M/S FICUS PAX PRIVATE LIMITED V. THE COMMISSIONER OF COMMERCIAL TAXES KARNATAKA

WP/62608/2016

AI Insights

The case involves M/s Ficus Pax Private Limited, which filed a writ petition challenging the rejection of its application for clarification under Section 59(4) of the Karnataka Value Added Tax 2003 (KVAT Act) by the Commissioner of Commercial Taxes, Karnataka. The petitioner sought to include Subheading 44152000 (related to pallets, box pallets, and other load boards of wood) in the notification dated 30.04.2005, which specified tax rates for certain goods under the KVAT Act. The petitioner argued that the exclusion of this subheading was an omission that should be corrected based on the principles of casus omissus and pari materia. However, the court rejected these arguments, emphasizing that the State's decision was a deliberate policy choice and not an oversight.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 692453 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 12-04-2023
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Central Calcutta v. National Taj Traders, Sanjiv V Kudva v. Commissioner of Income-Tax, Karnataka, Shiv Shakti Coop. Housing Society v. Swaraj Builders
• Laws Referred To: KVAT Act, Central Excise Tariff Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K HEMA KUMAR
• Assessee Lawyers: VENKATESH BHAGAT
• Keywords: Central Excise Tariff Act; KVAT Act; Notification; Packing Materials; Tax rate; Industrial Inputs
• Section: 15; 14; 4(1)(a); 59(4)

Judgement Text

" - 1 - WP No. 62608 of 2016 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 12TH DAY OF APRIL, 2023 BEFORE THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 62608 OF 2016 (T-RES) BETWEEN: M/S FICUS PAX PRIVATE LIMITED SY NO.95/2B, ALONG NH-207, KORALUR VILLAGE, THIRUMALASHETTY HALLI CROSS, BENGALURU-560067 REPRESENTED BY ITS AUTHORISED SIGNATORY SRI B.R.VIJAYENDRA MANAGING DIRECTOR. …PETITIONER (BY SRI. VENKATESH R BHAGAT.,ADVOCATE) AND: 1. THE COMMISSIONER OF COMMERCIAL TAXES KARNATAKA VANIJYA THERIGE KARYALAYA, GANDHI NAGAR, KALIDASA ROAD, BENGALURU-560009. 2. THE ADDITIONAL COMMISSIONER OF COMMERCIAL TAXES (ENFORCEMENT) SOUTH ZONE, V.T.K-2, B BLOCK, (NEAR NATIONAL GAMES VILLAGE) KORAMANGALA BENGALURU-560047. …RESPONDENTS (BY SRI.K. HEMA KUMAR., AGA) Digitally signed by NARASIMHA MURTHY VANAMALA Location: HIGH COURT OF KARNATAKA - 2 - WP No. 62608 of 2016 THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS IN IMPUGNED CLARIFICATION DATED 8.2.2016 VIDE ANNEXURE-A ISSUED BY THE R-1; QUASH THE IMPUGNED CLARIFICATION DATED 8.2.2016 VIDE ANNEXURE-A ISSUED BY THE R-1 AND FURTHER PROCEEDINGS THERETO BASED ON SAID CLARIFICATION ON AND FURTHER PROCEEDINGS THERETO IN SO FAR AS THE PETITIONER IS CONCERNED; DIRECT THE RESPONDENTS TO TREAT WHOLE HEADING AND SUB-HEADING 4415 OF CHAPTER 44 OF CENTRAL EXCISE TARIFF ACT TO READ AS A WHOLE IN VIEW OF EXPLANATIONS 3 TO THE NOTIFICATION DATED 30.4.2015 AT SL NO.187 FROM ITS INCEPTION. THIS PETITION, COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has filed an application under Section 59(4) of the Karnataka Value Added Tax 2003 [for short, ‘the KVAT Act’] for clarification, and the first respondent by the impugned order dated 08.02.2016 [Annexure-A] has rejected this application. The petitioner in addition to calling in question the first respondent’s order dated 08.02.2016 seeks directions to the respondents to treat the Heading and Subheading 4415 of Chapter 44 of the Central Excise - 3 - WP No. 62608 of 2016 Tariff Act, 1985 to be read into the notification dated 30.04.20051 issued under the provisions of Section 4 read with entry at Sl.No. 35 of the Third Schedule of the KVAT Act. 2. The petitioner is a registered dealer under the KVAT Act and is engaged in the manufacture and sale of boxes, pallets and boxes with pallets of wooden/plywood/pinewood/corrugation used as packing materials. The provisions of the Central Excise Tariff Act 1985 classify cases, boxes and crates, and pallets and box pallets are classified separately in HNS Code 4415 under two Subheadings 44151000 and 44152000. The classification under this Heading and Subheadings are as follows: 4415 Packing Cases, Boxes, Crates, Drums And Similar Packings, Of Wood; Cable Drums 1It is undisputed that by the subsequent notification dated 07.06.2005 it is clarified that the notification dated 30.04.2005 is issued in exercise of powers conferred under Section 4 of the KVAT read with entry at Sl.No.51 of the third schedule. - 4 - WP No. 62608 of 2016 Of Wood; Pallets, Box Pallets And Other Load Boards, Of Wood; Pallet Collars Of Wood 4415 10 00: Cases, Boxes, Crates, Drums And Similar Packings; Cable Drums 4415 20 00: Pallets, Box Pallets And Other Load Boards; Pallet Collars 3. The provisions of Section 4(1)(a) of KVAT Act 2 stipulate that every registered dealer must pay 24. Liability to tax and rates thereof.-(1) Every dealer who is or is required to be registered as specified in Sections 22 and 24, shall be liable to pay tax, on his taxable turnover, (a) in respect of goods mentioned in, (i) Second Schedule, at the rate of one per cent, (ii) Third Schedule, at the rate of five per cent, and; (iii) Fourth Schedule, at the rate of twenty per cent. (b) in respect of.- 1. declared goods as specified in Section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) at the maximum rate specified for such goods under Section 15 of the said Act; 2. cigarettes, cigars, gutkha and other manufactured tobacco at the rate of twenty percent; 3. other goods at the rate of fourteen per cent. (c) in respect of transfer of property in goods (whether as goods or in some other form) involved in the execution of works contract specified in column (2) of the Sixth Schedule, subject to sections 14 and 15 of the Central Sales Tax Act, 1956(Central Act 74 of 1956), at the rates specified in the corresponding entries in column (3) of the said Schedule Provided that the rate of tax in respect of declared goods as specified in section 14 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall be four per cent from Eighth day of April, 2011 to Eleventh day of April, 2011. - 5 - WP No. 62608 of 2016 taxes on his taxable turnover in respect of goods mentioned in the Third Schedule at the rate mentioned therein, and the rates are notified from time to time. The Third Schedule lists the goods that could be taxable at the rate mentioned in Section 4(1)(a)(ii), and entry at Sl.No.51 reads that ‘industrial inputs and packing material as may be notified’. The State Government is thus vested with the jurisdiction to notify goods that would come within the fold of industrial inputs and packing material to be eligible for tax rate as mentioned in Section 4(1)(a)(ii). 4. The notification dated 30.04.2005 is accordingly issued in supersession of the earlier notification in that regard to be in force with effect from 01.05.2005. In issuing this notification insofar as industrial inputs and packing materials, the followings are incorporated at Sl.No.187: \"187: Cartons, Boxes and their waste - 6 - WP No. 62608 of 2016 4415.10.00: (3) Packaging cases, boxes, crates, drums and similar packings of wood; Cable drums of wood.\" In incorporating Sub-heading 44151000 the concession rate under Section 4(1)(a)(ii) is confined to packing cases, boxes, crates, drums and similar packing of wood; cable-drums of wood but excludes pallets, box pallets and other boards; pallet collars. This notification has prevailed until 01.04.2015 when, by notification No. FD 40 CSL 2015(V) dated 31.03.2015, even pallets, box pallets and other load boards; pallet collars are included by including the Subheading 44152000. Hence, the present proceedings. 5. The petitioner’s application for clarification under Section 59(4) of the KVAT Act is filed with the first respondent with issuance of this notification, and for clarification on the rate of tax applicable to pallets, box pallets and other boards; pallet collars for the period prior to this subsequent Notification dated 31.03.2015. - 7 - WP No. 62608 of 2016 6. Sri Venkatesh R Bhagat, the learned counsel for the petitioner, fairly submits that the petitioner in filing the application with the first respondent for clarification has relied upon the explanation appended to the notification dated 31.03.2015 to contend that the Sub-heading 4415.20.00 must also be read into the notification dated 30.04.2005, but he would like to argue in favour of the application for clarification relying on the following grounds. a) The State Government, in issuing the notification dated 30.04.2005 under the entry at Sl.No.51 of the Third Schedule of the KVAT Act read with Section 4(1)(a) for the purposes of what would be industrial inputs and packing materials, has referred to the Heading and Subheading numbers under the Central Excise Tariff Act, 1985. The State while incorporating the Heading 44151000 ought to have included the entire heading including the two - 8 - WP No. 62608 of 2016 Subheadings. The State could not have excluded one Subheading while including the other Subheading and without reference to the Heading at all. b) All the States, in issuing notification under the similar provisions under the relevant statutes, have even as of the year 2005 incorporated the entire Heading 4415 without distinction between two Sub- headings 3 . The exclusion of the reference to the Heading and exclusion of Subheading 44152000 is an obvious omission which is only later incorporated with the subsequent notification dated 31.03.2015. c) When omission is established, this Court must apply the principle of casus omissus and read Subheading 44152000 into the notification dated 30.04.2005. A strong reliance is placed on record on the decision of the Hon’ble Supreme Court in Commissioner of Income Tax, Central Calcutta v. 3A specific reference to the notification is issued by the State of Maharashtra and State of Tamil Nadu - 9 - WP No. 62608 of 2016 National Taj Traders4 for application of the principle of casus omissus. d) The Central Excise Tariff Act would be the principal Act and the classification provided therein is incorporated for the purposes of the notification contemplated at entry at Sl.No.51 of the Third Schedule of the KVAT Act. This Court must invoke the principle of parimateria and hold that the Sub-heading 44152000 is part of the notification. Insofar as the application of principles of parimateria, a reliance is placed on the Division Bench’s decision of this Court in Sanjiv V Kudva v. Commissioner of Income-Tax, Karnataka5. 7. Sri Hema Kumar K., the learned Additional Government Advocate, submits that the State is within its domain to issue notifications declaring goods that that would be industrial inputs and packing materials for the purposes of Section 4(1)(a)(ii) of the KVAT Act as 4AIR 1980 SC 485 5 (1981) 127 ITR 354 - 10 - WP No. 62608 of 2016 contemplated under entry at item No.51, and therefore exigible at a particular rate. In exercise of such jurisdiction, the notification dated 30.04.2005 is issued specifically including only packing cases, boxes, crates, drums, and similar packing of wood; cable drums of wood excluding all other packing materials. The jurisdiction to issue notification for the purposes of Third Schedule is not restricted by the classification under the Central Excise Tariff Act and a reference to the provisions thereof in the notifications issued under the provisions of Section 4 of the KVAT Act is illustrative and for reasons of ease. 8. Sri Hema Kumar K argues that the notifications under the provisions of Section 4 of the KVAT Act are issued deliberately and as a policy, and there is no reason to opine that there is omission to apply the principles of casus omissus or pari materia. He submits that it is settled that the Courts cannot apply the principles of interpretation of statutes to read - 11 - WP No. 62608 of 2016 into statutes something when language of statutes is clear and unequivocal, and when decisions are taken to as a matter of policy. 9. The petitioner’s case for reading into the notification dated 30.04.2005 as aforesaid is premised on the ground that there is omission in not including the pallets, box pallets and other load boards of wood; pallet collars of wood, and that this omission stands out with the issuance of the subsequent notification dated 31.03.2015. It is also canvassed that this subsequent notification is issued because the other states viz., the State of Maharashtra and State of Tamil Nadu, in issuing similar notifications, have included the aforesaid packages of materials/boxes. 10. The principle of pari materia can be applied in a given case where two legislations they deal with the same subject matter and form part of the same subject matter, and this principle is also called in aid with the caution that it cannot be pressed too far to - 12 - WP No. 62608 of 2016 legislate. The pari material that is canvassed is between the Central Excise Tariff Act and the delegated legislation in issuing notifications for the purposes of Section 4(1)(a)(ii) of the KVAT Act. The classifications based on HNS Codes are notified under the Central Excise Tariff Act, and the notification dated 30.04.2005 is issued as contemplated in Entry-51in the Third Schedule of the KVAT Act for the purposes of Section 4(1)(a) thereof. 11. In the present circumstances, if one legislation is by the Union, the other is by a delegate under the State. The State Government’s domain [and therefore the delegate’s domain] to levy service tax under Section 4 of the KVAT Act is independent of the legislation by the Union, and this in the sense that it is not dependent on any notification or the provisions of the Central Excise Tariff Act. It is, therefore, difficult to read parimateriaas canvassed, and crucially to apply the principles of parimateriait must be when the two - 13 - WP No. 62608 of 2016 enactments are meant to enforce each other. It is not even argued whether this condition is satisfied. As such, the principle of parimateriacannot be invoked. 12. The principle of casus omissus can be invoked by Courts when a certain omission is established, and it is shown that it would necessary and justified to read a certain thought [the omission] into a provision subject to four corners of the given Statute. Further, it is settled that omission should not be readily accepted especially when the concerned statute/legislation is consistent.A useful reference in this regard can be made to Shiv Shakti Coop. Housing Society v. Swaraj Builders6. It follows from the afore that this Court must first opine that there is omission in excluding the Sub-heading 4415.2000 in the first notification dated 30.04.2005. 13. The canvass is that an omission is established is because 10 years after the date of 6 (2003) 6 SCR 659 - 14 - WP No. 62608 of 2016 notification dated 30.04.2005 another notification dated 31.03.2015 is issued including the aforesaid Sub heading amongst the items covered under the heading 'Industrial inputs and packaging material' as contemplated under Entry-51 of the Third Schedule to the KVAT Act and that this Notification is issued because the States of Tamil Nadu and Maharashtra have included the sub heading for the purposes of their respective Acts. 14. As canvassed by Sri Hema Kumar, if the Government in issuing the first notification dated 30.04.2005 has chosen, as a policy decision to notify one set of items, amongst many, for the purposes of taxing at a particular rate for what could be a variety of reasons, an omission cannot be read only because at a later point of time the State Government, again as a policy, has included the other products with effect from the date of the subsequent notification. The notification dated 30.04.2005, which prevailed over ten years, - 15 - WP No. 62608 of 2016 cannot be said was uncertain or lacking in definiteness only because other items are included later. This Court cannot but observe that these arguments were not canvassed before the first respondent and are put forth before this Court for the first time, and this in itself could render these two grounds tenuous. There is no reason for interference, and the petition stands rejected. Sd/- JUDGE SA,NV "