Extract of THE KERALA FINANCE BILL, 2009

A

BILL

to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2009-2010.

Preamble.-WHEREAS, it is expedient to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2009-2010.

BE it enacted in the Sixtieth Year of the Republic of India as follows:

1. Short title and commencement.-

(1) This Act may be called the Kerala Finance Act, 2009.

(2) Sub-sections (1)(i), (2) and (5) to (9) of section 4, sub-sections (1), (2) and (5) to (7) of section 5, sub-sections (1) to (5) and (7) to (15) of section 6 and sub-sections (1), (2), (15) to (19) and (25)(iv) (b) of section 7 shall come into force on such date as the Government may, by notification in the Gazette, appoint and the remaining provisions shall come into force on the 1st day of April, 2009.

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

(1) in section 2, clause (xvii) shall be omitted;

(2) in section 3,

(i) in sub-section (3), the words and brackets "Deputy Commissioner (Appeals)" shall be omitted;

(ii) the proviso to sub-section (4) shall be omitted;

(3) in section 6,

(i) in sub-section (5), after the fourth proviso, the following proviso shall be inserted, namely:

"Provided also that dealers covered under this sub-section whose total turnover for a year is below rupees twenty lakhs, shall pay a lump-sum amount of rupees three thousand annually as presumptive tax, and the payment shall be at the rate of rupees seven hundred and fifty per quarter along with a statement as may be prescribed. Such dealers shall also file an annual declaration as may be prescribed.";

(ii) in sub-section (7), in sub-clause (a) the word "exclusively" shall be omitted;

(4) in section 8,

(i) in clause (a),

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

"(ii) any works contractor not falling under clause (i) above may, at his option, instead of paying tax in accordance with the provisions of the said section, shall pay tax at three percent of the contract amount after deducting the purchase value of goods excluding freight and gross profit element consigned into the State on stock transfer or purchased from outside the State and for the purchase value of goods so deducted shall pay tax at the scheduled rate applicable to such goods.";

(b) after the fourth proviso, the following proviso shall be inserted, namely:

"Provided also that notwithstanding anything contained in this Act, in cases of works which commenced prior to 1st April, 2008 and which remains partly unexecuted as on 1st April, 2008, the contractor shall pay tax at the rates as it existed prior to 1st April, 2008 till the completion of work, or up to 31st March, 2009, whichever is earlier.";

(c) the existing Explanation shall be renumbered as Explanation 1, and after the Explanation as so renumbered, the following Explanation shall be inserted, namely:

"Explanation 2:-Notwithstanding anything contained in any other Act, a dealer who had surrendered his registration and unused declaration forms under the Central Sales Tax Act, 1956 (74 of 1956), before the assessing authority on or before 31st March, 2008 and who does not have any closing stock of materials purchased interstate as on 31st March, 2008 or who pays tax on such closing stock at scheduled rates, shall be eligible for paying compounded tax under sub-clause (i) of this clause, for the year 2008 -2009.";

(ii) in clause (b),

(a) in sub-clause (i), for the letters, figures and words "Rs.50,000 per annum", the letters, figures and words "Rs. 40,000 per annum" shall be substituted;

(b) in sub-clause (ii), for the letters, figures and words "Rs.1,60,000 per annum", the letters, figures and words "Rs.1,50,000 per annum" shall be substituted;

(c) in sub-clause (iii), for the letters, figures and words "Rs.3,20,000 per annum", the letters, figures and words "Rs.3,00,000 per annum" shall be substituted;

(d) in sub-clause (iv), for the letters, figures and words "Rs.7,50,000 per annum", the letters, figures and words "Rs.10,00,000 per annum" shall be substituted;

(e) after the existing proviso, the following proviso shall be inserted, namely:

"Provided further that dealers with a single crusher other than cone crusher shall pay rupees twenty-five thousand only per annum as tax under this clause.";

(f) for the Explanation, the following Explanation shall be substituted, namely:

"Explanation:-For the purpose of this clause, primary crushers shall also be reckoned for the purpose of computation of compounded tax, and the rate applicable to primary crushers shall be at fifty percent of the aggregate of the tax payable on secondary crushers.";

(iii) in clause (c),

(a) in sub-clause (i), the following Explanation shall be inserted, namely:

"Explanation:-Cooked food for the purpose of this clause shall include sweets prepared and served in the restaurants and hotels.";

(b) in sub-clause (ii), for the words "cigarettes and soft drinks", the words "cigarettes, soft drinks and other goods" shall be substituted;

(iv) in clause (f),

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

"(i) any dealer in ornaments or wares or articles of gold, silver or platinum group metals including diamond may at his option, instead of paying tax in respect of such goods in accordance with the provisions of section 6, pay tax at,

(a) one hundred and fifteen percent, in case their annual turnover for the above goods for the preceding year was rupees ten lakhs or below;

(b) one hundred and twenty percent, in case their annual turnover for the above goods for the preceding year was above rupees ten lakhs and upto rupees forty lakhs;

(c) one hundred and thirty-five percent; in case their annual turnover for the above goods for the preceding year was above rupees forty lakhs and upto rupees one crore; and at

(d) one hundred and fifty percent; in case their annual turnover for the above goods for the preceding year exceeded rupees one crore;

of the highest tax payable by him as conceded in the return or accounts, or tax paid by him under this Act, whichever is higher, for a year during any of the three consecutive years preceding that to which such option relates.";

(b) for Explanation 2, the following Explanation shall be substituted, namely:

"Explanation 2:-Where during any such preceding year, the dealer had not transacted business for any period in that financial year, the tax payable for the twelve months shall be calculated proportionately on the basis of the tax payable or the turnover conceded, as the case may be, for the period during which such dealer had transacted business.";

(c) in Explanation 3, for the words "previous to the year in which the option relates", the words "to which the option relates" shall be substituted;

(d) for Explanation 4, the following Explanation shall be substituted, namely:

"Explanation 4:-Where a dealer has not opted to pay compounded tax with respect to a new branch opened in 2008-09, the compounded tax payable for such branch for the year 2008-09 shall be notionally fixed as the average of the compounded tax paid for the principal place and branches in that year and if the new branch opened is the first branch, the compounded tax payable for it shall be the same as that payable for the principal place of business.";

(e) in Explanation 5, the last sentence shall be omitted;

(f) after Explanation 6, the following Explanation shall be inserted, namely:

"Explanation 7.-Tax payable as conceded in the accounts includes the tax payable on suppressed turnover subsequently detected also.";

(5) in section 11, in the proviso to sub-section (5), for the words and figures "31st March, 2007", the words and figures "30th June, 2009" shall be substituted;

(6) in section 16, in sub-section 2, for the existing proviso, the following provisos shall be substituted, namely:

"Provided that registration shall be deemed to have been granted with effect from the date of commencement of business irrespective of the date of application, for the purposes of,

(a) paying tax under sub-section (5) of section 6, subject to eligibility, and

(b) opting for payment of tax under section 8 for the relevant years subject to eligibility:

Provided further that new dealers applying for registration and existing dealers having registration may avail this benefit subject to the condition that they shall pay tax under the respective provisions along with interest and will not be entitled for any refunds relating to the period prior to filing of application for registration.";

(7) in section 20, for sub-section (2A), the following sub-section shall be substituted, namely:

"(2A) Every dealer registered under this Act and every others required to file their returns under this Act shall file their returns as well as purchase and sale list through electronic filing in addition to the hard copy to be filed along with the returns:

Provided that the Commissioner may, in the interest of tax administration, exempt such class or classes of dealers or others as may be prescribed, from electronic filing of returns and the stipulation regarding hard copy of returns prescribed under this subsection.";

(8) in section 22,

(i) in sub-section (1), after the existing proviso, the following proviso shall be inserted, namely:

"Provided further that where the filing of an incorrect return is due to the detection of any suppressed turnover as admitted by the dealer and such offence compounded under section 74, the turnover conceded in the revised return shall include the actual suppressed turnover detected.";

(ii) in sub-section (5), after the words, figures and brackets "sub-section (1) of section 20" the words, figures and brackets "or under sub-section (2) of this section" shall be inserted;

(9) in section 24, in sub-section (1), in clause (c), for the words "two years", the words "three years" shall be substituted;

(10) in section 40, after the existing proviso, the following proviso shall be inserted, namely:

"Provided further that auctioneers acting as agents and effecting auction sale shall maintain in such manner, as may be prescribed, the details of such goods received for auction, sold in auction and those returned to the owners of such goods without effecting auction.";

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

"Provided that a co-operative society registered or deemed to be registered under the Kerala Co-operative Societies Act, 1969 (21 of 1969), may in lieu of the statement and certificate mentioned above, submit a copy of the audited statement of accounts and certificate issued by the Registrar of Co-operative Societies on or before 31st day of December of the year succeeding to the year to which annual return relates.";

(12) in section 44, in sub-section (6), for the words "sixty days", the words "one hundred and eighty days" shall be substituted;

(13) in section 47, in sub-section (16), for the words "in the public auction", the words "in public auction or by public sale" shall be substituted;

(14) in section 49, after sub-section (8), the following sub-section shall be inserted, namely:

"(8A) Notwithstanding anything contained in this Act, the goods so confiscated under this section can be disposed of by public auction or by public sale, if the Commissioner feels that compelling circumstances exist to do so.";

(15) section 55 shall be omitted;

(16) in section 56, in sub-section (2), the words and brackets "Deputy Commissioner (Appeals) or" shall be omitted;

(17) in section 58,

(i) in sub-section (1), the words and brackets "other than that of the Deputy Commissioner (Appeals)" shall be omitted;

(ii) in sub-section (2), the words and brackets "the Deputy Commissioner (Appeals) or" shall be omitted;

(18) in section 59, in sub-section (1), the words, brackets and figures "the Deputy Commissioner (Appeals) under section 55" shall be omitted;

(19) in section 60,

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

"(1) Any person aggrieved by any order issued or proceedings recorded other than those under sub-section (3), sub-section (8), or sub-section (9) of section 16, sub-section (8) of section 19 passed by an authority empowered to do so, or any officer empowered by the Government in this behalf may within a period of sixty days from the date on which the order was served on him, in the manner prescribed, appeal against such order to the Appellate Tribunal.";

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

"(1A) All appeals together with the interlocutory applications, if any, pending for disposal before any appellate authority under this Act as on the date of commencement of this provision shall stand transferred to the Appellate Tribunal and the Appellate Tribunal shall consider the same as if it is an appeal filed before it.";

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

"(2) On receipt of notice that an appeal against his order has been preferred the assessing authority or any other officer authorised by the Government in this behalf may within thirty days of receipt of the notice, file a memorandum of cross objections and the Appellate Tribunal shall consider the same while disposing of the appeal.";

(20) in section 67, in the proviso to sub-section (1), for the words "one year", the words "three years" shall be substituted;

(21) after section 70A, the following section shall be inserted, namely:

"70B. Penalty for commercial use of goods brought from outside the State declaring it as for own use.-

Any person bringing goods from outside the State declaring it as for own use and has used the goods so brought otherwise than for own use, shall, without prejudice to any other provisions in this Act, be liable to pay by way of penalty, an amount not exceeding thrice the amount of tax due on such goods.";

(22) in section 74, in sub-section (1), for the words 'two lakhs', the words 'four lakhs' shall be substituted;

(23) after section 74, the following section shall be inserted, namely:

"74A. Voluntary disclosure of unaccounted transactions.-

(1) Any dealer who had failed to include or suppressed any turnover or taxable turnover in the return filed upto 31st March, 2008 shall be permitted to disclose voluntarily such suppressed turnover to the assessing authority on or before 30th June, 2009.

(2) Such dealers shall file a revised return along with tax due thereon and a statement admitting such non-inclusion or suppression in the returns already filed.

(3) Interest and penalty on the tax due on the suppressed turnover shall be waived in the case of such dealers.

(4) The provisions under this section shall not be applicable to cases already detected by any authority under this Act.";

(24) in section 86, in sub-section (1), after clause (d), the following clause shall be inserted, namely:

"(e) a member of the Institute of Company Secretaries of India within the meaning of section 2(2) of the Company Secretaries Act, 1980 (Central Act 56 of 1980)";

(25) in section 94,

(i) in the marginal heading, for the word "Commissioner", the word "Authority" shall be substituted;

(ii) in sub-section (1), after the words "shall be decided by", the words "an authority consisting of three Deputy Commissioners nominated by" shall be inserted;

(iii) in sub-section (2),

(a) for the word "Commissioner", the word "authority" shall be substituted;

(b) the following sentence shall be added at the end, namely:

"Commissioner may considering the fact in issue decide whether such orders have prospective operation only.";

(iv) in sub-section (5),

(a) for the words "by the Commissioner", the words "by the authority" shall be substituted;

(b) the words and brackets "including Deputy Commissioner (Appeals)" shall be omitted;

(v) after sub-section (5), the following sub-sections shall be inserted, namely:

"(6) If no unanimous decision is arrived at by the authority, the matter shall be referred to the Commissioner who shall decide the same as if the application is filed before him.

(7) If the order passed by the authority mentioned in sub-section (1) is found to be prejudicial to the revenue; the Commissioner may exercise his powers of suo-moto revision, and may cancel, amend or vary such order:

Provided that no order shall be passed under this sub-section, until the party is given an opportunity of being heard.

(8) Where the Authority/Commissioner finds on a representation made to it by any officer or otherwise, that an order passed by it was obtained by the applicant by fraud or mis-representation of facts, it may, by order, declare such order to be void ab initio and thereupon all the provisions of this Act shall apply to the applicant as if such order had never been made.";

(26) in section 98, in sub-section (2), the following proviso shall be inserted, namely:

"Provided that, notwithstanding anything contained in sub-section (2), the dealer who had paid tax on such stock under this Act shall not be liable to pay any tax under the Kerala General Sales Tax Act, 1963. But such dealer shall be liable to pay interest for such belated payments under the provisions of this Act.".

(27) in the SCHEDULES,

(a) in the First Schedule,

(i) in serial No.7, in the entries against it in column (2), after the words 'brushes', the words "including mops" shall be inserted;

(ii) after serial No.27 in column (1) and the entries against it in columns (2) and

(3), the following serial number and entries shall respectively be inserted, namely:

(iii) in serial No.35, in the entries against it in column (2), after the words 'palm jaggery', the words "and its products" shall be inserted;

(iv) after serial No.38 and the entries against it in columns (2) and (3), the following \ serial number and entries shall respectively be inserted, namely:

(b) in the Second Schedule, in serial number (1), after item (6) and the entries against it in columns (2) and (3), the following items and entries shall respectively be inserted, namely:

(c) in the Third Schedule,

(i) in serial No. 3, in item (1), after sub-item (i) and the entries against it in columns (2) and (3), the following sub-item and entries shall respectively be inserted, namely:

(ii) serial No. 4 in column (1) and the entries against it in columns (2) and (3) shall be omitted;

(iii) in serial No.7, in the entries against it in column (2), for the words and symbols "Bakery products, sweets, confectionery", the words and symbols "Bakery products excluding biscuits and confectionery, sweets," shall be substituted;

(iv) in serial No.18, after item (5) and the entries against it in columns (2) and (3), the following item and entries shall respectively be inserted, namely:

(v) in serial number 51A, item (9) and the entries against it in column (2) shall be omitted;

(vi) in serial No.55, in the entries in column (2), after the words "annual turnover", the words "of this item" shall be inserted;

(vii) in serial number 59A, in the entries in column (2), after the words "veterinary science", the words "and spares and parts thereof" shall be inserted;

(viii) after serial number 75 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely:

(ix) after serial number 79 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely:

(x) in serial No.83, for item (19) and the entries against it in columns (2) and (3), the following item and entries shall respectively be substituted, namely:

"(19)All kinds of machinery for printing and allied activities, including book binding, gathering, saddle stitching, paper cutting, paper folding, perforating machines.";

(d) in List A, in serial number 144, in the entries in column (2), after the word "kattadi", the word "silveroak" shall be inserted.

DECLARATION UNDER THE KERALA PROVISIONAL COLLECTION OF REVENUES ACT, 1985 (10 OF 1985)

It is hereby declared that it is expedient in the public interest that all the provisions of this Bill except sub-clauses (1)(i), (2) and (5) to (9) of clause 4, sub-clauses (1), (2) and (5) to (7) of clause 5, sub-clauses (1) to (5) and (7) to (15) of clause 6 and sub-clauses (1), (2), (15) to (19) and (25)(iv) (b) of clause 7 shall have effect from the 1st day of April, 2009 under the Kerala Provisional Collection of Revenues Act, 1985 (10 of 1985).

STATEMENT OF OBJECTS AND REASONS

The Bill seeks to amend the following enactments to give effect to the financial proposals of Government of Kerala for the financial year 2009-2010 as announced in paras 197, 198, 202 to 204, 206 to 212, 214, 216 to 229, 234 to 252 and 259 in the Budget Speech 2009 -2010, namely:

1. The Kerala Surcharge on Taxes Act, 1957 (11 of 1957)

2. The Kerala Stamp Act, 1959 (17 of 1959)

3. The Kerala General Sales Tax Act, 1963 (15 of 1963)

4. The Kerala Tax on Luxuries Act, 1976 (32 of 1976)

5. The Kerala Agricultural Income Tax Act, 1991 (15 of 1991)

6. The Kerala Value Added Tax Act, 2003 (30 of 2004)

FINANCIAL MEMORANDUM

Sub-clause (25) of clause 7 of the Bill proposes to amend section 94 of the Kerala Value Added Tax Act, 2003, to empower the Commissioner to constitute an authority consisting of three Deputy Commissioners nominated by him to decide disputes and to issue clarifications. The expenditure required for this purpose from the Consolidated Fund of the State cannot be estimated with any degree of accuracy at this stage.

MEMORANDUM REGARDING DELEGATED LEGISLATION

1. Clause 2 of the Bill proposes to insert a new section 3B to the Kerala Surcharge on Taxes Act, 1957, which seeks to empower the Government to prescribe the form for making an application to opt for settling the arrears by availing reductions in the case of public sector undertakings.

2. Sub -clause (3) of clause 4 of the Bill proposes to insert a new section 23BA to the Kerala General Sales Tax Act, 1963, which seeks to empower the Government to prescribe the form for making an application to opt for settling the arrears by availing reductions in the case of public sector undertakings.

3. Sub-clause (8) of clause 4 of the Bill proposes to amend section 39 of the Kerala General Sales Tax Act, 1963, which seeks to empower the Government to prescribe the manner in which the appeal against the order of the assessing authority has to be filed before the Appellate Tribunal.

4. Sub-clause (6) of clause 5 of the Bill proposes to amend section 7A of the Kerala Tax on Luxuries Act, 1976, which seeks to empower the Government to prescribe the manner in which the appeal against the order of assessment of the assessing authority has to be filed before the Appellate Tribunal.

5. Sub-clause (6) of clause 6 of the Bill proposes to insert a new section 37C to the Kerala Agricultural Income Tax Act, 1991, which seeks to empower the Government to prescribe the form for making an application to opt for settling the arrears by availing reductions.

6. Sub-clause (3) of clause 7 of the Bill proposes to amend section 6 of the Kerala Value Added Tax Act, 2003, which seeks to empower the Government to prescribe a statement to be filed along with the record of payment of quarterly tax and also to prescribe the details in the annual declaration which has to be filed before the authorities by the dealers.

7. Sub-clause (7) of clause 7 of the Bill proposes to amend section 20 of the Kerala Value Added Tax Act, 2003, which seeks to empower the Government to prescribe the manner for exemption of such class or classes of dealers or others from electronic filing of returns.

8. Sub-clause (10) of clause 7 of the Bill proposes to amend section 40 of the Kerala Value Added Tax Act, 2003, which seeks to empower the Government to prescribe the manner in which the details of goods received for auction, sold in auction and those goods returned to the owners without effecting auction.

9. Sub-clause (19) of clause 7 of the Bill proposes to amend section 60 of the Kerala Value Added Tax Act, 2003, which seeks to empower the Government to prescribe the manner in which the appeal against the order of the assessing authority has to be filed before the Appellate Tribunal.

The matters in respect of which rules are to be made are either administrative in nature or matters of detail. Further, the rules, after they are made, will be subject to thescrutiny of the Legislative Assembly. The delegation of legislative power is, thus, of a normal character.

Dr. T. M. THOMAS ISSAC.