IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR TUESDAY, THE 19TH FEBRUARY 2008 / 30TH MAGHA 1929 WP(C).No. 19573 of 2007(E) ------------------------------------------- PETITIONER: --------------------- MATHEW VARGHESE, PROPRIETOR, MAJESTIC CYCLE SHOWROOM, CHERTHALA, ALAPPUZHA DISTRICT. BY ADV. SRI.V.P.SUKUMAR SRI.KURYAN THOMAS RESPONDENTS: ------------------------- 1. THE COMMERCIAL TAX OFFICER, (AUDIT ASSESSMENT), ALAPPUZHA. 2. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER SRI. K.P. PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19/02/2008, ALONGWITH W.P.(C).NOS. 19604/07, 21235/07 AND 1408/08 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 19573 of 2007(E) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: NOTICE DTD. 04.05.2007 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT U/S 24 OF THE KVAT ACT FOR THE PERIOD FROM APRIL 2005 TO MARCH 2006. EXT.P2: NOTICE DATED 04.05.2007 ISSUED TO THE PETITIONER BY THE 1ST RESPONDENT U/S. 24 OF THE KVAT ACT FOR THE PERIOD FROM APRIL 2006 TO OCTOBER 2006. EXT.P3: REPLY DTD. 19.05.2007 FILED BY THE PETITIONER TO EXT.P1 NOTICE. EXT.P4: REPLY DATED 19.05.2007 FILED BY THE PETITIONER TO EXT.P2 NOTICE. EXT.P5: ASSESSMENT ORDER DTDE. 21.05.2007 FOR THE YEAR 2005- 2006. EXT.P6: ASSESSMENT ORDER DTD. 21.05.2007 FOR THE PERIOD OF APRIL 2006 TO OCTOBER 2006. RESPONDENT'S EXHIBITS: NIL ..... // TRUE COPY // P.A. TO JUDGE. C.N.RAMACHANDRAN NAIR, J = = = = = = = = = = = = = = = = = = = = W.P.(C).Nos. 19573, 19604, 21235 OF 2007 and 1408 of 2008 = = = = = = = = = = = = = = = = = == = = = = = Dated this the 19th day of February, 2008. = = = = = = = = = = = = = = = = = = = = = = J U D G M E N T The petitioners are dealers in cycle and cycle parts. Bicycles, tricycles and cycle rickshaws and specified parts are brought under 4% tax under Entry 13 of III Schedule of the KVAT Act. During inspection of the business premises by the audit team, it was noticed that all items were accounted by the petitioners at 4% tax. The assessing officer is of the view that cycle parts such as seat cover, dynamo, bell, carrier, cycle stand, handle bar, etc., which are not covered by Entry 13 of III Schedule, are assessable at 12.5% under Section 6(1)(d) of the Act. Since petitioners have not written any turnover of those items separately, the turnover is estimated at 4%. The assessing officer estimated the turnover of cycle parts which are not covered by Entry 13 (3) of III Schedule and assessed the same at 12.5%. These assessments are challenged on the ground that the different parts of bicycle as taxable under Entry 13 (3) is W.P.(C).Nos. 19573, 19604, 21235 OF 2007 and 2 1408 of 2008 discriminatory and against the mandate of Article 14 of the Constitution of India. 2. I have heard learned counsel for the petitioners and Government Pleader for the respondents. 3. Petitioners have cited the decision of Supreme Court in Arya Vaidhya Pharmacy and Another vs. State of Tamil Nadu reported in 1989(73) STC 346, Kerala Hotel and Restaurant Association and others vs. State of Kerala and others (AIR 1990 SC 913) and State of UP and others vs. Deepak Fertilizers and Petrochemical Corporation Limited reported in 2007(7) VST 535 in support of their contentions that discriminatory legislature is liable to be declared unconstitutional under Article 14 of the Constitution of India. However, Government pleader pointed out the decision of the Supreme Court in State of Karnataka and another vs. M/s Hansa Corporation (1980 (4) SCC 697) wherein Supreme Court held that the basis of discretion in regard to heavier tax including fixation of rated tax is the concern of the statutory authorities. Government pleader has relied on the decisions reported in ELEL W.P.(C).Nos. 19573, 19604, 21235 OF 2007 and 3 1408 of 2008 Hotels and Investments Ltd. and another vs. Union of India (74 STC 146), Federation of Hotel and Restaurant Association of India and others vs. Union of India and others (74 STC 102) and R.K.Garg vs. Union of India and others (133 ITR 239) and contented that legislature has quite discretion in regard to levy tax on commodities and fixation of rated tax on various commodities. 4. On going through Entry 13 of III Schedule of the KVAT Act, I find that, parts of bicycles, tricycles and cycle rickshaws covered by Sub Entry 3 are only these items, namely, bicycle rims, bicycle spokes, bicycle hubs, bicycle free wheels, bicycle saddles, bicycle chain and bicycle wheels. The usual entry to include other items namely, “other”, is absent in Entry 13 (3) of III Schedule. This obviously means that the legislature did not intend to cover other cycle parts. It is obviously covered all cycle parts under Entry 13 (3) of III Schedule. In fact, bicycle has ever so many parts such as head lamp, fork, pedal, chain cover brake etc. The contention of the petitioner that these items are not different from the items enumerated in Entry 13(3) has some W.P.(C).Nos. 19573, 19604, 21235 OF 2007 and 4 1408 of 2008 force. It is not known on what basis a classification of this nature is made. I doubt whether the items taxed by the assessing officer at a higher rate of 12.5% under Section 6(1)(d) are really intended to be taxed by the legislature at the high rate even such items taxed at 12.5% are included in the notification of SRO 82/06. It does not contain these items. However, the Government Pleader rightly pointed out that heavy tax on residuary items can be levied at 12.5%, for which no notification as scheduled under Section 6(1)(d) is required. Even though I am agreeing to the argument of the learned Government Pleader, I feel the matter would be required to be considered by the Government and if required, amendment has to be carried out. However, I do not find any discrimination in regard to heavier tax imposed on bicycle parts are not the same and it is up to the legislature to fix a tax on each and every part of the bicycle. There can be discrimination with regard to rated tax on single part and for the likely items. Similarly the usual worn out items and replaced items of long life can be separated. It is for the Government and legislature to consider classification if, required. W.P.(C).Nos. 19573, 19604, 21235 OF 2007 and 5 1408 of 2008 In any case, the decision cited by the counsel for the petitioners offer sufficient justification to interfere with them. The assessing officer made assessments in accordance with the statute. However in view of the absence of the items specified by the Government under Section 6(1)(d), Government should consider the matter. The OPs are disposed of directing the Government to consider the matter in the light of the observation made above. So far as the estimated turnover for higher rate is concerned, the petitioners have a case that if the orders are adverse to them, they are free to file appeals against the impugned orders against this issue. C.N.RAMACHANDRAN NAIR, JUDGE bkn/-