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 17th of March, 2005.

ACT 10 OF 2005

THE KERALA FINANCE ACT, 2005

An Act to give effect to certain financial proposals of the Government of Kerala for the year 2005-2006.

Preamble.- WHEREAS it is expedient to give effect to certain financial proposals of the Government of Kerala for the Financial year 2005-2006;

BE it enacted in the Fifty-sixth Year of Republic of India as follows:-

1. Short title and commencement.-

(1) This Act may be called the Kerala Finance Act, 2005.

(2) Sub-section (3A) of section 3 shall be deemed to have come into force on the 17th day of February, 2005, Sub-section (12) of section 3 shall be deemed to have come into force on the 25th day of November, 1988, sub-section (14) of section 3 shall be deemed to have come into force on 28th day of May, 2002, sub-sections (2), (3), (4), (5) clause (a) of sub-section (9), (17) and (19) of section 3 and section 7 shall come into force on the date of commencement of the Kerala Value Added Tax Act, 2003 (30 of 2004) and the remaining provisions shall come into force on the 1st day of April, 2005.

3. Amendment of Act 15 of 1963.- In the Kerala General Sales Tax Act, 1963 (15 of 1963),-

(1) in section 2,-

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

"(xvB) "Notified goods" means goods notified by the Government for the purposes of section 30E." ;

(ii) the proviso to clause (xxv) shall be omitted;

(iii) the Explanation under clause (xxvi) shall be omitted;

(iv) for clause (xxvii), the following clause shall be substituted, namely :-

"(xxvii) "turnover" means the aggregate amount for which goods are either bought or sold, supplied or distributed by a dealer, either directly or through another, on his own account or on account of others, whether for cash or for deferred payment or other valuable consideration." ;

(2) for section 5, the following section shall be substituted, namely:-

"5. Levy of tax on sale of goods.- (1) Every dealer (other than a casual trader or agent of a non-resident dealer or the Central Government, or Government of Kerala or the Government of any other State or of any Union Territory, or any local authority) whose total turnover for a year is not less than two lakh rupees and every casual trader or agent of a non-resident dealer, the Central Government, the Government of Kerala, the Government of any other State or of any Union Territory or any local authority, whatever be its total turnover for the year, shall pay tax on his taxable turnover for that year in respect of goods included in the Schedule at the rate mentioned against such goods,-

(a) in respect of Aviation turbine fuel, Diesel and Petrol, at the point of sale in the State by an oil company liable to tax under this section, except where the sale is by an oil company to another oil company and at the point of first sale in the State by a dealer liable to tax under this section when the sale is not by an oil company.

(b) in respect of Foreign liquor, at the point of sale by the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited and at the point of first sale in the State by a dealer liable to tax under this section except where the sale is to the Kerala State Beverages (Manufacturing and Marketing) Corporation Limited.

(c) in respect of other goods included in the Schedule, at the point of first sale in the State by a dealer liable to tax under this section.

Explanation : For the purposes of this section,-

(a) "Oil Company" means Kochi Refineries Ltd., Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd., Indo-Burma Petroleum Company Ltd., Bharat Petroleum and includes such other company as the Government of Kerala may, by notification in the Gazette, specify in this behalf.

(b) "Foreign liquor" means and includes wine, brandy, champagne, sherry, rum, gin, whisky, beer, cidar, cocoa brandy and all other distilled or spirituous preparations but shall not include medicines and drugs covered by the Kerala Value Added Tax Act, 2003 (30 of 2004).

(2) (i) Notwithstanding anything contained in sub-section (1), every dealer in Foreign Liquor, as specified hereunder, shall pay turnover tax on the turnover of foreign liquor at all points of sale in the State, after making such deductions as may be prescribed, namely:-

(a) by a bar attached hotel, at the rate of ten per cent; and

(b) by others at the rate of five per cent, on the turnover at all points of sale.

Explanation I : Any distillery, brewery, winery or other manufactory established under section 14 of the Abkari Act 1 of 1077, shall be liable to pay turnover tax on the turnover including any duty of excise leviable on such liquor at the hands of such person, whether such duty is paid by such person or any subsequent dealer as per the provisions of section 18 of the said Act.

Explanation II : For the removal of doubt, it is hereby clarified that any distillery in the State which sell liquor manufactured by it within the State to the Kerala State Beverages (Manufacturing and Marketing) Corporation shall be liable to pay turnover tax on the turnover of sale of liquor by it to the said Corporation and the turnover for the purpose of this sub-section shall include any duty of excise leviable on such liquor at the hands of such manufacturer whether such duty is paid by the manufacturer or by the said Corporation.

Explanation III : For the purposes of this sub-section bar attached hotel shall mean a hotel, restaurant, club or any other place which is licensed under the Foreign Liquor Rules, to serve foreign liquor specified under clause (b) of Explanation to sub-section (1).

(ii) Notwithstanding anything contained in sub-section (1) of section 22, no dealer shall collect from his purchaser the turnover tax payable by him under this sub-section.

(3) Notwithstanding anything contained in sub-section (1), every dealer registered under sub-section (3) of section 7 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), shall, whatever be the quantum of his total turnover, pay tax on his taxable turnover for that year in respect of the sale of the goods, with reference to the purchase of which he has furnished a declaration under sub-section (4) of section 8 of the said Central Act.

(4) Notwithstanding anything contained in sub-section (1) but subject to sub-section (5), where goods sold are contained in containers or are packed in any packing materials, the rate of tax and the point of levy applicable to such containers or packing materials, as the case may be, shall, whether the price of the containers or the packing materials is charged separately or not be the same as those applicable to goods contained or packed, and in determining the turnover of the goods, the turnover in respect of the containers or packing materials shall be included therein.

(5) Where the sale or purchase of goods contained in any containers or packed in any packing materials is exempt from tax, then the sale or purchase of such containers or packing materials shall also be exempt from tax.

Explanation : For the purposes of sub-section (4) and sub-section (5), the word "containers" include gunny bags, tins, bottles or any other containers." ;

(3) sections 5B and 5C shall be omitted;

(3A) section 5BA shall be omitted ;

(4) for section 5D, the following section shall be substituted, namely: -

"5D. Levy of Additional Sales Tax.- The tax payable under section 5 and section 5A shall be increased by an additional sales tax at the rate of fifteen per cent of the tax payable under the said sections:

Provided that no additional sales tax under this section shall be levied on the tax payable on High Speed Diesel Oil, Petrol falling under sub-entries (ii) and (iv) of Sl. No.1 and Foreign Liquor falling under Sl. No. 2 of the Schedule.";

(4A) after section 5D, the following section shall be inserted, namely :-

"5E. Special provision for completion of assessment of tax on lotteries.-

Notwithstanding anything contained in this Act or any judgement, decree or order of any court, Tribunal or other authority, any dealer in lottery tickets liable to pay tax under sub-section (1) of section 5 or section 5BA as it stood before amendment by the Kerala Finance Act, 2005 shall be liable to pay tax on the sale or purchase of lottery tickets at the rates applicable under this Act before such amendment and nothing shall affect the right to initiate and complete any proceedings pending regarding the assessment. Levy, collection and recovery of tax, penalty or other amount chargeable including that of escaped turnover or affect the liability of any person to pay any sum due from him or existing right of refund under this Act or the right to initiate or continue any application, appeal, revision including suomotu revision or other proceedings made or preferred to any officer or authority under this Act.";

(5) sections 7 and 9 shall be omitted;

(6) in section 17,-

(a) in sub-section (6) for the words 'five years' the words 'four years' shall be substituted;

(b) after the fourth proviso to sub-section (6), the following proviso shall be added, namely:-

"Provided also that the assessment relating to the year 2000-01 shall be completed on or before 31st March 2006.";

(c) in sub-section (8) in the last proviso, for the figures '2005' the figures '2006' shall be substituted.";

(7) after section 17A, the following section shall be inserted, namely:-

"17B. Special provision for completion of assessment.-

Notwithstanding anything contained in this Act, a dealer who had purchased any goods falling under serial numbers 12 to 32 of item (iv) of sub-clause 18 of clause 3 of the Kerala Finance Bill, 2004 during the period from the first day of April, 2004 to the 27th day of July, 2004, from any registered dealer after paying tax at the rates shown in column (4) against the said serial numbers, such dealer shall pay tax on the re-sale of such goods at the rates mentioned in column (6) against such goods and the assessing authority shall complete the assessment under section 17 of the Act.";

(8) section 18 shall be omitted;

(9) in section 22,-

(a) the proviso to sub-section (3) shall be omitted;

(b) after sub-section (4), the following sub-sections shall be inserted, namely:-

"(5) The Central Government, Government of Kerala, the Government of any other State or any Union Territory (including departments of Central and State Governments) and local authorities shall collect tax at the rate or rates specified in the Schedule to the Act in respect of any sale of goods effected by them and the tax so collected shall be remitted to Government in the Commercial Taxes Department on or before the 10th day of the succeeding month.

(6) If any officer responsible for collection of tax fails to do so or fails to remit the tax so collected under sub-section (5) such officer shall be personally liable to Government for such amount together with interest and such amounts shall be liable to be recovered from him as if it were arrears of revenue due on land recoverable from him.";

(10) in section 23, for sub-section (3) the following sub-section shall be substituted, namely :-

"(3) If the tax or any other amount assessed or due under this Act is not paid by any dealer or any other person within the time prescribed therefore in this Act or in any rule made thereunder and in other cases within the time specified therefor in the notice of demand, the dealer or the other person, shall pay simple interest at the rate of twelve per cent per annum on the tax or other amount defaulted.";

(11) section 23A and section 23B shall be omitted;

(12) in section 30B, for sub-section (4), the following sub-section shall be substituted, namely:-

"(4) Where any person consigns any goods or transports any goods liable to tax under this Act from another State into the State without any records as provided for under sub-section (2) of section 29 or where the particulars furnished in the documents accompanying the goods are false or the consignor or purchaser stated therein is found to be bogus or non-existent or is not traceable or where the transporter fails to prove the bonafides of the transport, it shall be presumed that such goods have been sold in the State by the consignor or the owner of the goods or the transporter or the owner or person in charge of the vehicle or the person in charge of the goods or all of them jointly and they shall be jointly and severally liable to pay tax on such sales which shall be assessed and recovered in the manner provided for in sub-section (3)." ;

(13) section 30 C and section 30 D shall be omitted;

(14) in Section 30 E,-

(i) in sub-section (1), for the words "coffee, rubber, cardamom, ginger, pepper, arecanut, cashewnut, iron and steel and any other goods notified by Government" , the words "any notified goods" shall be substituted;

(ii) In the second proviso to sub-section (4), for the word "penalty" the words "redemption fee" shall be substituted;

(iii) for sub-sections (5) and (6), the following sub-sections shall be substituted, namely:-

"(5) Notwithstanding anything contained in the foregoing provisions, if the owner or person in charge of the notified goods or the owner or person in charge of the vehicle fails to prove the genuineness of the transport of the notified goods or to remit the redemption fee as specified in the second proviso to sub-section (3), within thirty days from the date of seizure and detention of goods and the authorized officer has reason to believe that the owner or the person in charge of the vehicle or the driver has transported the notified goods to evade payment of tax with the knowledge or connivance of the owner of the goods, the officer may confiscate the vehicle or vessel along with the goods:

Provided that the authorized officer shall serve notice to the owner of the vehicle or the person in charge of the vehicle or the owner of the notified goods, if ascertainable, intimating the reason for the confiscation of the vehicle or vessel affording him and an opportunity of being heard. The officer shall also afford an opportunity to any of such persons to pay a penalty equal to thrice the amount of tax attempted to be evaded in lieu of confiscation of the notified goods and an amount equal to thrice the amount of such tax or rupees one lakh whichever is higher in lieu of confiscation of the vehicle or vessel.

(6) No order confiscating any vehicle or vessel shall be made under sub-section (4), if the owner or the person in charge of the vehicle or vessel proves to the satisfaction of the authorized officer that it was used for carrying the notified goods without the knowledge or connivance of the owner himself, his agent, if any, or the person in charge of such vehicle or vessel and that each of them has taken all reasonable and necessary precautions against such use.";

(14A) after section 30F, the following section shall be inserted, namely:-

"30G. Police Assistance for inspection, search and seizure.- An officer authorized under the provisions of this Act to conduct inspection, search or seizure of any vehicle or vessel, goods, business place, residential accommodation or any other place, if such officer feels necessary to have police assistance for the effective conduct of such inspection, search or seizure may seek police assistance from the officer in charge of the police station or from his superior officer having jurisdiction over the area where inspection, search or seizure is to be conducted or is being conducted and thereupon such police officer shall render such assistance to the officer as may be required for the conduct of such inspection, search or seizure.";

(15) in section 32, after the words 'or steamer agency' and before the words 'in the State' the words 'or courier services' shall be inserted;

(16) after section 49, the following section shall be inserted, namely:-

"49A. Bar against attachment in certain cases.- Notwithstanding anything contained in any other law in force or in any judgment, decree or order of any court, no court or any other authority shall pass any order attaching any amount from any person out of the tax collected by such person under the Act and kept with him before it became due to Government.";

(17) in Section 59, after sub-section (3) the following sub-section shall be inserted, namely:-

"(4). Notwithstanding anything contained in this Act, goods which were liable to tax at the point of last purchase in the State under section 5, on the date preceding the date of coming into force of The Kerala Value Added Tax Act, 2003 (30 of 2004) and purchased in the State and are held as closing stock on such date shall be deemed to have acquired the quality of last purchase in the State on such date, and tax levied at the rate of four per cent.";

(18) in Section 59A, after sub-section (5), the following sub-section shall be inserted, namely:-

"(6) The Commissioner may, on application or otherwise, at any time within a period of three years from the date of the orders passed under sub-section (1), rectify any error apparent on the face of the record :

Provided that no such rectification which is prejudicial to a person shall be made, unless the Commissioner has given notice to the person affected and has allowed him a reasonable opportunity of being heard.";

(19) for the Schedules, the following Schedule shall be substituted, namely:-

"THE SCHEDULE

[Section 5(1)]

Goods in respect of which tax is leviable under section 5