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 8th day of November, 2011.

By order of the Governor,

C. K. PADMAKARAN,

Special Secretary (Law).

EXTRACT OF THE KERALA FINANCE ACT. 2011

ACT No. 16 OF 2011

An Act to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2011-12

Preamble- WHEREAS, it is expedient to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2011-2012 :

BE it enacted in the Sixty-second Year of the Republic of India as follows:-

1. Short title and commencement -

(1) This Act may be called the Kerala Finance Act, 2011.

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

(i) clause (ii) of sub-section (2) and sub-clause (f) of clause (i) of sub-section (12) of section 8 shall deemed to have come into force on the 1" day of April, 2005 ;

(ii) sub-section (7) and sub-clause (g) of clause (ii) of sub-section (12) of section 8 shall be deemed to have come into force on the 1st day of April, 2007 ;

(iii) sub-clause (e) of clause (ii) of sub-section (3) of section 8 shall be deemed to have come into force on the 1st day of April, 2010 ;

(iv) section 2, clause (i) of sub-section (3) of section 4, sub-sections (1), (2), (3) and (4) of section 5, sub-sections (1), (2), (3) . (4) and (6) of section 6 and sub-section (1), item (ii) of sub-clause (b), sub-clauses (c) and (d) of clause (i), sub-clause (d) of clause (iii) of sub-section (2), sub-clauses (a), (b), (c) and (d) of clause (ii) of sub-section (3), sub-sections (4). (5), (6). (8) and (10). clause (i) of sub-section (11), sub-clauses (b), (c) and (e) of clause (i), sub-clauses (a), (c), (d), (e) and (f) of clause (ii) of sub-section (12) of section 8 shall be deemed to have come into force on the 1" day of April. 2011 ;

(v) section 3, sub-sections (1), (2), (4) of section 4, sub-section (5) of section 6, section 7, sub-clause (a), item (i) of sub-clause (b) of clause (i) and sub-clauses (a), (b) and (c) of clause (iii) of sub-section (2), sub-section (9), clause (ii) of sub-section (11), sub-clauses (a) and (d) of clause (i), sub-clause (b) of clause (ii) of sub-section (12) of section 8, sections 9, 10 and 11 shall be deemed to have come into force on the 19th day of July, 2011

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

8. Amendment of Act 30 of 2004.-

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

(1) in section 4, in sub-section (6), the following sentence shall be added at the end, namely:-

"The Bench or Benches shall ordinarily sit at such places as the Government may, by notification, specify.";

(2) in section 6,-

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

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

"(a) in the case of goods specified in the Second and Third Schedules at the rates specified therein and at all points of sale of such goods within the State and in the case of goods specified below, at the rate of twenty per cent, at all points of sale of such goods within the State, namely;-

Explanation.The 'Rules of Interpretation of the Schedules' appended to the Schedules of this Act shall apply to the interpretation of the HSN codes mentioned in this clause.";

(a) in the fifth proviso-,

(i) in item (a) after the words "Indian Naval Canteen Service", the words "Central Police Canteen" shall be inserted;

(ii) in item (b), after the words "Canteen Stores Department", the words and symbol "Indian Naval Canteen Stores or Air Force Canteen, as the case may be," shall be inserted;

(c) in the eleventh proviso, the words "with effect on and from the 1^st day of April, 2005" shall be added at the end;

(d) after the eleventh proviso, the following provisos shall be inserted, namely:-

"Provided also that cooked food and beverages served in a houseboat paying compounded tax under the Kerala Tax on Luxuries Act, 1976 (32 of 1976) shall be exempted from tax:

Provided also that the tax payable on ayurvedic cosmetic products manufactured under a drug license granted under the Drugs and Cosmetics Act, 1940 (Central Act 23 of 1940) containing added medicaments having subsidiary therapeutic or prophylactic uses and those notified under clause (d) of sub-section (1) of section 6, for the period on and from the 1^st day of April, 2005 to the 12^th day of November, 2009 shall be at four per cent.";

(ii) in sub-section (1A), in clause (a), the words "and he shall be eligible for input tax credit" shall be added at the end;

(iii) in sub-section (5)-

(a) for the words "fifty lakh rupees", the words "sixty lakh rupees" shall be substituted;

(b) in the third proviso, for the words "fifty lakh rupees", the words "sixty lakh rupees" shall be substituted ;

(c) for the fifth proviso, the following proviso shall be substituted, namely :-

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

(d) after the fifth proviso, the following proviso shall be inserted, namely:-

"Provided also that notwithstanding anything contained in the Act or rules made thereunder if the turnover of a dealer, who opted for payment of tax under this sub-section has exceeded the turnover limit during the course of an year, he shall be eligible for input tax credit on the turnover in excess of sixty lakh rupees.";

(3) in section 8,-

(i) in clause (e), in the Explanation, the following sentence shall be added at the end, namely:-

"This Explanation shall have effect on and from the 1^st day of April, 2005.";

(ii) in clause (f),-

(a) in sub-clause (i),

(i) in Explanation 6, for the figures "2009-10" and "2010-11", wherever they occur, the figures "2010-11" and "2011-12" shall respectively be substituted;

(ii) after Explanation 8, the following Explanation shall be inserted, namely:

"Explanation 9:- For the removal of doubts, it is clarified that for the purpose of this clause, "articles of gold, silver or platinum group metals" shall also include bullion.";

(iii) for the existing proviso to clause (f), the following proviso shall be substituted, namely;-

"'Provided that dealer who opts for payment of tax under this clause may collect tax at the rate not exceeding 1.25 per cent for the commodity, but where the tax so collected during year is in excess of the tax payable for the year under this clause, the lax collected in excess shall be paid over to the Government in addition to tax payable under this clause." ;

(b) after sub-clause (i), the following sub-clause shall be inserted, namely:-

"(ia) Notwithstanding anything contained in this clause, a dealer shall not be allowed to opt for the payment of tax under this clause unless he has conducted business up to a full year as on the first day of April of the year to which the option relates.";

(c) in sub-clause (ii), the words "holding of stock exceeding double the quantity held in the previous year" shall be omitted;

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

"(v) where a dealer had paid tax under this clause for the previous year, the tax payable for the succeeding year under this clause shall be calculated at the rates mentioned in item (i) or (ii) below, whichever is higher,-

(i) (a) at the same amount of tax paid during the previous year, in case their turnover for the above goods for the preceding year was rupees ten lakh or below;

(b) at one hundred and five per cent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year was above rupees ten lakh and up to rupees forty lakh ;

(c) at one hundred and fifteen per cent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year was above rupees forty lakh and up to rupees one crore ; and

(d) at one hundred and twenty five per cent of such tax paid during the previous year, in case their turnover for the above goods for the preceding year exceeded rupees one crore :

Provided that the tax payable under this sub-clause by the dealers covered under Explanation 6 of this clause shall be at the appropriate percentage of tax mentioned in (a), (b), (c) or (d) above, of the tax re-determined under the said Explanation.

(ii) 1.25% of the turnover of sales of the goods covered under this clause, for the previous year.";

(e) sub-clause (vi) shall be omitted;

(4) in section 10,-

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

"(1A) Every person making any payment or discharging any liability to any person liable to pay tax under section 6 on account of any amount purporting to be the full or part payment of consideration for the transfer of the right to use any goods for any purpose shall deduct at source an amount calculated at the rate of four per cent from such sum towards full satisfaction of the tax payable under this Act in respect of the transfer of the right to use such goods and remit it to Government, in the prescribed manner, on or before the fifth day of the month succeeding the month in which such deduction is made. Every such person shall also file such return as may be prescribed.";

(ii) in sub-section (3),-

(a) for the word "awarder" wherever it occurs, the words "awarder or the person" shall be substituted;

(b) for the words, symbols and figure "under sub-section (1)", the words, symbols, figures and letter "under sub-section (1) or (1A)" shall be substituted;

(5) in section 24, in sub-section (1), for the fourth proviso, the following proviso shall be substituted, namely:-

"Provided also that the time limit for the completion of assessments for the years 2005-06 and 2006-07 under this section shall be extended up to 31^st March, 2012.";

(6) in section 25, in sub-section (1), for the third proviso, the following proviso shall be substituted, namely:-

"Provided also that the time limit for the completion of assessments for the years 2005-06 and 2006-07 under this section shall be extended up to 31^st March, 2012.";

(7) in section 40A, sub-section (3) shall be omitted;

(8) in section 52, after the words and symbol "railway authorities,", the words and symbol "operators of leased railway wagons," shall be inserted;

(9) in section 74, in sub-section (1), for the words "four lakh" wherever they occur, the words "eight lakh" shall be substituted;

(10) in section 86, in the Explanation, for the words "Centre for Taxation Studies", the words "Gulati Institute of Finance and Taxation" shall be substituted;

(11) in section 94-

(i) in sub-section (2), after the words "hearing the parties", the words "pass orders within three months or within such time as may be extended by the Commissioner" shall be inserted;

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

"(2A) Notwithstanding anything contained in this Act, where a clarification has been issued under this section clarifying the rate of tax of any goods and the registered dealers were paying tax at lower rates on the sale of those goods before the issuance of such clarification, then if the manufacturer or first seller of the goods within the State, who shall also be a registered dealer, pays the entire tax due on the turnover of such goods sold by him at the Maximum Retail Price, then subsequent registered dealers who had purchased those goods and has sold the same shall not be assessed or penalized for the differential tax payable :

Provided that such payment of tax under this sub-section shall be subject to the conditions and restrictions as may be prescribed.

Explanation:-

For the purpose of this section, Maximum Retail Price in respect of the goods mentioned means the maximum price printed on the package of any goods at which such goods may be sold to the ultimate consumer and where such price is not so printed on the package, the price charged on the sale to the ultimate consumer.";

(12) in the SCHEDULES,-  

(i) in the First Schedule,-  

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

(aa) after serial number 17A and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely :-

(b) in serial number 18, after item (3) and the entries against it in columns (2) and (3), the following items and entries shall respectively be inserted, namely:-

(c) after serial number 28 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely:-

(d) after serial number 30 and the entries against it in columns (2) and (3), the following serial numbers and entries shall, respectively, be inserted, namely:-

(e) in serial number 34, in item (1), after sub-item (g) and the entries against it in columns (2) and (3), the following sub-items and entries shall respectively be inserted, namely:-

(f) after serial number 60 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely:-

(ii) in the Third Schedule,-

(a) serial number 17 and the entries against it in columns (2) and (3) shall be omitted;

(b) serial number 44 and the entries against it in columns (2) and (3) shall be omitted;

(ba) after serial number 52 and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely :-

(c) after serial number 82 and the entries against it in columns (2) and (3), the following serial number and entries shall respectively be inserted, namely:-

(d) in serial number 90, after item (4) and the entries against it in columns (2) and (3), the following item and entries shall respectively be inserted, namely:-

"(4A) Soil ****";

(e) serial number 92A and the entries against it in columns (2) and (3) shall be omitted;

(ea) after serial number 97 and the entnes against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely :-

(f) serial number 99A and the entries against it in columns (2) and (3) shall be omitted;

(g) in serial number 137, for the entry against item (13) in column (2), the following entry shall be substituted, namely:-

"Choodarapetties of all kinds".

9. Amendment of Act 21 of 2008.--

In the Kerala Finance Act, 2008 (21 of 2008), in section 6, to sub-section (1), the following proviso shall be added, namely:-

"Provided that the rate of cess payable under this section shall be six per cent on the lax payable under section 5(l)(b) of the Kerala General Sales Tax Act, 1963 (15 of 1963).".

10. Levy and collection of cess on luxury cars.

(1) There shall be levied and collected, in accordance with the provisions of this section, for the purpose of the State, a cess to be called the Essential Necessities Cess, at the rate of two per cent on the output tax due under section 6 of the Kerala Value Added Tax Act, 2003 (30 of 2004) on the sale of cars, the sale price of which exceeds rupees twenty lakh, to fulfil the commitment of the Government to provide and finance a comprehensive scheme for the essential necessities to the general public.

(2) The State Government may, after due appropriation made by the Legislature by law in this behalf, utilise such sums of money of the Essential Necessities Cess levied for the purposes specified in sub-section (1) as it may consider necessary.

(3) The provisions regarding the assessment and recovery in the Kerala Value Added Tax Act. 2003 (30 of 2004) shall mutatis mutandis apply to cess under this section.

(4) The provisions of section 30 of the Kerala Value Added Tax Act, 2003 (30 of 2004) shall mutatis mutandis apply for the collection of cess under sub-section (1).

11. Levy and collection of cess on residential buildings.-

(1) There shall be levied and collected, in accordance with the provisions of this section, for the purpose of the State, a cess to be called the Housing Projects Cess, at the rate of two per cent on the building tax for residential buildings having a plinth area of 4000 sq. ft. and above, to fulfil the commitment of the Government to provide and finance the housing projects for the weaker sections, taken up by the Panchayaths.

(2) The State Government may, after due appropriation made by the Legislature by law in this behalf, utilise such sums of money of the Housing Projects Cess levied for the purposes specified in sub-seclion (1) as it may consider necessary.

(3) The provisions regarding assessment and recovery in the Kerala Building Tax Act, 1975 (7 of 1975) shall mutatis mutandis apply to the cess under this section.

(4) The provisions of sections 18 and 19 of the Kerala Building Tax Act, 1975 (Act 7 of 1975) shall mutatis mutandis apply for the collection of cess under sub-section (1).

12. Validation-

(1) Notwithstanding the lapse of the Kerala Finance Bill, 2011 (Bill No. 426 of the Twelfth Kerala Legislative Assembly) (hereinafter referred to as the said Bill) and the cesser of force of law of the declared provisions of the said Bill, anything done or any action taken, including the levy and collection of tax or duty, during the period from the 1st day of April, 2011 to the 19th day of July, 2011, 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 General Sales Tax Act, 1963 (15 of 1963) or under the Kerala Tax on Luxuries Act, 1976 (32 of 1976) or under the Kerala Value Added Tax Act, 2003 (30 of 2004) (hereinafter referred to as the "respective Acts'), as they stand amended by the said Bill, 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, 2011 to the 19th day of July, 2011 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 duly collected, if any, by a dealer or an authority, as the case may be, shall be paid over to the Government.