IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMAN & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN FRIDAY, THE 27TH FEBRUARY 2009 / 8TH PHALGUNA 1930 WA.No. 2448 of 2007() --------------------- AGAINST THE JUDGEMENT IN WPC.25640/2007 Dated 19/09/2007 .................... APPELLANT(S): PETITIONER IN THE WP ---------------------------------- MS. AMANA JEWELLERS, CHUNGAM, PATTIKKAD, MALAPPURAM DISTRICT, REPRESENTED BY MANAGING PARTNER, MUSTHAFA KAMAL. BY ADV. SRI.P.RAGHUNATH SRI.PREMJIT NAGENDRAN RESPONDENT(S): (RESPONDENTS IN WP) ---------------------------------- 1. COMMERCIAL TAX OFFICER, COMMERCIAL TAXES DEPARTMENT, PERINTHALMANNA. 2. DEPUTY COMMISSIONER OF COMMERCIAL TAXES, MALAPPURAM. 3. STATE OF KERALA, REPRESENTED BY COMMISSIONER OF COMMERCIAL TAXES, TRIVANDRUM. THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 27/02/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.Raman & P.S.Gopinathan, JJ. ================================== WRIT APPEAL No.2448 OF 2007 ================================== Dated this the 27th day of February, 2009. JUDGMENT Raman, J. This writ appeal is directed against the judgment of a learned Single Judge in W.P.(C)No.25640/2007 dated 19th September, 2007. 2. The short point that arises for consideration is regarding the interpretation to be placed on sec.8(f) of the Kerala Value Added Tax Act, 2003. To be more specific, the real question that arises for determination is as to whether a person becomes ineligible to be governed by clause 8f(i) of the Kerala Value Added Tax Act merely because he could do business only for a few days in one of the three years preceding the year during which the claim for payment of tax at compounded rate is made so as to bring his claim under sub-clause (ii) thereof. In the judgment under appeal, the learned Single Judge has quoted the relevant WA 2448 OF 2007 -:2:- provision and therefore we need not repeat to extract the provision. As per sec.8(f)(i) of the Act, a dealer in ornaments or wares or articles of gold, silver or platinum group metals has got an option of paying the tax at compounded rate prescribed thereunder, instead of paying the tax in accordance with the provisions of sec.6. The compounded rate is at 200% of the highest tax payable by him as conceded in the return or accounts, either under the Value Added Tax Act or under the Kerala General Sales Tax Act, for a period of twelve months during any of the three consecutive years preceding that to which such option relates. Therefore, the highest tax payable by him has to be determined taking into account any 12 months period within the period of three consecutive years. The contention of the appellant was that he had only done business for 51 days during the year 2003-04 and as such did not complete business for three years to attract sec.8(f) (i), in which event he will have the option to pay tax as per sec.8(f)(ii). This contention was not accepted by the Single WA 2448 OF 2007 -:3:- Judge holding that by Explanation I to sec.8(f)(ii) the position is made clear that where during any such preceding year the dealer has not transacted business for any period in that financial year, tax payable for the 12 months shall be calculated proportionately on the basis of the tax payable for the period during which such dealer had transacted business. Though it was contended by the petitioner that this explanation applies only to clause (ii), the learned Single Judge did not accept the same and it was held that in fact the Explanation applies to sub-sec.(ii) also and such situation applies only to dealers who had carried on business only for part of the the previous year and who had not carried on business for two preceding years prior to the previous year. In other words, sub-sec.(ii) of sec.8(f) read with Explanation applies to a dealer who commenced business in the previous year relevant to the year for which tax at compounded rate is to be computed where such dealer had not carried out business for the full period of the said previous year. The writ petition was accordingly WA 2448 OF 2007 -:4:- dismissed. Aggrieved thereby, this writ appeal is preferred. 3. We have heard the learned counsel for the appellant as also the learned Government Pleader. 4. The learned counsel appearing for the appellant reiterated his submission before us and took us to the amended provision where, according to him, the Explanation is much more clear that unless the three years period is completed, he will become ineligible to come under sec.8(f) (i). First of all, the subsequent amendment made to the legislation cannot be taken as a guideline for interpreting the provision as it stood earlier. Further, even the amended provision, according to us, only supports the interpretation placed by the learned Single Judge. 5. As per sec.8(f)(i), as we have noticed, what is more important is that the highest tax payable should be reckoned for a period of twelve months. Therefore, if a dealer has not carried on business for a period of twelve months, necessarily he will become ineligible to come under sec.8(f)(i). But merely because a person like the petitioner WA 2448 OF 2007 -:5:- who was a dealer had only done business for 51 days in the year 2003-04, but continued his business during the subsequent years, will not become ineligible for the mere reason that he could not do business for the entire period of 2003-04. Admittedly the assessment year relates to 2006-07. We find nothing in the section which compels the continuing of the business for the entire period of 36 months during the preceding period of three years to become eligible to claim the benefit under sec.8(f)(i) of the Act. Admittedly he had done business during all the three years preceding the year in question, but he had done business only for a few days in one of the three years. As per Explanation I, if 'during any such preceding year' the dealer has not transacted business for any period in that financial year, then the tax payable to the twelve months shall be calculated proportionately on the basis of the tax payable for the period during which the dealer transacted business, makes the position clear that he need not have done business for the entire period to become 'eligible' to claim WA 2448 OF 2007 -:6:- the benefit. The words 'preceding year' occurs only in sec.8 (f)(i). Therefore Explanation I squarely applies to sec.8(f) (i) and sec.8(f)(i) read with the Explanation leaves no doubt that it it is not necessary to complete the three full years period to become eligible for claiming option under sec.8(f) (i). If it is less than three years, necessarily by virtue of the Explanation, twelve months can be calculated proportionately on the basis of the period during which he has transacted the business. We agree with the view taken by the learned Single Judge. No grounds made out for interference. Writ appeal is dismissed. In view of the pendency of the matter, the time granted by the learned Single Judge for paying the balance tax is extended by two weeks from today. P.R.Raman, Judge. P.S.Gopinathan, Judge. mt/-