IN THE HIGH COURT OF KERALA AT ERNAKULAM WP(C).No. 17170 of 2009(M) 1. PREMIER STEELS, IRON AND STEEL MERCHANTS ... Petitioner Vs 1. ASSISTANT COMMISSIONER, COMMERCIAL TAXES ... Respondent 2. DEPUTY COMMISSIONER, COMMERCIAL TAXES, 3. THE COMMISSIONER, COMMERCIAL TAXES, For Petitioner :SRI.K.I.MAYANKUTTY MATHER For Respondent :GOVERNMENT PLEADER The Hon'ble MR. Justice C.K.ABDUL REHIM Dated :19/01/2010 O R D E R C.K.ABDUL REHIM, J. ------------------------------ W.P.(C).No.17170 OF 2009 ------------------------------ Dated this the 19th day of January, 2010 J U D G M E N T
1. Petitioner is a registered dealer on the rolls of the 1st respondent, under the Kerala Value Added Tax Act, 2003 (KVAT Act), with effect from 1.4.2005. The petitioner was having registration under the Kerala General Sales Tax Act, 1963 (KGST Act) during the previous periods. Challenge in this writ petition is against Ext.P3 order of the 2nd respondent, whereby condonation of delay was refused with respect to filing of application in Form-25A, as contemplated under Rule 12(2) of the KVAT Rules.
2. It is noticed that, on the advent of the KVAT Act credit of input tax was permitted against tax paid under the KGST Act, with respect to goods purchased by them during the period of one year immediately preceding the date of commencement of KVAT Act, subject to certain conditions and restrictions prescribed under Section 11(13). Under Rule 12(2) of the KVAT Rules, it is prescribed that any dealer claiming credit of input tax under Section 11(13) has to submit application before the assessing authority in Form-25A, along with opening stock inventory of the goods as on the date of coming into force of the W.P.(C).17170/09-M 2 KVAT Act. It is also insisted that the application in Form-25A shall be accompanied by a statement showing opening stock value of goods as on 1.4.2004 and 1.4.2005 in respect of goods taxable at the hands of the dealer and those exempted at his hands. Such stock inventory and statement of purchase bills shall be certified by a Chartered Accountant or a Cost Accountant, where the dealer submitting the statement was covered by provisions of Section 27A of the KGST Act during the year 2004-05.
3. According to the petitioner he had submitted Ext.P1 application in Form-25A as provided under Rule 12(2) claiming refund of the input tax credit, with respect to the assessment year 2005-06, amounting to Rs.4,59,287/-. It is an admitted case that the petitioner had filed the said application on 16.5.2005. But the 1st respondent had returned the said application for want of certificate by a Chartered Accountant/Cost Accountant, as required under Rule 12(2). As per Rule 12(2) of the KVAT Rules the application in Form-25A claiming input tax credit has to be submitted on or before 31.1.2006 (The date fixed originally was 30.4.05, which was extended to 31.7.05. The date is seen further extended as, 31.1.06 by virtue of SRO:385/07 dt:24.4.07). But the petitioner could not re-submit the application after curing the defect within the time stipulated. W.P.(C).17170/09-M 3
4. By virtue of Finance Act, 2008 a new provision as Section 20A was introduced in the KVAT Act conferring powers on the Deputy Commissioner to condone delay in applying for any refund under the Act and the Rules. Invoking the said provision, the petitioner submitted application before the 2nd respondent seeking condonation of delay in submitting Form- 25A, as evidenced from Ext.P2. But the 2nd respondent had rejected the application holding that there is no provision under the KVAT Act or Rules to condone delay in filing application for credit of input tax on opening stock held on 1.4.2005. Hence this writ petition.
5. Question to be considered is as to whether an application submitted under Section 11(3) and Rule 12(2) in Form No.25A, can be considered as an application for refund of tax, coming within the purview of Section 20A(a). Learned counsel for the petitioner contended that, under Section 11(6) of the KVAT Act, if the input tax of a dealer for a returned period is more than the output tax and if the excess input tax cannot be adjusted against any amount due or demanded under the Act, the balance shall be carried forward to the next returned period and if the excess input tax so carried forward cannot be fully adjusted during the last returned period, the excess input tax credit remaining unadjusted shall be refunded W.P.(C).17170/09-M 4 to the dealer, as if it were a refund accrued under Section 13. The procedure for effecting such refund of input tax remaining unadjusted at the close of the year is dealt with under Rule 47A of the KVAT Rules. Contention is that in this case since the amount of input tax credit reflected in the opening stock of the year 2005-06 could not be adjusted against the output tax of that year, it became liable for refund as excess input credit, and the provisions governing such refund is Section 13 read with Rule 47 and 47A.
6. Construed on the above basis, the application is one coming within the purview of Section 20A, for which the 2nd respondent is vested with jurisdiction to condone delay, is the contention. In this regard the petitioner had also pointed out the particulars contained in the Form (Ext.P1) wherein Serial No:J indicates Sales Tax claimed for refund. Therefore, according to the counsel, the claim made for credit of tax paid under KGST Act, is the amount virtually liable for refund and it can be treated only as a claim for refund.
7. Learned Special Government Pleader opposed the above view, stating that the question of refund arises only if credit of input tax is allowed, as provided under law. With respect to tax paid under the KGST Act, Section 11(13) read with Rule 12(2) provides a specific procedure and stipulates W.P.(C).17170/09-M 5 particular time limit. If the application for credit of tax paid under the KGST Act has not been submitted within the period stipulated, under Rule 12(2), no condonation can be effected under Section 20A treating the application for credit as one coming having characteristics of a refund application mentioned in Section 20A(a).
8. Having considered the rival contentions, I am of the view that the question of refund will arise only after the assessing authority allows the credit. The assessing authority need to evaluate the statement of accounts and to decide as to whether there was any actual payment of tax made under KGST Act, which is liable to be given credit or not. Only after such verification, the assessing authority can reach at a conclusion with respect to total amount due for credit. Then only the question of adjustment or refund will arise. In the case at hand it is an undisputed fact that the application submitted before the assessing authority is one coming within the purview of Section 11(3) read with Rule 12(2) which is an application for allowing credit of input tax. Therefore I am of the opinion that Ext.P1 application cannot be considered as an application for refund coming within the purview of Section 13, which need be dealt with under the provisions of Rule 47 or 47A of the Act. Hence the 2nd respondent was justified in rejecting condonation W.P.(C).17170/09-M 6 of delay holding that there is no provision for condonation of delay in filing the application for credit of input tax.
9. However, it is noticed that time for submission of application under Rule 12(2) stood extended till 31.1.2006. It is an admitted case that the petitioner had submitted the application in Form 25A as early as on 16.5.2005, which was within the period allowed. The application was defective because the certificate of the Chartered Accountant with respect to the stock inventory and statement of purchase was not available. The application is returned since the above said defect existed. But the defect was not cured and re-submitted thereafter on any date within the time stipulated under Rule 12 (2). The question is whether the failure for re-submission of application after curing defect within the time stipulated, can be considered as failure in submitting the application within such period. Learned Special Government Pleader vehemently contended that the application received as defective cannot be considered as an application properly submitted as prescribed under the Rules. An application which is not properly submitted cannot be considered as an application at all, is the contention.
10. Without entering to any decision on the dispute as above, I am of the opinion that, considering the fact that the W.P.(C).17170/09-M 7 petitioner was a registered dealer under the KGST Act and he had effected payment of considerable amount as tax due under that statute, the question whether he is liable to be given credit with respect to the subsequent year, is a matter which need examination, especially when the petitioner had preferred the application in the prescribed form, eventhough defective, within the time stipulated. I am inclined to hold that apart from the technical objections the petitioner need be provided with substantial relief.
11. Hence the 1st respondent is hereby directed to receive back the application for credit of input tax which is necessary to be re-submitted under the amended Form 25A, if it is submitted within a period of two weeks from today, and to consider and dispose of the same on merits in order to decide whether input tax credit can be allowed or not.
12. A decision in this regard shall be taken as early as possible, at any rate within a period of two months from the date of receipt of such application.
The writ petition is disposed of as above.
C.K.ABDUL REHIM, JUDGE.