SHRI.K.M. JOSE v. ASSISTANT COMMISSIONER

WP(C) NO: 4568/2007 R 8. KERALA VYAPARI VYAVASAYI EKOPANA SAMATHI, (MERCHANTS UNION) REPRESENTED BY ITS PRESIDENT. BY GOVERNMENT PLEADER SRI. MOHAMMED RAFIQ ADV. SRI. N.N. SUGUNAPALAN (SR.) SC FOR BPC ADV. SRI. A.M. SHAFFIQUE THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09/02/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.BALAKRISHNAN NAIR,J.------------------------------------------WP(C)NO.4568 OF 2007-R ------------------------------------------JudgmentThe petitioner is a contractor. He is aggrieved by the retrospectivity givento the amendment to Section 6(1)(f) of the KVAT Act. The said amendedprovision reads as follows :“In the case of transfer of goods involved in the execution of workscontract, where the transfer is not in the form of goods but in someother form -(i) where the goods incorporated in the work are separatelyascertainable at the rates applicable to the goods and (ii) where the goods incorporated in the work are not separatelyascertainable at the rate of 12.5 per cent at all points of sale.”The rate of value added tax was revised from 4% to 12.5% by the amendmentwhich was enforced on 24.10.2006 with retrospective effect from 01.07.2006.The petitioner submits, he has entered into several contracts and his affairs havebeen arranged, having regard to the rate of tax provided before the amendment. Now, everything is unsettled by the enhancement of the rate of tax and that too, with retrospective effect. Hence this Writ Petition, seeking the following reliefs :“i. to declare that the amendment made to Clause (f) of Sub-sec.(1)to Sec. 6 of the Entry Tax Act, 2003 brought about vide KeralaFinance Act, 2006 (Act No.22 of 2006) published in the KeralaGovt. Extra Ordinary gazette No.1670 dated 24.10.2006, to be WPC 4568/072illegal and non-est in the eye of law and quash the same ; andii. to issue incidentally, a writ of mandamus or appropriatedirection in the nature of a writ of mandamus, directing therespondents 1 to 3 to collect tax based on the Value Added Tax Act,2003, as it stood prior to the amendment of 2006 ; oriii) to declare that the amended Act shall not be applicableretrospectively in the case of the petitioner for current workscontracts, but only for works undertaken later to 24.10.2006 andtherefore, the petitioner is not liable to pay value added tax as perVAT (Amendment Act, 2006) for the second quarter of theAssessment year 2006-07 ; and iv) to issue consequentially, a writ of mandamus or otherappropriate direction in the nature of writ of mandamus to the 1strespondent directing to collect quarterly taxes for the 2nd quarterof the fiscal (year) starting (from) 1.7.2006 applying the law andrates as it stood prior to the amendment of 2006.”The main grievance of the petitioner is about the collection of tax at 12.5% duringthe period between 01.07.2006 and 24.10.2006. In other words, theretrospectivity given to the enhancement of rate of tax is under challenge. 2. The learned Government Pleader points out that the bills proposing toamend the various fiscal statutes were presented in the form of Finance Bill on01.07.2006, wherein it was provided that the tax proposals contained therein willhave effect from 01.07.2006. Though the Act was enforced only on 24.10.2006, WPC 4568/073everyone knew that the revised proposals will have effect from 01.07.2006, inview of the specific clause contained in the Finance Bill, it is submitted. 3. It is well settled that the Finance Act, though passed later, can be giveneffect from the date of presentation of the Finance Bill, containing the proposalsfor taxation. The said well accepted practice has been followed in this case also. Any inconvenience caused to an individual contractor cannot be a ground for thisCourt to interfere with a statutory provision. This Court can interfere with astatutory provision, if only the same is enacted in violation of any of theconstitutional limitations. I find that no ground has been made out in this WritPetition to condemn the above quoted provision as unconstitutional. In theresult, the Writ Petition fails and it is dismissed.09.02.2007 K.BALAKRISHNAN NAIR,JUDGEsta WPC 4568/074