Judgment:
1/10 R IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE7H DAY OF NOVEMBER2017BEFORE THE HON'BLE Dr.JUSTICE VINEET KOTHARI WRIT PETITION Nos.44574-44575 OF2015T-RES) BETWEEN: M/s.Wonderla Holidays Ltd. Jadenahalli, Hejjala P.O., 28th KM, Mysore Road, Bidadi Hobli, Ramanagara, Bangalore – 562 109, Represented by Mr.M.Sivadas, Senior General Manager, Aged about 50 years, S/o.Late K.Bhaskaran Nair. …Petitioner (By Sri V.Raghuram, Advocate) The State of Karnataka, Rep. by the Secretary, Finance Department, Vidhana Soudha, Bangalore – 560 001. Assistant Commissioner of Commercial Taxes, LVO-155, Kandaya Bhavana, B.M.Road, Ramanagara, Bangalore – 562 159. …Respondents (By Sri T.K.Vedamurthy, AGA) AND:
1.
2. M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 2/10 regards rejection of application These writ petitions are filed under Articles 226 & 227 of the Constitution of India praying to quash the impugned issued by the R2 vide endorsement dated 13.7.2015 Annexure-A as for registration under ‘Composition of Tax’ under Section 15(1)(c) of KVAT Act, 2003 and declare it as illegal and ultra vires the statutory provisions contained in Section 15 of KVAT Act 2003, quash the endorsement dated 13.7.2015 vide Annexure-A as being arbitrary and oppressive being violative of Article 14 and 19 of the Constitution and to declare sub-rule (4) of Rule 135 of KVAT Rules, 2005 vide Annexure-B, to the extent of having unreasonable restriction that ‘he shall not be a dealer selling liquor’ and declare it as illegal and ultra vires the statutory provisions contained in Section 15 of KVAT Act 2003 and etc. These writ petitions, coming on for preliminary hearing ‘B’ Group, this day, the Court made the following: ORDER
Mr.V.Raghuraman, Adv. for Petitioner Mr.T.K.Vedamurthy, AGA for Respondents The petitioner M/s.Wonderla Holidays Limited running various composite businesses like Amusement Park, 3 Star Hotel, a restaurant etc. has filed this petition before this Court on 09.10.2015 aggrieved by the fact that the respondent - Assessing Authority Assistant Commissioner of Commercial Taxes has not allowed him the benefit of Composition Tax permissible M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 3/10 to be filed under Section 15 of the Karnataka Value Added Tax, 2003 (‘Act’ for short).
2. The said benefit has been denied to the assessee - petitioner on the ground that as per Rule 135(4) of the Karnataka Value Added Tax Rules, 2005 (‘Rules’ for short), a Dealer selling liquor is not entitled to have the benefit of composition of tax under Section 15 of the Act.
3. The Assessing Authority has assigned the reason that since the petitioner-assessee holds common registration vide TIN No.29381132763 for all its businesses jointly, therefore in view of the admitted selling of the liquor by the Dealer in its 3 Star Hotel under the duly granted excise licence, the petitioner assessee would not be entitled to avail the composition of tax under Section 15 of the Act.
4. Learned counsel for the petitioner Mr.Raghuram has submitted before the Court that M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 4/10 Section 15(2)(e) of the Act which is quoted below, the Composition Scheme indicated under Section 15 of the Act permits the bifurcation of the turnover of the Dealer into taxable turnovers for eligible commodities and taxable turnovers for ineligible commodities and therefore the Composition Scheme entirely cannot be denied to the petitioner-assessee on the ground of selling of liquor in one of its Divisions namely, in 3-Star Hotel in view of Rule 135(4) of the Rules.
5. On the other hand, learned counsel for the Respondent-Department Mr.T.K.Vedamurthy submitted before the Court that in view of violation of Rule 135(4) of the Rules, since the assessee admittedly sells not only liquor in its 3-Star Hotel but other commodities like umbrellas, garments, toys, soft drinks, etc. which are not covered by the provisions of Section 15 of the Act, therefore, the Respondent Assessing Authority was justified in denying the said benefit to the petitioner - assessee. He also submitted that the impugned order M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 5/10 passed by the Assessing Authority is an appealable order under Section 62 of the Act which permits any person objecting to any order or proceedings affecting him under the provisions of the Act to prefer such an appeal before the higher authority. Mr.Vedamurthy also brought to the notice of the Court the provisions of Section 38(6) of the Act which empowers the Commissioner to treat separate Units of the business by providing for separate registration for separate Units to the assessee in this regard.
6. The relevant provisions of Sections 15(2)(e) and 38(6) of the Act and Rule 135(4) of the Rules are quoted below for ready reference: “15. Composition of tax ………
2) Notwithstanding anything contained in sub-section (1), a dealer whose nature of business is of a type falling under more than one clause of sub-section (1), shall be eligible to opt for composition under the said sub- M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 6/10 section in respect of tax payable on his turnover relating to any or all of such types of business subject to the condition that.- …………. (e) in respect of such type of business for which, he has not exercised his option or is not eligible, for composition under sub- section (1), then on the taxable turnover as determined from the balance total turnover after reduction as specified in clause (d), he shall be liable to tax as specified under Section 4.
38. Assessment of tax ………. (6) Notwithstanding anything contained in this Act, where a dealer is a body corporate and has more than one place of business, Commissioner may, subject to such conditions as may be prescribed and with the consent of the dealer, treat each of such places of business as a separate unit for the purposes of levy, assessment and collection of tax and thereupon all the provisions of this Act regarding registration, filing of returns, assessment and collection of M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 7/10 tax, shall apply as if each of such places of business is a separate unit.
135. Conditions of Scheme – A dealer opting to pay tax by way of composition under Section 15, shall satisfy the following conditions.- ………… (4) He shall not be a dealer selling liquor.” 7. Having heard learned counsel for the parties, this Court is satisfied that the impugned endorsements and order passed by the Assessing Authority cannot be faulted on the simple ground that the petitioner cannot be permitted to avail the benefit of composition of taxes under Section 15 of the Act in the face of the admitted and clear restriction imposed under Rule 135(4) of the Rules. The petitioner-assessee is admittedly selling liquor in one of its Units or Divisions namely, 3-Star Hotel run by it. The petitioner also holds a common registration number with the Respondent-Department. Merely because the petitioner - assessee can bifurcate M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 8/10 the turnover relating to different commodities and the Respondent-Assessing Authority can also verify the same, it does not entitle the petitioner-assessee to claim blanket benefit of composition under Section 15 of the Act. The Act also permits separate Units and Divisions of the same dealer to be separately registered with the prior approval of the Commissioner under Section 38(6) of the Act quoted above. While it is for the Department to verify the bifurcated turnover for different commodities eligible for composition and ineligible category, but the petitioner-assessee should obtain separate registrations for its businesses which are eligible for composition benefit under Section 15 of the Act and which are not so eligible.
8. There is no conflict, disharmony between Rule 135(4) and Section 15 of the Act. The Legislature has wide latitude to select the objects for taxation and restrict the concession or exemption by the conditions M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 9/10 imposed by it. If the State does not intend to give the benefit of composition to the Dealer selling liquor, it can certainly do so and no valid challenge can be made to the same.
9. If the Dealer has composite business of selling liquor also it is the choice of the Dealer to avail the benefit of composition under Section 15 of the Act or not while getting the common registration for all its Units or not. If the Dealer intends to avail the benefit of Composition Scheme under Section 15 of the Act for the eligible goods and eligible businesses, it can certainly apply for separate registrations of such Units or businesses and then seek the benefit of composition for such eligible business or commodities.
10. The petitioner Dealer cannot compel the Respondent-Department to grant such composition benefit, while maintaining the common registration and also simultaneously carry on the business of the goods M/s.Wonderla Holidays Ltd.Vs. The State of Karnataka & Anr. Date of Order 07-11-2017 W.P.Nos.44574-575/2015 10/10 or commodities like liquor which is specifically prohibited under Rule 135(4) of the Rules for availing such benefit.
11. In these circumstances this Court does not find any ground to quash the impugned Endorsement issued by the Respondent - Department and the writ petitions are without any merit. The same are liable to be dismissed. The same are dismissed with no order as to costs.
12. However, this will not prevent the assessee - petitioner to seek separate registration for its different Divisions and thereafter proceed to claim the benefit of composition in accordance with law. Cm/- Sd/- JUDGE