IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE ACTING CHIEF JUSTICE MR.P.R.RAMAN & THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 19TH FEBRUARY 2010 / 30TH MAGHA 1931 WA.No. 284 of 2010() -------------------- AGAINST THE JUDGEMENT IN WPC.32866/2009 Dated 05/02/2010 .................... APPELLANT/PETITIONER: ------------------------ V.V.SASI, PROPRIETOR, M/S.VELLAYIKUDAM METAL CRUSHER, VELLAYIKUDAM HOUSE, SREEMOOLANAGARAM P.O., ERNAKULAM (DISTRICT). BY ADV. SRI.P.N.DAMODARAN NAMBOODIRI RESPONDENTS/RESPONDENTS: -------------------------- 1. THE COMMERCIAL TAX OFFICER-III, DEPARTMENT OF COMMERCIAL TAXES, ALUVA. 2. COMMISSIONER OF COMMERCIAL TAXES, DEPARTMENT OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. 3. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY G.P. SRI.K.P.PRADEEP THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 19/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: P.R.RAMAN, AG. C.J. & C.N.RAMACHANDRAN NAIR, J. .................................................................... Writ Appeal No.284 of 2010 .................................................................... Dated this the 19th day of February, 2010. JUDGMENT Ramachandran Nair, J. Heard counsel for the appellant and Government Pleader for the respondents. The question raised is about the correctness of the judgment of the learned Single Judge upholding rectification of demand of tax at compounded rate for the year 2009-2010. The appellant is admittedly running a stone quarry and is entitled to remit tax at compounded rate. During 2008-2009, compounding fee payable by quarry operators was based on the capacity of the machine. Based on the capacity of the machine petitioner was liable to pay Rs.1,50,000/-. However, in the Finance Bill 2009 there was a proposal to reduce the tax at compounded rate to Rs.25,000/- per annum. Based on the provisions of the Finance Bill, the Government issued Circular authorising officers to collect tax in terms of the Bill. However, when the Finance Act was passed, the proposal in the Bill was given up and the statute retained liability under the existing provisions i.e. at the rate W.A. 284/2010 2 of Rs.1,50,000/- per annum. The original demand based on provisions of the Bill and in terms of the Circular was, therefore, rectified demanding the balance amount, which was under challenge before the learned Single Judge who upheld the same. 2. In the appeal, counsel for the appellant relied on the Circular based on which was payment was made. According to him, since Circular is binding on the departmental authorities, they cannot treat the demand as a mistaken demand warranting rectification unless Circular is recalled. However, Government Pleader rightly pointed out that Circular is issued in terms of the provisions of the Provisional Collection of Revenue Act, 1985 which authorises collection and payment of tax during pendency of Finance Bill in terms of the provisions of the Finance Bill with effect from the beginning of the financial year . Obviously this Act is a stop-gap arrangement to implement the provisions of the Finance Bill on a provisional basis which is always subject to variation as and when Finance Act is passed. We find that the learned Single Judge rightly upheld the rectified order issued by the Assessing Officer after the Finance Act was passed. The W.A. 284/2010 3 Writ Appeal is consequently dismissed. However, we grant two weeks time from the date of receipt of copy of this judgment to the appellant to pay the arrears of tax at compounded rate in terms of the Finance Act, 2009 without any liability for interest. P.R.RAMAN Acting Chief Justice C.N.RAMACHANDRAN NAIR Judge pms