The following Act of the Kerala State Legislature is hereby published for general information. The Bill as passed by the Legislative Assembly received the assent of the Governor on the 13th day of November, 2016.

By order of the Governor,

B. G. HARINDRANATH,

Law Secretary.

Extract of THE KERALA FINANCE ACT, 2016

Act No. 18 of 2016

An Act to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2016-2017.

Preamble.- Whereas, it is expedient to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2016-2017;

Be it enacted in the Sixty-seventh Year of the Republic of India as follows:-

1. Short title and commencement.-

(1) This Act may be called the Kerala Finance Act, 2016.

(2) Save as otherwise provided in this Act,-

(i) Clause (b) of sub-section (8) of section 9 shall be deemed to have come into force on the 1st day of April, 2005;

(ii) Clause (b) of sub-section (2) of section 9 shall be deemed to have come into force on the 1st day of April, 2013;

(iii) Sub-clause (i) of clause (a) of sub-section (2) and item (d) of sub-clause (ii) of clause (a) of sub-section (2) of section 9 shall be deemed to have come into force on the 1st day of April, 2015;

(iv) "section 2, clause (b) of sub-section (1) of section 3, clause (b) of sub-section (3) of section 3, section 4";, section 8, item (a) of sub-clause (i) of clause (a) of sub-section (1) of section 9, item (a) of sub-clause (ii) of clause (a) of sub-section (2) of section 9, sub-section (4) of section 9, sub-clauses (i), (ii), (iii) and (v) of clause (a) of sub-section (16) of section 9 shall be deemed to have come into force on the 1st day of April, 2016;

(v) sub-section (2) of section 3, clauses (a), (c), (d), (f), (g), (h), (i), (j) and (k) of sub-section (3) of section 3, section 5, section 6, sub-clause (i) and sub-clause (ii) of clause (b) and clause (c) of section 7, item (b) and (c) of sub-clause (i) of clause (a) of sub-section (1) of section 9, sub-clause (ii) of clause (a) of sub-section (1) of section 9, clause (b) of sub-section (1) of section 9, items (b) and (c) of sub-clause (ii) of clause (a) of sub-section (2) of section 9, sub-section (3) and sub-sections (5) to (7), clause (a) of sub-section (8) and sub-section (9) to (15) of section 9, sub-clause (iv), sub-clauses (vi), (vii), (viii) and (ix) of clause (a) of sub-section (16) of section 9 and clause (b) and sub-clauses (i), (ii), (iii), (v), (vi), (vii) and (viii) of clause (c) and (d) of sub-section (16) of section 9 shall be deemed to have come into force on the 18th day of July, 2016;

(vi) The remaining provisions of this Act shall come into force at once.

2. Amendment of Act 11 of 1957.-

In the Kerala Surcharge on Taxes Act, 1957 (11 of 1957), in section 3,-

(a) after sub-section (1A), the following sub-section shall be inserted, namely:-

"(1AA) The tax payable under section 6 of the Kerala Value Added Tax Act, 2003 (30 of 2004), shall, with respect to the sale of water, soda, soft drinks, fruit juices and other beverages whether aerated or not, intended for human consumption and sold in containers of plastic but excluding those sold in such containers of and above 20 litres, be increased by a surcharge at the rate of five per cent and the same shall be paid over to the Government and further, the provisions of the Kerala Value Added Tax Act, 2003 (30 of 2004) excluding those related to input tax credit and special rebate shall apply in relation to the said surcharge as they apply in relation to the tax payable under the said Act.";

(b) in sub-section (2), for the word, brackets, figure and letter "sub-sections (1) and (1A)" the word, brackets, figure and letter "sub-sections (1), (1A) and (1AA)" shall be inserted;

(c) in sub-section (3), for the word, brackets, figure and letter "sub-sections (1) and (1A)" the word, brackets, figure and letter "sub-sections (1), (1A) and (1AA)" shall be inserted;

5. Amendment of Act 15 of 1963.-

In the Kerala General Sales Tax Act, 1963 (15 of 1963), in section 23B -

(a) for sub-section (1), the following sub-section shall be substituted, namely:-

"(1) Notwithstanding anything contained in this Act or in any judgment, decree or order of any court, Tribunal, or Appellate Authority, an assessee who is in arrears of tax or any other amount due under this Act or the Central Sales Tax Act, 1956 (Central Act 74 of 1956) relating to the period ending on 31st March, 2005, may opt for settling the arrears by availing a complete reduction of the interest on the tax amount and for the amount of penalty and interest thereon:

Provided that nothing in this section shall apply to a public sector undertaking under the control of Government of India.";

(b) in sub-section (3), for the words and figures "31st August, 2014", the words and figures "28th February, 2017" shall be substituted;

(c) in sub-section (4), for the words and figures "31st December, 2014", the words and figures "28th February, 2017" shall be substituted;

(d) after sub-section (7), the following sub-section shall be inserted, namely:-

"(8) If a dealer is continuing business even after the commencement of the Kerala Value Added Tax Act, 2003 (30 of 2004) he shall get himself registered thereunder before filing option for payment of arrears under sub-section (1).".

9. Amendment of Act 30 of 2004.-

In the Kerala Value Added Tax Act, 2003 (30 of 2004),-

(1) in section 6,-

(a) in sub-section (1),-

(i) in clause (a), in the table,-

(a) in serial number (3), for the entry in column (2), the following entry shall be substituted, namely:-

"all types of plastic carry bags including non-woven poly propylene bags.";

(b) in serial number (3A), in the entry against it in column (2), after the words "disposable plates", the words "tumblers" shall be inserted;

(c) after serial number (7) and the entries against it in columns (2), (3) and (4), the following serial number and entries shall, respectively, be inserted, namely:-

(ii) after the sixteenth proviso, the following provisos shall be inserted, namely:-

"Provided further that cooked food manufactured by the prisoners and sold by the Kerala Prison and Correctional Services Department shall be exempted from tax with effect from 1st day of April, 2011:

Provided further that in respect of cinematographic films, turnover relating to sale of 'Copyright' under clause (a) and transfer of right to use under clause (c) shall be exempted:

Provided also that the rate of tax on the sale of disposable plates and cups made of styrofoam for the financial years 2013-14 and 2014-15 shall be at five per cent.";

(b) in sub-section (7), in clause (b), the following explanation shall be inserted, namely:-

"Explanation.- Building materials referred to in this clause shall include basic building materials and other goods essentially required to make the building effectively functional and capable of being used by the unit, depending on the activity carried out by the said unit.";

(2) in section 8,-

(a) in clause (a),-

(i) for sub-clause (i), the following sub-clause shall be substituted, namely:-

"(i) any works contractor who imports any goods into the State from other States or Country for incorporation in the works contracts and or who is registered under the provisions of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), may at his option, instead of paying tax in accordance with the provisions of section 6, pay tax at the rate of seven per cent of the whole contract amount for all works contracts undertaken by him except works contracts of interior decoration and furnishing contracts, electrical, refrigeration or air conditioning contracts or contracts relating to supply and installation of plant, machinery, rolling shutters, cranes, hoists, elevators or lifts, escalators, generators, generating sets, transformers, weighing machines, air conditioners and air coolers, deep freezers, laying of all kinds of tiles other than brick tiles, slabs and stones including marble:

Provided that the compounded tax payable under this sub-clause by such works contractor in respect of works contract awarded by Government of Kerala, Kerala Water Authority or Local Authorities shall be five per cent of the whole contract amount.";

(ii) in sub-clause (ii),-

(a) for the second proviso, the following proviso shall be substituted, namely:-

"Provided further that a contractor who intends to pay tax at compounded rate in accordance with this clause in respect of all works awarded by Government of Kerala, Kerala Water Authority or Local Authorities undertaken by him during an year, may, instead of filing separate application for compounding for such individual works, file a single option for payment of tax under this clause for such works before 30th day of April of the year to which the option relates, subject to eligibility:";

(b) in the third proviso, the following words shall be added at the end, namely:-

"and with respect to works contract awarded by Government of Kerala, Kerala Water Authority or Local Authorities up to 31st March, 2016.";

(c) after the third proviso, the following proviso shall be inserted, namely:-

"Provided also that subject to eligibility, a work once compounded under this clause, shall remain compounded till the completion of such work.";

(d) in Explanation 3, for the word "this sub-clause", the words and figure "sub-clause (i)" shall be substituted;

(b) in clause (f), in sub-section (v), for the words "under sub-clause; (ii)", the words "under sub-clause (iv)" shall be substituted;

(3) in section 9, the existing proviso shall be numbered as sub-section (1) and after the sub-section as so numbered, the following sub-section shall be inserted, namely:-

"(2) The burden of proving the denial of any transaction or the correctness in the returns, applications, payments, declarations, delivery notes and other records furnished by the dealer under this Act, through the website or portal of the Commercial Taxes Department, by using the user identification name and password allotted to him by the assessing authority or the Commissioner, shall be on such dealer.";

(4) in section 11, in the proviso to sub-section (5), the words, letters and figures, "for the period up to 30th September, 2010", shall be omitted;

(5) in section 20A, in sub-section (2), for the words "the Commissioner", the words "the District Deputy Commissioner" shall be substituted;

(6) after Section 25C, the following sections shall be inserted, namely:

"25D. Special provision for bakery dealers to settle arrears.-

Notwithstanding anything contained in this Act, a dealer in bakery products, sweets, confectionary and other food products sold under brand name registered under the Trade Marks Act, 1999, who had not remitted the tax as per the prescribed rate, for the period up to the financial year 2013-14, and have opted for remitting the differential amount of tax up to 30th June, 2016 and those who opt for payment of tax under this Scheme shall be exempted from payment of interest and penalty due thereon subject to such conditions and restrictions, as may be prescribed.

25E. Special provision for assessment and payment of tax for presumptive dealers.-

(1) Notwithstanding anything contained in this Act or rules made thereunder or in any judgment, decree or order of any court, tribunal or appellate or revisional authority or any assessment orders or penalty orders issued under this Act, the dealers who have opted to pay tax under sub-section (5) of section 6 and with regard to whom unaccounted purchases have been detected by the assessing authority for the period up to 31st March, 2016, may opt to settle their cases by paying tax at the scheduled rates on such unaccounted purchases with an addition of 5% gross profit and on payment of such tax, all penalties and interest including penalty under subsection (7) of section 22, shall stand waived and it shall be subject to the following conditions, namely:-

(a) Any dealer who opt for this scheme shall obtain Tax payers Identification Number (TIN) under this Act with effect from 1st April, 2016;

(b) All pending cases in any Forum shall be withdrawn and evidence to that effect shall be produced before the assessing authority;

(c) Such option and settlement shall cover all the financial years, in which unaccounted purchases have been detected; and

(d) such further condition, if any, as may be specified:

Provided that dealers who have opted to pay tax under sub-section (5) of section 6 and with regard to whom unaccounted purchases have not been detected by the assessing authority for the period up to 31st March, 2016, may also voluntarily declare their unaccounted purchases, and opt for the scheme mentioned in sub-section (1), and on doing so, no further action under this Act shall be initiated against such dealers with regard to the same.

(2) For settling the cases under sub-section (1), the assesee shall file option before the assessing authority within three months from the date of declaring the scheme :

Provided that in cases where no notice or orders has been issued by the assessing authority, regarding the unaccounted purchases detected by such authority mentioned in sub-section (1), the assessing authority shall intimate the dealer regarding the cases pending against him, to enable him to file option under the scheme.

(3) On receipt of the option, the assessing authority shall intimate by order, the details of the evidence before him and the amount of tax to be paid, calculated in accordance with sub-section (1).

(4) Thirty per cent of the amount shall be paid within fourteen days from the receipt of the order under sub-section (2) and the balance in twelve equal monthly instalments or in lump sum at his option, and the last date for fulfilment of payment under this section shall be the date of payment of the twelfth instalment.

(5) Without prejudice to the provisions of this section or notice made thereunder, the Commissioner may issue such instructions to the assessing authorities and the dealers for the effective implementation of the scheme.

(6) No further action under any of the provisions of this Act shall be invoked by the assessing authority with regard to the unaccounted purchases settled by the dealer under this section or other irregularities in accounts, which resulted from such unaccounted purchases, and no appeal or revision shall lie against the amount so settled under this section.";

(7) in section 40, after the second proviso, the following proviso shall be inserted, namely:-

"Provided also that every dealer whose total turnover for the previous year had exceeded rupees five crores shall get the bill or invoice or cash memorandum in respect of every sale, uploaded on a real time basis through the portal of the dealer in the Kerala Value Added Tax Information System in the manner and subject to such restrictions and conditions as may be prescribed.";

(8) in section 42, in sub-section (1), after the second proviso, the following proviso shall be inserted, namely:-

"Provided also that with respect to units of Kerala State Electricity Board Ltd. which obtained separate registration as per sub-section (3) of section 20 shall file trial balance for each such units, along with audited statement of accounts and certificate of the company.";

(b) after sub-section (2), the following sub-section shall be inserted, namely:-

"(3) Notwithstanding anything to the contrary contained in this Act, if a dealer,

(i) fails to file audited accounts referred to in sub-section (1), or

(ii) fails to file revised annual return rectifying the mistake or omission, along with the audited statement of accounts and certificate or if the variance in the audited statement of accounts with the returns is not satisfactorily explained in the reconciliation statement prescribed, or

(iii) fails to file the annexures, statements, certificates, declarations, including the statutory declarations to be filed under the Central Sales Tax Act, 1956 which are required to be filed along with the returns to prove the correctness of the concessional rate of tax, exemptions and exports claimed in the returns, or

(iv) fails to declare any sale, purchase or interstate stock transfer as evidenced from the documents prescribed under section 46 available with the assessing authority in the sales and purchase lists filed along with the returns, the assessment of such dealer for the relevant year for the purpose of section 25 shall be treated as pending and the time limit mentioned thereunder shall not be applicable in such cases.";

(9) in section 46, in sub-section (3), after clause (e), the following clause shall be inserted, namely:-

"(f) when goods are transported out of the State through coastal cargo, air or railways, such dealer or person or his agents by whatever name called, shall furnish a declaration to such authority in such manner as may be prescribed.";

(10) in section 47, in sub-section (11), after the words, figure and symbol "sub-section (9) shall be" the words "confiscated and" shall be inserted;

(11) in section 48, in sub-section (1), for the words "one hundred rupees", the words "two hundred and fifty rupees" shall be substituted;

(12) in section 55, in sub-section (4), after the existing proviso, the following proviso shall be inserted, namely:-

"Provided further that where the appellant remits 20% of the disputed amount of tax along with collected tax, if any, further proceedings against recovery shall stand stayed till disposal of the appeal.";

(13) after section 58, the following section shall be inserted, namely:-

"58A. Powers of revision of the Commissioner suo-motu on the orders passed by Deputy Commissioner (Appeals) under section 55 of the Act.-

(1) Notwithstanding anything contained in sub-section (4) of section 3, the Commissioner or any Joint Commissioner authorized by him in this behalf, may suo-motu call for and examine any order passed by Deputy Commissioner (Appeals) or Assistant Commissioner (Appeals) under section 55, along with records thereof, which in his opinion is prejudicial to the interest of revenue and may make such enquiry or cause such enquiry to be made and subject to the provisions of this Act may pass such orders as he deems fit.

(2) The Commissioner or Joint Commissioner shall not pass any order under sub-section (1), if,-

(a) the order has been made on subject matter of an appeal before the Appellate Tribunal or of a revision before the High Court; or

(b) more than one year have expired from the year in which the order referred to therein has been passed.

(3) Notwithstanding anything contained in sub-section (2), the Commissioner may pass an order under sub-section (1) on any point which has not been decided in an appeal or revision referred to in clause (b) of sub-section (2), before the expiry of a period of one year from the date of the order in such appeal or revision.

(4) No order under this section adversely affecting a person shall be passed unless that person has been given a reasonable opportunity of being heard.";

(14) in section 62, in sub-section (1), for the word and figure "section 58", the words, figure, letter and symbol "section 58, section 58A" shall be substituted.";

(15) in section 88, in item (e), the following shall be added, namely:-

"by sending it through the portal of the registered dealer in the Kerala Value Added Tax Information System (KVATIS) along with an alert through short message service (SMS) in the phone number declared by the dealer with the department.";

(16) in the Schedules,-

(a) in the First Schedule,-

(i) in serial number 2, after sub-item (9), the following items shall be inserted, namely:-

(ii) in serial number 9A,-

(a) in the entry against it in column (2), the following words shall be added at the end, namely:-

"with or without MS-rod and MS-flat";

(b) the following Note shall be inserted, namely:-

"Note: This entry shall be deemed to have come into force on and from the 1st day of April, 2005.";

(iii) after serial number 11A and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted namely:-

"11B. Cleaning liquids for removing pesticides residue from vegetables manufactured by units using the technology developed by Kerala Agricultural University or other recognized institution.";

(iv) serial number 12B and the entries against it in columns (2) and (3) shall be omitted;

(v) for serial number 16 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively, be substituted, namely:-

(vi) in serial number 18A,-

(a) in the heading, the following words shall be inserted at the end, namely:-

"other than those specifically mentioned in the Third Schedule";

(b) the entries in column (3) against sub-item (1) shall be omitted;

(vii) after serial number 31 and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-

(viii) in serial number 42A,-

(a) in the heading in column (2), the following words shall be added at the end, namely:-

"other than those specifically mentioned in Third Schedule.";

(b) the entry in column (3) of sub-item (1), shall be omitted.

(ix) serial number 42B in column (1) and the entries against it in columns (2) and (3) shall be omitted;

(x) in serial number 63, in the entry in column (2) after the words, "used plastic" the words "plastic scrap, waste chips, parings" shall be inserted;

(b) in the Second Schedule,-

(i) serial number 2D and the entries against it in columns (2) and (3) shall be omitted;

(ii) serial numbers 7A, 8, 9 and 10 and the entries against it in columns (2) and (3) shall be omitted;

(c) in the Third Schedule -

(i) after serial number 5A and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:--

"5B. Atta, maida, sooji and rava sold in packages with MRP printed on such packages.";

(ii) after serial number 8, the entry against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-

"8A. Basmati Rice sold in packages with MRP printed on such packages.";

(iii) after serial number 24 and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-

(iv) for serial number 30A and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be substituted, namely:-

(v) in serial number 33, in the heading in column (2), the following words shall be added at the end, namely:-

"other than those specifically mentioned in the table in clause (a) of sub-section (1) of section 6.";

(vi) serial number 86B and the entries against it in columns (2) and (3) shall be omitted;

(vii) After serial number 109A, and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-

(viii) after serial number 141A and the entries against in columns (2) and (3), the following serial numbers and entries shall, respectively, be inserted, namely:-

(d) in List A,-

(i) in serial number 118, in item 15 for entries against it in columns (2) and (3) the following entries shall, respectively, be substituted, namely:

"recycled plastic. ****.".

10. Validation.-

(1) Notwithstanding the lapse of the Kerala Finance Bill, 2016 (Bill No. 396 of Thirteenth Kerala Legislative Assembly) (hereinafter referred to as the said Bill) and the cesser of force of law of the declared provisions of said Bill anything done or any action taken, including levy and collection of tax or duty, during the period from the 1st day of April, 2016 to the 17th day of July, 2016, by virtue of the declared provisions contained in the said bill, under the Kerala Surcharge on Taxes Act, 1957 (11 of 1957) or under the Kerala Stamp Act, 1959 (17 of 1959) or under the Kerala Court Fees and Suits Valuation Act, 1959 (10 of 1960) or under the Kerala Tax on Luxuries Act, 1976 (32 of 1976) or under the Kerala Agricultural Income Tax Act, 1991 (15 of 1991) or under the Kerala Value Added Tax Act, 2003 (30 of 2004) (hereinafter shall be deemed to be and to have always been for all purposes, validly and effectively done or taken under the provisions of the respective Acts, as if the said amendments had been in force at all material times.

(2) Notwithstanding anything contained in the respective Acts during the period from 1st April, 2016 to 17th day of July, 2016 during which the declared provisions contained in the said Bill was in force, anything done or any action taken by virtue of the said provisions of the said Bill shall be deemed to have been validly done or taken under the respective Acts and no action shall lie against any dealer or authority on the ground of short levy or refund of excess tax or duty and tax or duty collected, if any, by a dealer or an authority, as the case may be, shall be paid over to the Government.

(3) Notwithstanding anything contained in the Kerala Value Added Tax Act, 2003 (30 of 2004) and the Kerala Stamp Act, 1959 (17 of 1959) any tax collected or paid at higher rate by virtue of the provisions of the Kerala Finance Bill, 2016 (Bill No. 16 of the XIV Kerala Legislative Assembly) in respect of the period with effect on and from the 18th day of July, 2016 to the date of publication of this Act, shall be deemed to have been validly done and any tax collected or paid by a dealer or authority at such higher rates shall be deemed to have been validly collected or paid and the tax so collected shall be paid over to the Government and shall not be refunded.