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 27th day of July, 2009.

By order of the Governor,

K. JOHN BRITTO,

Special Secretary (Law).

ACT 13 OF 2009

EXTRACT OF THE KERALA FINANCE ACT, 2009

An Act 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) Save as otherwise provided in this Act,-

(a) clause (i) of sub-section (3) of section 5 and clause (ii) of sub-section (3), sub-clause (a) of clause (iii) of sub-section (4), sub-section (9), sub-sections (13), (14), (20) and (26), sub-clauses (i), (ii), (iii), (iv), (vi) of clause (a), sub-clauses (i), (iii), (vii), (ix) of clause (c) and sub-clause (ii) of clause (d) of sub-section (27) of section 7 shall be deemed to have come into force on the 1st day of April, 2005;

(b) sub-clause (vii) of clause (a), sub-clause (v) of clause (c) and sub-clause (iii) of clause (d) of sub-section (27) of section 7 shall be deemed to have come into force on the 1st day of April, 2007;

(c) sub-section (6) of section 6 and sub-clause (v) of clause (a) of sub-section (27) of section 7 shall be deemed to have come into force on the 1st day of April, 2008;

(d) clause (i) of sub-section (1), sub-sections (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 clause (ii) of sub-section (1), sub-sections (2), (15) to (19) and sub-clause (b) of clause (iv) of sub-section (25) of section 7 shall come into force on such date as the Government may, by notification in the Gazette, appoint; and

(e) the remaining provisions of this Act shall be deemed to have 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,-

(i) in clause (x), after the word "processing", the words "excluding for job works or rendering of services." shall be inserted;

(ii) 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, may 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 per cent 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 provisos 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:

Provided also that notwithstanding anything contained in this Act, contractors who have opted for payment of tax under sub-clause (ii) of clause (a) of section 8 during the previous years shall continue to pay tax on that portion of the works remaining unexecuted as on 1st April, 2009, at the rates applicable as on 1st April, 2009.";

(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 notwithstanding anything contained in this clause, dealers with a single crushing machine of size not exceeding 30.48 cm. × 22.86 cm. 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 per cent 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 and fresh fruit juice 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 per cent, in case their annual turnover for the above goods for the preceding year was rupees ten lakhs or below;

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

(c) one hundred and thirty five per cent; in case their annual turnover for the above goods for the preceding year was above rupees forty lakhs and up to rupees one crore; and at

(d) one hundred and fifty per cent; 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;

(ea) for Explanation 6, the following Explanation shall be substituted, namely:-

"Explanation 6:- Where a dealer has opted for payment of tax under this clause for the first time in 2009-10 and has commenced business only in 2008-09 and the tax payable as per return or account during 2008-09 is less than the output tax payable, then the tax payable for 2008-09 shall be notionally re-determined on the basis of output tax for determining the tax liability for 2009-10.";

(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,-

(i) in sub-section (2), after the existing proviso, the following proviso shall be inserted, namely:-

"Provided further that no input tax credit shall be allowed with respect to capital goods used exclusively for the manufacture of goods having no taxable consequence under this Act or the Central Sales Tax Act, other than zero rated sales and in cases where it is only partly used for such purposes, input tax credit shall be proportionately disallowed to that extent.";

(ii) in sub-section (5), in the proviso, 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:

Provided also that in the case of dealers against whom an offence has been detected under section 67 of the Act before filing application for registration, registration shall be granted under this sub-section subject to the finalisation of the proceedings in respect of the offence so detected.";

(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 sub-section.";

(8) in section 22, after sub-section (8), the following sub-sections shall be inserted, namely:-

"(9) Notwithstanding anything contained in this Act, where an offence has been detected under the Act in respect of a return filed by a dealer or otherwise and proceedings initiated under this Act, the dealer shall not be permitted to revise the return till such proceedings are finalised.

(10) Where the proceedings referred to in the above sub-section are finalised under section 74 on payment of tax due along with the compounding fee, the dealer may thereafter file a revised return incorporating such turnover covered in such proceedings within a period of three months from the finalisation of such proceedings and on the receipt of such return by the assessing authority, the assessment for the return period or periods shall, subject to the provisions of sections 24 and 25, be deemed to have been completed:

Provided that where a pattern of suppression is detected the assessing authority shall proceed with best judgment assessment in accordance with the provisions of sections 24 and 25, as the case may be.";

(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" and for the words "ninety days", the words "one year" shall respectively 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 :

Provided that the Appellate Tribunal may admit an appeal presented after the expiration of the said period if it satisfied that the appellant had sufficient cause for not presenting the appeal within the said period :

Provided further that no appeal shall lie in cases where suo moto revision proceedings under section 58 is pending.";

(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 31^st March, 2008 shall be permitted to disclose voluntarily such suppressed turnover to the assessing authority on or before 30^th 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 suomoto 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. 9 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely :-

(iii) 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 :-

(iv) 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 ;

'(v) in serial No. 35A, for the entries against it in column (2), the following entries shall be substituted, namely :-

"Paper bags including paper covers" ;

(vi) 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 :-

'(vii) in serial No. 56, for the entries against it in column (2), the following entries shall be substituted, namely :-

"Products manufactured and sold by Kudumbasree units, or by marketing organisations exclusively owned by Kudumbasree units, under brand name as notified by Government from time to time, either prospectively or retrospectively.";

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

(iv) in serial No. 51A, item (9) and the entries against it in column (2) shall be omitted ;

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

(vi) in serial No. 59A, in the entries in column (2), after the words "veterinary science", the words "and spares and parts thereof" shall be inserted ;

(vii) after serial No. 75 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely :-

(viii) after serial No. 79 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely :-

(ix) 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, spiral binding, comb binding, gathering, saddle stitching, paper cutting, paper folding, perforating machines.";

(x) in serial No. 103A, after the entries against, it in columns (2) and (3), the following Note shall be inserted, namely :-

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

(d) in List A,

(i) in serial No. 82, in item (1) in the entries in column (2) after the words 'iron oxides' the words 'including red oxide' shall be inserted and the entry against it in column (3) shall be omitted ;

(ii) in serial No. 134, after item (9), and the entries against it in columns (2) and (3), the following items and entries shall respectively be inserted, namely :-

(iii) in serial No. 144, in the entries in column (2), after the word "kattadi", the word "silveroak" shall be inserted.

8. Validation.-

(1) Notwithstanding anything contained in the Kerala Value Added Tax Act, 2003 (Act 30 of 2004) or any other law for the time being in force, during the period from 1^st April, 2009 to the date of publication of thisAct, during which the declared provisions contained in the Kerala Finance Bill, 2009 (Bill No. 254 of the XII^th Kerala Legislative Assembly) were in force, anything done or any action taken or any tax collected by virtue of the said provisions of the said Bill shall be deemed to have been validly done or taken or collected under the said Act and no action shall lie against any dealer or authority on the ground of short levy or refund of excess tax, and tax collected or paid by a dealer, if any, shall be paid over to the Government.

(2) Notwithstanding anything contained in the Kerala Value Added Tax Act, 2003 (Act 30 of 2004) any exemption or reduction of tax granted by virtue of the provisions of the Kerala Finance Bill, 2009 ( Bill No. 254 of the XII^th Kerala Legislative Assembly) in respect of the period with effect from 1^st April, 2005 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 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.