IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM TUESDAY, THE 20TH DAY OF DECEMBER 2011/29TH AGRAHAYANA 1933 WP(C).No. 34068 of 2010 (C) --------------------------- PETITIONER(S): ------------- 1. M/S CENTRAL ADVERTISING AGENCY, ANAND THEARTRE BUILDINGS, T.B.ROAD,KOTTAYAM-686001 REPRESENTED BY THE PARTNER,MATHEW GEORGE. 2. M/S CENTRAL PICTURES,ANAND THEATRE BUILDINGS,T.B.ROAD,KOTTAYAM-686001 REPRESENTED BY, THE PARTNER,MATHEW GEORGE. BY ADVS.SRI.C.K.THANU PILLAI SRI.K.P.JOY RESPONDENT(S): -------------- 1. THE STATE OF KERALA,REPRESENTED BY THE SECRETARY TO GOVERNMENT,TAXES DEPARTMENT SECRETARIAT,THIRUVANANTHAPURAM. 2. THE INTELLIGENCE OFFICER,SQUAD NO.III, COMMERCIAL TAXES,THIRUVANANTHAPURAM AT NEYYATTINKARA. BY GOVERNMENT PLEADER C.K. GOVINDAN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-12-2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 34068 of 2010 (C) APPENDIX PETITIONERS EXHIBITS P1 COPY OF NOTICE NO. CR-8(1)/10-11 DATED 04-10-2010 ISSUED BY THE 2ND RESPONDENT P2 COPY OF NOTICE NO. CR-8(7)/10-11 DATED 04-10-2010 ISSUED BY THE 2ND RESPONDENT P3 COPY OF REPRESENTATION DATED 25-10-2010 PRESENTED BY THE KERALA FILM PRODUCERS ASSOCIATION TO THE 1ST RESPONDENT RESPONDENTS EXHIBITS NIL TRUE COPY P.A. TO JUDGE SMM C.K.ABDUL REHIM, J. --------------------------------- W.P.(C) No.34068 OF 2010 --------------------------------- Dated this the 20 th day of December , 2011 J U D G M E N T Penalty under Section 64 of the Kerala Value Added Tax Act (KVAT) was proposed against the petitioners, as intimated through Ext.P1 and P2 notices. The allegation in the notices is that the petitioners have failed to remit tax on the turn over relating to sale of copy right. It is alleged that the petitioners have received huge amounts by way of royalty for granting rights to telecast cinematic films. According to the respondents, the right transferred by virtue of the agreement to use the cinematic film for the purpose of telecast on payment of consideration in terms of money, would amount to taxable transaction under the Kerala Value Added Tax Act, as per Section 6(1) (a) and (c) of the said Act. W.P.(C) No.34068 OF 2010 2 2. The contention of the petitioner is based on the 'Budget Speech' made on behalf of the Government for the year 2008-09, in which a promise was made to exempt the film industry from levy of Value Added Tax on transfer of the right to use copy rights, with effect from 1-4-2005. It is contented that against the terms of the 'Budget Speech' made, when the Finance-Act,2008 was introduced, no retrospective effect for the exemption was granted from 1-4-2005, as promised. On the above premise it is contented that levy of penalty alleging non payment is unsustainable, because there was a clear promise made on behalf of the government to exempt such payment. 3. The learned counsel appearing for the petitioner had pointed out that in the Finance Act for the year 2011, retrospectivity for the exemption was granted with effect on and from 1-4-2005. Therefore, there is no tax liability attracted on the turn over in question and the proceedings proposed alleging non payment of tax has become unsustainable. 4. I notice that, since Exts.P1 and P2 are only proposal W.P.(C) No.34068 OF 2010 3 notices issued, the petitioner will be at liberty to point out unsustainability of the proposal before the authority concerned itself. 5. Under the above mentioned circumstances, the writ petition is disposed of directing the petitioner to file objections against Ext.P1 and P2, within a period of 2 weeks from the date of receipt of copy of this judgment. It is left open to the petitioner to bring to the notice of the 2nd respondent about the amendments brought in through Finance Act, 2011 and to contend that the penalty proposal is not sustainable. 6. Needless to say that the second respondent will take a final decision considering such contentions after affording an opportunity of hearing to the petitioner at the earliest possible , at any rate, within a period of one month from the date of receipt of such objections. C.K.ABDUL REHIM JUDGE smm W.P.(C) No.34068 OF 2010 4 W.P.(C) No.34068 OF 2010 5