tax credit under Section 11 of the KVAT Act.

The court held that it is a fit case where the competent authority, who exercises the powers of the Commissioner under the KVAT Act, must exercise jurisdiction under Section 3 of the KVAT Act so as to ensure that the credit of the amount of tax paid by the petitioner, which has admittedly been received to the credit of the State Exchequer, is extended to the petitioner.

The court disposed of the writ petition directing that if the petitioner makes a suitable representation before the officer presently exercising the jurisdiction of Commissioner under the provisions of the KVAT Act, the officer shall, having regard to the observations contained in the judgment, pass necessary orders giving instructions to the appropriate officer to provide credit of the amount paid by the petitioner as tax on the purchase of materials from the Travancore Devaswom Board to the extent tax has been credited to the State Exchequer.

Counsel For Petitioner: A.Kumar

Counsel For Respondent: G.Biju

2024 LiveLaw (Ker) 468

Case Title: Mythree Associates Versus Commercial Tax Officer

Case No.: WP(C) NO. 36495 OF 2015

Click Here To Read The Order