IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 22ND MARCH 2011 / 1ST CHAITHRA 1933 WP(C).No. 7656 of 2011(F) -------------------------------------- PETITIONER(S): ------------------------ M/S.BAKERS TRADERS, PADMA JUNCTION, ERNAKULAM REPRESENTED BY ITS PARTNER JESSY KUNACHAN. BY ADV. SMT.S.K.DEVI SRI.SHANMUGHAM D. JAYAN RESPONDENT(S): --------------------------- 1. THE ASSISTANT COMMISSIONR (ASSESSEMENT), SPECIAL CIRCLE -I, ERNAKULAM DEPARTMENT OF COMMERCIAL TAXES, ERNAKULAM . PIN-682 016, THEVARA.P.O. 2. STATE OF KREALA, REPRESENTED BY ITS FINANCE SECETARY, SECRETARIAT, THIRUVANANTHAPURAM.PIN- 695 001 R1 & R2 BY GOVERNMENT PLEADER SRI.V.K.SHAMSUDHEEN THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 22/03/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C).No.7656 of 2011 ------------------------------------------- Dated this the 22nd day of March, 2011 J U D G M E N T ---------------------- Challenge in this writ petition is against Ext.P1 to P5 notices issued under Section 25 of the Kerala Value Added Tax Act, 2003 (KVAT Act) proposing assessment against the petitioner, with respect to the years 2006-'07 to 2010-'11. The returns filed by the petitioner was proposed to be rejected mainly on the ground that the commodity, 'Margarine' is taxable at the rate of 12.5%, whereas the petitioner had conceded tax with respect to the said commodity only at 4%. Contention of the petitioner is that the product dealt with by them is 'Vanaspathy' or 'Dalda' and the same is taxable at 4% being a vegetable edible oil. The assessing authority found that, eventhough the element of vegetable fat is available in both the commodities, 'Margarine' is not used for cooking as in the case of other vegetable edible oils. On the other hand, 'Margarine' is used in manufacture of cake and bread and it is mainly used as a softening agent. According to the authority, at no stretch of imagination, the commercial 'Margarine' cannot be compared with vegetable oil like 'Vanaspathy'. Hence the proposal is to W.P.(C).7656/11 -2- assess the said commodity on the differential rate of 8.5 %. 2. Against Ext.P1 to P5 the petitioner had submitted detailed reply to the 1st respondent, as evidenced from Ext.P6. Contention of the petitioner is that the commodity belongs to a large class of items used for more or less the same purpose. It is contended that since the introduction of the KVAT Act the commodity was subjected to tax at 4%. It is also contended that the product dealt with by the petitioner is not borne out of processing of milk and it is natural 'Margarine' which is alternative product in the trade circle. Further contention raised by the petitioner is that even if it is presumed that the rate of tax applicable is at 12.5%, all purchases made by the petitioner are from dealers within the State by payment of 4% tax and that the petitioner had claimed credit of input tax only @ 4%. If at all any differential tax is liable to be collected, the same can only be on the value addition made by the petitioner, is the contention. 3. Heard; Government Pleader appearing on behalf of respondents. It is pointed out that the rate of tax applicable to the product 'Margarine', now stands settled by virtue of O.T. Rev.No.24/2010 dt.8.6.2010. Therefore it is contended that there is no merit in the objections raised. 4. Learned counsel for petitioner raises further contention to the effect that, the classification of 'Margarine' W.P.(C).7656/11 -3- among the group of products taxable at 12.5% will amount to discrimination which is violative of Article 14 of the Constitution of India. It is noticed that the petitioner is not raising any specific challenge against the relevant entry in the schedule of the KVAT Act. However, since the matter is only at the stage of proposal notice and since the petitioner had filed objections against the proposal, I am not proposing to enter upon any finding regarding merits of the contentions. It is left open to the petitioner to raise all such contentions before the assessing authority, if necessary by filing additional objections. Needless to say that before finalising the matter, the 1st respondent should afford the petitioner adequate opportunity to raise all contentions, and an effective opportunity of personal hearing. 5. Under the above circumstances the writ petition is disposed of with the above observations and leaving open all contentions raised by the petitioner for agitation. C.K.ABDUL REHIM, JUDGE. okb