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IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 8TH DAY OF DECEMBER 2022 / 17TH AGRAHAYANA, 1944 OT.REV NO. 177 OF 2017 AGAINST THE ORDER IN TAVAT 201/2012 OF KERALA VAT APPELLATE TRIBUNAL, ERNAKULAM REVISION PETITIONER/ASSESSEE/APPELLANT:
M/S KERALA SHIPPING AND INLAND NAVIGATION CORPORATION LTD UDAYA NAGAR ROAD, GANDHI NAGAR, KOCHI - 20, A GOVERNMENT OF KERALA, UNDERTAKING, REPRESENTED BY SRI. RAJESH.K., FINANCE MANAGER.
BY ADVS. SRI.E.P.GOVINDAN SMT.G.DEEPA RESPONDENT/REVENUE/RESPONDENT:
THE STATE OF KERALA REPRESENTED BY THE SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM - 695 001.
BY ADVS. GOVERNMENT PLEADER GOVERNMENT PLEADER OTHER PRESENT:
GP SMT JASMINE M M THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 08.12.2022, ALONG WITH ST.Rev..25/2016, 26/2016 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 2
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 8TH DAY OF DECEMBER 2022 / 17TH AGRAHAYANA, 1944 ST.REV. NO. 25 OF 2016 AGAINST THE ORDER IN TA No.112/2012 OF S.T.A.T.ADDITIONAL BENCH, ERNAKULAM PETITIONER:
M/S.KERALA SHIPPING AND INLAND NAVIGATION CORPORATION LTD. GANDHI NAGAR, UDAYA NAGAR, KOCHI 20, A GOVERNMENT OF KERALA UNDERTAKING, REPRESENTED BY SRI. RAJESH K, FINANCE MANAGER.
BY ADVS. SRI.E.P.GOVINDAN SMT.G.DEEPA RESPONDENT:
THE STATE OF KERALA TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM 695 001 THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 08.12.2022, ALONG WITH OT.Rev.177/2017 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 3
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 8TH DAY OF DECEMBER 2022 / 17TH AGRAHAYANA, 1944 ST.REV. NO. 26 OF 2016 AGAINST THE ORDER IN TA No.114/2012 OF S.T.A.T.ADDITIONAL BENCH, ERNAKULAM REVISION PETITIONER/ASSESSEE/APPELLANTS:
M/S. KERALA SHIPPING AND INLAND NAVIGATION CORPORATION LTD. GANDHI NAGAR, UDAYA NAGAR, KOCHI-20, A GOVERNMENT OF KERALA UNDERTAKING, REP. BY SRI.RAJESH K., FINANCE MANAGER
BY ADVS. SRI.E.P.GOVINDAN SMT.G.DEEPA RESPONDENT:
THE STATE OF KERALA REP. BY THE SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM - 695 001 THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 08.12.2022, ALONG WITH OT.Rev.177/2017 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 4
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE S.V.BHATTI & THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS THURSDAY, THE 8TH DAY OF DECEMBER 2022 / 17TH AGRAHAYANA, 1944 ST.REV. NO. 27 OF 2016 AGAINST THE ORDER IN TA No.113/2012 OF S.T.A.T.ADDITIONAL BENCH, ERNAKULAM REVISION PETITIONER/ASSESSEE/APPELLANT:
M/S.KERALA SHIPPING AND INLAND NAVIGATION CORPORATION LTD,GANDHI NAGAR, UDAYA NAGAR, KOCHI 20, A GOVERNMENT OF KERALA UNDERTAKING, REPRESENTED BY SRI. RAJESH K, FINANCE MANAGER
BY ADVS. SRI.E.P.GOVINDAN SMT.G.DEEPA RESPONDENT:
THE STATE OF KERALA REPRESENTED BY THE SECRETARY, TAXES DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM 695001 THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 08.12.2022, ALONG WITH OT.Rev.177/2017 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 5
S.V.BHATTI & BECHU KURIAN THOMAS, JJ. ----------------------------------------------------------- S.T.(Rev.)Nos.25,26 & 27 of 2016 and O.T.R.(VAT)No.177 of 2017 ---------------------------------------------------------- Dated this the 8th day of December 2022
JUDGMENT
S.V.Bhatti, J.
M/s Kerala Shipping and Island Navigation Corporation Ltd./dealer registered under Kerala General Sales Tax Act (short 'GST Act’) and Kerala Value Added Tax Act (short 'KVAT Act') is the petitioner in the batch of revisions. The revisions are filed against the common order dated 28.04.2017 in T.A.(VAT)Nos.200 & 201 of 2012 of the KVAT Appellate Tribunal, Ernakulam and common order dated 17.12.2015 in T.A.Nos.112, 113 and 114 of 2012 of the Kerala Sales Tax Appellate Tribunal, Ernakulam. The assessee entered into agreements with the companies like FACT, IOC and KLR(BPCL). The dealer owns the transportation of the products and raw materials by boats and barges. The dealer
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 6
entered into an agreement with the District Collector to transport drinking water to a few islands in Ernakulam District. The dealer claims that for rendering the above services, the dealer received fare from the passengers for transporting goods, commodities etc. belonging to the dealer’s customers. Therefore, a question arises on whether Section 5 (i)(iii) of the KGST Act is attractive or not. The authorities rejected the claim of the dealer, and the dealer filed S.T. Revision Nos.31,32 and 33 of 2015 in this Court. On 15.07.2015, the revisions were disposed of, setting aside the impugned orders and remitting the appeals to the Tribunal for fresh consideration in the manner as ordered in the judgment dated 15.07.2015. At this juncture, it is contextual to refer to paragraphs 5 and 6 from the judgment dated 15.07.2015: “5. Subsequently, the meaning of the expression 'deemed sale' again came up for consideration of the Apex Court. In the State of Andhra Pradesh and another v. M/S Rashtriya Ispat Nigam Ltd. (2002) 10 KTR 272 (SC) where it was held that the fact that the machinery is leased out to a contractor does not mean that the effective control of the machinery even while it was in the use of the contractor was that of the contractor, in as much as the contractor was not free to make use of the machinery for the
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 7
works other than the project work of the awarder or move it out during the period the machinery was in his use.
The principles governing the interpretation of Section 5(1)(iii) of the KGST Act being the above, the question is whether the conclusion of the Tribunal that hire charges received by the assessee attracts levy of tax under Section 5(1)(iii) is correct or not. The Tribunal being the last fact finding authority constituted under the KGST Act, should necessarily evaluate the provisions of the contract entered into between the assessee and its clients and other documentary evidence that are produced by the assessee in order to come to its conclusions. However, a reading of the order passed by the Tribunal shows that it has examined the issue by confining itself to the orders passed by the lower authorities. We are, therefore, of the considered opinion that the matter requires to be considered afresh, duly taking into account the agreement and other documents that are available on record. On that basis, the Tribunal should pronounce on the question whether the nature of the transaction between the assessee and its clients, levy of tax under Section 5(1)(ii) of the KGST Act is attracted or not. For that purpose, without expressing any opinion on the merits of the case, we set aside the order passed by the Tribunal in T.A.Nos.112/12, 113/12 and 114/12 and remit the matters to the Tribunal for a fresh consideration.”
Adv. E.P. Govindan argues that the contracts under which the dealer provides services by any stretch of construction would be considered as coming within the ambit of Section 5(i)(iii) of the GST Act. The Tribunal referred to several contentions and rejected the claim of the dealer. The learned counsel argues that upon remand by this Court by judgment dated 15.07.2015, the Tribunal should have heard the
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 8
appeals in the manner indicated in the judgment. The counsel has invited our attention to the agreements entered into by the dealer with its customers, and none of the cyclostyle agreements contains anything from which it could be inferred that the effect of Section 5(i)(iii) is attracted to treat the transportation charges received by the dealer as forming part of taxable turnover. He has invited our attention to the materials and also the judgments reported in M.S.Jewellery v Asst.Commissioner1, State of Kerala v K.T.Shaduli Yusuf2, K.Musthafa v State of Kerala3, The Deputy Commissioner of Sales Tax (Law) v S.Bahuleyan4, State of Andhra Pradesh v M/s Rashtriya Ispat Nigam Ltd.5, Bharat Sanchar Nigam Ltd. v Union of India6, 20th Century Finance Corpn.Ltd. v State of Maharashtra7, J.K.Synthetics Ltd. v Commercial Taxes Officer8,
1 97 STC 455 (Ker.) 2 39 STC 478 (SC) 3 122 STC 565 (Ker.) 4 1 KTR (1992) 137 (Ker.) 5 10 KTR 272 (2002 (Ker.) 6 142 STC 91(SC) 7 119 STC 182(SC) 8 94 STC 422 (SC)
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 9
Suzion Infrastructure Service Ltd. v Commercial Tax Officer (W.C.), Commercial Taxes, Kochi9, M/s Great Eastern Shipping Company Limited v State of Karnataka10, Saumya Mining Pvt. Ltd. v Commissioner of Taxes, Assam11 and Alpha Clays v State of Kerala12 and he prays for setting aside the order of the Tribunal and excluding the turnover of transportation charges received towards fare from passengers for transportation of commodities, water etc. 3. Adv. Jasmin, by referring to the very conclusions rendered by the Tribunal, would attempt to convince us that the matter does not warrant re-consideration by the Tribunal. Smt.Jasmine argued that all the elements stipulated in Section 5(iii) of GST Act or VAT Act, as the case may be, attracted the heads now included in the turnover and are legally justifiable. Alternatively, for not referring to the very contracts referring to which the dealer has executed the works are not
9 2010 35 VST 451 (Ker.) 10 136 STC 519 11 146 STC 343 12 135 STC 107
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 10
considered by the Tribunal or that the directions given by this Court are not adequately complied with, the matter needs to be re-examined by the Tribunal and this Court may not re- examine all issues. Such review could be beyond the scope of the respective sections under which the revisions are filed.
To appreciate whether the matters warrant a second round of remand or not, we have, as a litmus test, examined firstly a few contractual clauses on which the dealer is relying to stay out of the purview of Section 5(iii) of the GST Act. Prima facie, the consideration of contractual clauses is incorrect or inappropriate. Further, it appears that instead of giving due weightage to the direction issued by this Court while remanding the matter, the Tribunal has preferred the reasoning of the assessing officer and arrived at an axiomatic conclusion. The direction of this Court in S.T.Revisions is clear and categorical. We are convinced the directions issued in the remand order are not duly and adequately complied with by the Tribunal in the orders impugned in the batch of revisions.
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 11
By taking note of the alternative submission of the Government Pleader to set aside the orders of the Tribunal, we set aside the common order dated 28.04.2017 in T.A.(VAT)Nos.200 & 201 of 2012 of the KVAT Appellate Tribunal, Ernakulam and common order dated 17.12.2015 in T.A.Nos.112, 113 and 114 of 2012 of the Kerala Sales Tax Appellate Tribunal, Ernakulam and remit the matters for consideration of materials/respective contract clauses and the direction issued by this Court on 15.07.2015. The Tribunals shall dispose of the appeals expeditiously and preferably within four months from receiving a copy of this judgment. No order as to costs.
SD/- S.V.BHATTI, JUDGE
SD/-BECHU KURIAN THOMAS, JUDGE
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S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 12
APPENDIX OF ST.REV. 25/2016
PETITIONER ANNEXURES ANNEXURE A TRIBUNAL ORDER DAT.17.12.2015 IN TA NOS.112/12, 113/12 AND 114/12 PASSED BY THE KERALA AGRL. INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, ERNAKULAM ANNEXURE B TRUE COPY OF THE COMMON ORDER DT. 15.07.2015 IN ST(REV). 31/15, 32/15 AND 33/15 PASSED BY THE HON'BLE HIGH COURT FOR THE YEARS 2002-03, 2003-04 AND 2004-05 ANNEXURE C TRUE COPY OF THE ASSESSMENT ORDER DT 29.06.2010 PASSED BY THE COMMERCIAL TAX OFFICER, 2ND CIRCLE, COMMERCIAL TAXES, THRIPUNITHURA ANNEXURE D TRUE COPY OF THE APPELLATE ORDER DT. 14.08.2012 IN STA.423/2010 PASSED BY THE DY. COMMISSIONER (A), COMMERCIAL TAXES, ERNAKULAM ANNEXURE E TRUE COPY OF THE APPEAL MEMORANDUM DT. 12.12.2012 FILED BEFORE THE TRIBUNAL ANNEXURE F TRUE COPY OF THE COMMON ORDER DT. 31.01.2015 IN TA.112/12, 113/12 AND 114/12 PASSED BY THE TRIBUNAL, ERNAKULAM ANNEXURE G TRUE COPY OF THE ARGUMENT NOTE DT. 30.11.2015 FILED BEFORE THE TRIBUNAL ANNEXURE H TRUE COPY OF THE REPLY DT 25.06.2010 AGAINST THE PRE-ASSESSMENT NOTICE FILED BY THE PETITIONER ANNEXURE I TRUE COPY OF THE AGREEMENT DT. 3-9-2002 BETWEEN THE PETITIONER COMPANY AND FACT LTD. ANNEXURE J TRUE COPY OF THE WORK ORDER DT. 6-3-2002 ISSUED BY THE INDIAN OIL CORPORATION LTD. ANNEXURE K TRUE COPY OF THE ORDER DT. 14.12.2001 ISSUED BY THE DISTRICT COLLECTOR, ERNAKULAM FOR TRANSPORTING THE DRINKING WATER TO ISLANDS.
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 13
APPENDIX OF ST.REV. 26/2016
PETITIONER’S ANNEXURES ANNEXURE A TRIBUNAL ORDER DAT.17.12.2015 IN TA NOS.112/12, 113/12 AND 114/12 PASSED BY THE KERALA AGRL. INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, ERNAKULAM ANNEXURE B TRUE COPY OF THE COMMON ORDER DT. 15.07.2015 IN ST(REV).33/15 PASSED BY THE HON'BLE HIGH COURT FOR THE YEARS 2002-03, 2003-04 AND 2004-05 ANNEXURE C TRUE COPY OF THE ASSESSMENT ORDER DT 31.07.2010 PASSED BY THE COMMERCIAL TAX OFFICER, 2ND CIRCLE, COMMERCIAL TAXES, THRIPUNITHURA ANNEXURE D TRUE COPY OF THE APPELLATE ORDER DT. 13.08.2012 IN STA.423/2010 PASSED BY THE DY. COMMISSIONER (A), COMMERCIAL TAXES, ERNAKULAM ANNEXURE E TRUE COPY OF THE APPEAL MEMORANDUM DT. 12.12.2012 FILED BEFORE THE TRIBUNAL ANNEXURE F TRUE COPY OF THE COMMON ORDER DT. 31.01.2015 IN TA.112/12, 113/12 AND 114/12 PASSED BY THE TRIBUNAL, ERNAKULAM ANNEXURE G TRUE COPY OF THE ARGUMENT NOTE DT. 30.11.2015 FILED BEFORE THE TRIBUNAL ANNEXURE H TRUE COPY OF THE REPLY DT 14.07.2010 AGAINST THE PRE-ASSESSMENT NOTICE FILED BY THE PETITIONER
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 14
APPENDIX OF ST.REV. 27/2016
PETITIONER ANNEXURES ANNEXURE A TRIBUNAL ORDER DT.17.12.2015 IN TA NOS.112/12, 113/12 AND 114/12 PASSED BY THE KERALA AGRL. INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, ERNAKULAM ANNEXURE B TRUE COPY OF THE COMMON ORDER DT. 15.07.2015 IN ST(REV). 31/15, 32/15 AND 33/15 PASSED BY THE HON'BLE HIGH COURT FOR THE YEARS 2002-03, 2003-04 AND 2004-05 ANNEXURE C TRUE COPY OF THE ASSESSMENT ORDER DT 29.06.2010 PASSED BY THE COMMERCIAL TAX OFFICER, 2ND CIRCLE, COMMERCIAL TAXES, THRIPUNITHURA ANNEXURE D TRUE COPY OF THE APPELLATE ORDER DT. 13.08.2012 IN STA.423/2010 PASSED BY THE DY. COMMISSIONER (A), COMMERCIAL TAXES, ERNAKULAM ANNEXURE E TRUE COPY OF THE APPEAL MEMORANDUM DT. 12.12.2012 FILED BEFORE THE TRIBUNAL ANNEXURE F TRUE COPY OF THE COMMON ORDER DT. 31.01.2015 IN TA.112/12, 113/12 AND 114/12 PASSED BY THE TRIBUNAL, ERNAKULAM ANNEXURE G TRUE COPY OF THE ARGUMENT NOTE DT. 30.11.2015 FILED BEFORE THE TRIBUNAL ANNEXURE H TRUE COPY OF THE REPLY DT 25.06.2010 AGAINST THE PRE-ASSESSMENT NOTICE FILED BY THE PETITIONER
S.T.(Rev.)Nos.25, 26 & 27 of 2016 and OTR(VAT) No.177 of 2017 15
APPENDIX OF OT.REV 177/2017
PETITIONER ANNEXURES ANNEXURE A TRUE COPY OF THE REVISED ASSESSMENT ORDER DATED 26/03/2010 PASSED BY THE ASSESSING AUTHORITY FOR THE YEARS 2006-2007. ANNEXURE B TRUE COPY OF THE APPELLATE ORDER DATED 26/11/2011 IN KVATA 1481/2010 FOR THE YEARS 2006-2007. ANNEXURE C TRUE COPY OF THE COMMON ORDER DATED 28/04/2017 IN TA.(VAT)200/2012 AND 201/2012 BY THE KVAT APPELLATE TRIBUNAL, ERNAKULAM. ANNEXURE D TRUE COPY OF THE WORK ORDER DATED 27/12/2003 ISSUED BY THE FACT LTD. IN FAVOUR OF THE PETITIONER COMPANY. ANNEXURE E TRUE COPY OF THE TRIP SHEET DATED 23/11/2010 PREPARED BY THE PETITIONER COMPANY. ANNEXURE F TRUE COPY OF THE RECEIPT DATED 24/11/2010 ISSUED BY THE AWARDER.