IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 16TH NOVEMBER 2011 / 25TH KARTHIKA 1933 WP(C).No. 6846 of 2006(M) ----------------------------------- PETITIONER(S): ---------------------- M/S. C.T. JACOB (KELACHANDRA) & SONS, HOTEL AIDA, M.C. ROAD, KOTTAYAM, REPRESENTED BY ITS MANAGING PARTNER MOHAN JACOB. BY ADV. SRI.V.P.SUKUMAR RESPONDENT(S): ------------------------- 1. THE COMMERCIAL TAX OFFICER, 1ST CIRCLE, KOTTAYAM. 2. THE STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. R1 & R2 BY GOVERNMENT PLEADER SRI.NOBLE MATHEW. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/11/2011, THE COURT ON 16/11/2011 DELIVERED THE FOLLOWING: STU WP(C).No. 6846 of 2006(M) APPENDIX PETITIONER'S EXHIBITS: P1 : COPY OF THE KGST (AMENDMENT) ACT, 2005 ISSUED BY THE 2ND RESPONDENT. P2 : TRUE EXTRACT OF RELEVANT PORTION OF THE KERALA VALUE ADDED TAX (AMENDMENT) ACT, 2005 (ACT 39 OF 2005) P2(a) : TRUE EXTRACT OF THE RELEVANT PORTION OF SRO 1122 OF 2005. P3(a) : COPY OF THE NOTICE DTD 15/02/2006 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT FOR THE MONTH OF SEPTEMBER, 2005. P3(b) : COPY OF THE NOTICE DTD 15/02/2006 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT FOR THE MONTH OF OCTOBER, 2005. P3(c) : COPY OF THE NOTICE DTD 15/02/2006 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT FOR THE MONTH OF NOVEMBER, 2005. P3(d) : COPY OF THE NOTICE DTD 15/02/2006 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT FOR THE MONTH OF DECEMBER, 2005. P3(e) : COPY OF THE NOTICE DTD 15/02/2006 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT FOR THE MONTH OF JANUARY, 2006. P4 : COPY OF THE REPLY DTD 27/02/2006 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. RESPONDENT'S EXHIBITS : NIL //TRUE COPY// P.A TO JUDGE. STU S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W.P(C) No. 6846 of 2006 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 16th day of November, 2011. J U D G M E N T The petitioner is challenging the amendment to Rule 11 of the Kerala Value Added Tax Rules by Ext.P2(a) amendment rules. The petitioner challenges the same on the ground that the same is ultra vires Section 8 (c)(ii). The petitioner submits that by Section 8(c)(ii), bar attached hotels have been permitted to pay tax at compounded rates of 12.5% on the turnover of cooked food and beverage prepared by the Bar Hotel calculated at 15% of the turnover of foreign liquor estimated under Section 7 of the Kerala General Sales Tax Act, 1963. But, as per Rule 11 (5)(b) as amended by Ext.P2(a) Rules, the said Section has been made subject to the condition that if sale of cooked foods and beverages is more than 15% percent of its turnover of foreign liquor as estimated under Section 7 of the KGST Act, the assessee shall be liable to pay tax on the actual turnover conceded by it. The petitioner's contention is that a provision of the statute cannot be amended by rules, which has been done in this case. The petitioner therefore seeks the following reliefs: “i. to issue a writ in the nature of certiorari or any other appropriate writ or order quashing Ext.P3 series of notices issued to the petitioner by the 1st respondent; ii. to declare that Rule 11(5)(b) of the Kerala Value Added Tax Rules, 2005 introduced by SRO 1122/05 is ultra vires of the rule making powers of the Government under Section 92 of the Kerala Value Added Tax Act, 2003 and hence unconstitutional.” W.P(C) No. 6846 of 2006 -: 2 :- 2. Section 8(2)(aa)(ii) reads thus: “(ii) Any bar attached hotel, not being a star hotel of and above three star or a club or a heritage hotel may, at its option, instead of paying tax in accordance with the provisions of section 6, but subject to such conditions and restrictions as may be prescribed, pay tax at 12.5% of the turnover of cooked food and beverages prepared by it, calculated at 15% of the turnover of foreign liquor estimated under Section of the Kerala General Sales Tax Act, 1963 (15 of 1963).” (Underlining supplied) Rule 11(5(b), which is the impugned rule, reads thus: “(b) Where the actual turnover of a bar attached hotel falling under any of the categories to which the provisions of item (ii) of clause (c) of section 8 applies, in respect of cooked food and beverages prepared by it is more than fifteen percent of its turnover of foreign liquor as estimated under Section 7 of the KGST Act, 1963 (15 of 1963), it shall be liable to pay tax on the actual turnover conceded by it.” As is clear from the above, by Section 8(c)(ii), bar hotels have been given a concession in the matter of payment of tax at compounded rates. That section itself specifically mentions that the said concession is subject to such conditions and restrictions as maybe prescribed, which means that the Government can impose conditions and restrictions for availing of the concession. Section 92 of the Kerala Value Added Tax Act gives power to the Government to make rules by notification in the gazette to carry out the purposes of this Act. Section 8(c)(ii) gives the concession W.P(C) No. 6846 of 2006 -: 3 :- subject to such conditions and restrictions as may be prescribed. For implementing the provisions of the section by virtue of Section 92, the Government has powers to make rules to carry out the purpose of this Act. I am of opinion that Rule 11(5)(b) has been framed by the Government by virtue of the powers conferred on Section 92 prescribing the conditions and restrictions mentioned in Section 8(c)(ii). Therefore, the impugned rule does not suffer from any illegality as contended by the petitioner. Hence, there is no merit in this writ petition and accordingly the same is dismissed. Sd/- S. Siri Jagan, Judge. Tds/