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 23rd day of July, 2014.
EXTRACT OF THE KERALA FINANCE ACT, 2014
Act No. 29 of 2014
An Act to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2014-2015.
Preamble.- Whereas, it is expedient to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2014-2015;
Be it enacted in the Sixty-fifth Year of the Republic of India as follows:-
1. Short title and commencement.-
(1) This Act may be called the Kerala Finance Act, 2014.
(2) Save as otherwise provided in this Act,-
(i) sub-section (10) of section 10, sub-clause (iv) of clause (a) and sub-clause (ix) of clause (c) of sub-section (17) of section 10 shall be deemed to have come into force on the 1st day of April, 2005;
(ii) clause (b) of sub-section (1) of section 7 shall be deemed to have come into force on the 1st day of April, 2007;
(iii) sub-clause (iv) of cluase (c) of sub-section (17) of section 10 shall be deemed to have come into force on the 13th day of November, 2009;
(iv) clause (e) of sub-section (5) of section 10 shall be deemed to have come into force on the 1st day of April, 2013;
(v) sub-section (2) of section 5 and sub-clause (x) of clause (c) of sub-section (17) of section 10 shall be deemed to have come into force on the 1st day of January, 2014;
(vi) sections 2 to 4, sub-sections (1), (3) and (4) of section 5, section 6, clause (a) of sub-section (1) and sub-sections (2) to (7) of section 7, sections 8, 9, sub-sections (1) to (4), clauses (a) to (d) of sub-section (5), sub-sections (6) to (9), sub-sections (11) to (16), sub-clauses (i) to (iii), (v) and (vi) of clause (a) sub-clause (i) to (iii) of clause (b), sub-clauses (i) to (iii) and (v) to (viii) of clause (c) and clause (d) of sub-section (17) of section 10 and section 11 shall be deemed to have come into force on the 1st day of April, 2014;
(vii) the remaining provisions of this Act shall come in to force at once.
10. Amendment of Act 30 of 2004 -In the Kerala Value Added Tax Act, 2003 (30 of 2004),-
(1) in section 4, in sub-section (4), after clause (iii), the following clauses shall be inserted, namely:-
"(iv) The Chairman or any other member of the Appellate Tribunal nominated by him, may, sitting singly, dispose of any case where the amount of tax or penalty disputed in appeal does not exceed fifty thousand rupees and the order of assessment or penalty appealed against is issued by an officer of and below the rank of a commercial tax officer.
(v) A Bench constituting of two or more members other than the Chairman may dispose of any case where the amount of tax or penalty disputed in appeal does not exceed five lakhs rupees.";
(2) after section 4, the following section shall be inserted, namely:-
"4A. Appellate Tribunals appointed under the Kerala General Sales Tax Act, 1963.
Notwithstanding anything contained in this Act, the Appellate Tribunals appointed under the Kerala General Sales Tax Act, 1963 (Act 15 of 1963) shall have the power to hear and dispose of appeals filed under this Act, in such manner as may be prescribed, as if they are appointed under this Act;
(3) in section 6,-
(a) in sub-section (1),-
(i) in the Table, in serial number 1, for the figure "20" in column (4), the figure "22" shall be substituted;
(ii) for the fifth proviso, the following proviso shall be substituted, namely:-
"Provided also that, where,-
(a) the sale is to or by Canteen Stores Department, Central Police Canteen, Indian Naval Canteen Service and National Cadet Corps Canteen; or
(b) the sale is by Military, Naval, Air force or by the one subsidiary canteen each that may be established by the Kerala Police in each District of the State and affiliated to the Central Police Canteen, of the goods purchased from Canteen Stores Department, Central Police Canteen or from direct suppliers authorised by them, as the case may be; and
(c) in case of motor vehicles, the sale is to Defence personnel or ex-servicemen on production of authorization duly issued by the authorized officer of the Canteen Stores Department, Indian Naval Canteen Stores or Air Force Canteen, as the case may be;
the tax payable under (a), (b) or (c) above shall, subject to such conditions and restrictions as may be prescribed, be half the rate applicable to such goods.";
(iii) after the fifteenth proviso, the following provisos shall be inserted, namely:-
"Provided also that the rate of tax for the sale of furnace oil to Coastal Cargo Vessel as fuel, shall, subject to such conditions and restrictions as may be prescribed, be 5 per cent:
(b) in sub-section (5), the existing Explanation shall be numbered as Explanation I and after Explanation I as so numbered, the following Explanation shall be inserted, namely:-
"Explanation II.- For the purpose of this sub-section, total turnover of a dealer shall not include the turnover of sale of medicines sold under first proviso to clause (e) of section 8 and the turnover of sale of goods covered under the Schedule to the Kerala General Sales Tax Act, 1963 (15 of 1963).";
(c) in sub-section (7), to clause (b), the following proviso shall be inserted, namely:-
"Provided that the exemption covered by this clause shall be applicable to a deemed sale involved in a works contract executed through a sub-contractor also.";
(4) after section 6, the following section shall be inserted, namely:-
"6A. Payment of turnover tax of textile articles.
Notwithstanding anything contained in section 6, every dealer shall pay turnover tax at the rate of two per cent, on the turnover of sale of textile articles included in serial numbers 17A, 46A and 51 of the First Schedule.";
Provided that a dealer whose turnover of sale of such textiles in the State for the previous year is below rupees one crore, shall not be liable to pay turnover tax under this section:
Provided further that this levy would be applicable even if, the constitution of the business has been changed in the current year to proprietorship, firm or association of persons consisting of the proprietor, partner, director or persons of the dealer for the previous year."
(5) in section 8,-
(a) for clause (a), the following clause shall be substituted, namely:-
"(a) (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 six per cent of the whole contract amount along with tax under sub-section (2) of section 6:
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 four per cent of the whole contract amount, along with tax under sub-section (2) of section 6:
(ii) any works contractor not falling under the description in 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 whole contract amount along with tax under sub-section (2) of section 6:
Provided that the provisions of this clause shall not apply to any works contract in which the transfer of material is in the form of goods:
Provided further that notwithstanding anything contained in this Act, a works contractor who intends to pay tax at compounded rate in accordance with this clause in respect of all works undertaken by him during an year, may, instead of filing separate application for compounding for individual works, file a single option for payment of tax under this clause before 30th day of April of the year to which the option relates, subject to eligibility:
Provided also that in the case of any work compounded under this clause, and which remains unexecuted fully or partly as on 31st March, 2014, the contractor may continue to pay tax in respect of such works in accordance with the provisions of this clause as existed when he had opted for compounding up to 31st March, 2015.
Provided also that with respect to works contract awarded by Government of Kerala, Kerala Water Authority or local authorities, the contractor shall not be liable to pay tax under sub-section (2) of section 6 in respect of the purchase of soil, sand or rocks.
Explanation I- For the purpose of this clause "whole contract amount" shall not include the amount paid to sub-contractors for execution of the portion of works contracted if the sub-contractor is a registered dealer liable to pay tax under sub-section (1) or sub-section (1A) of section 6, and the contractor claiming deduction in respect of such amount furnishes certificates in such form as may be prescribed.
Explanation 2.- Notwithstanding anything contained in any other Act, a dealer surrenders his registration and unused declaration forms under the Central Sales Tax Act, 1956 (Central Act 74 of 1956), before the assessing authority on or before 31st March of an year (including 31st March 2014) and who does not have any closing stock of materials purchased interstate as on that date or who pays tax on such closing stock at scheduled rates, shall be eligible for paying compounded tax under sub-clause (ii) of this clause, for the next year.;
(b) for clause (b), the following clause shall be substituted, namely:-
(b) Any dealer producing granite metals and/or manufactured sand with the aid of mechanised machines may, at his option, instead of paying tax in accordance with the provisions of the said sections, pay tax at the following rates, namely:-
Explanation:For the purpose of this clause, primary crushers falling under the description of item (i), (ii) or (iii) above, 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:
Provided that notwithstanding anything contained in this clause, dealers with a single crushing machine of size not exceeding 30.48 cm. x 22.86 cm. shall pay rupees thirty thousand only per annum and those with a single crushing machine of size above 30.48 cm. x 22.86 cm. but not exceeding 40.64 cm. x 25.40 cm. shall pay rupees one lakh twenty thousand only per annum as tax under this clause:
Provided further that notwithstanding anything contained in this clause, dealers having Vertical/Horizontal Shaft Impactor machines or similar machines along with jaw crushers/cone crushers shall pay only sixty per cent of the relevant rate of compounded tax for each of such Vertical/Horizontal Shaft Impactor machines or similar machines, in addition to the tax on crushing machines, as compounded tax under this clause:
Provided also that the compounded tax payable shall be determined for an year and shall be payable in 12 equal monthly instalments.""
(c) in clause (c), for sub-clause (i), the following sub-clause shall be substituted, namely:-
(i) any dealer in cooked food and beverages, including fresh fruit juices and sweets prepared by him, other than,-
(a) a dealer supplying cooked food or beverages to any airline service company or institution or shipping company for serving in aircraft, ships or steamer or served in aircraft, ship, steamer;
(b) a bar attached hotel or a dealer for serving cooked food in a bar attached hotel;
(c) a star hotel or a dealer serving cooked food in a star hotel;
(d) a dealer making interstate purchase of goods, other than capital goods or packing materials; or
(e) hotels or restaurants using a brand name or a trade mark registered under the Trade Marks Act, 1999 (Central Act 47 of 1999);
may, at his option, instead of paying tax in accordance with the provisions of sub-section (1) of section 6 but subject to payment of tax, if any, payable under sub-section (2) thereof, pay tax at half per cent of the turnover of cooked food and beverages prepared by him and also on the turnover of other goods in respect of which he is not the dealer effecting first taxable sale, as provided in the Explanation under sub-section (5) of section 6.";
(d) in clause (e), the third proviso shall be omitted;
(e) for clause (f), the following clause shall be substituted, namely:-
"(f) (i) any dealer in bullion or ornaments or wares or articles of gold, silver or platinum group metals including diamond may at his option, instead of paying tax on their sale in the State in respect of such goods in accordance with the provisions of section 6, may pay tax at,-
(a) one hundred and fifteen per cent, in case the total turnover of the dealer opting to pay tax under this clause, for the preceding year was rupees ten lakhs or below;
(b) one hundred and twenty per cent, in case the total turnover of the dealer opting to pay tax under this clause, 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 the total turnover of the dealer opting to pay tax under this clause, for the preceding year was above rupees forty lakhs and up to rupees one crore;
(d) one hundred and fifty per cent, in case the total turnover of the dealer opting to pay tax under this clause, for the preceding year was above rupees one crore and above;
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 an year during any of the three consecutive years preceding that to which such option relates.
Explanation 1.- 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. Where a dealer had not transacted any business for the last three years consecutively, the highest tax paid or payable for the year during the year or years he transacted business shall be considered for the above purpose and 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 total turnover conceded, as applicable, for the period during which such dealer had transacted business.
Explanation 2.- Dealers opting for payment of tax under this clause shall pay compounded tax in respect of all their branches existing in the year to which the option relates, except the newly started branch or branches started during the year under option. Such branch or branches will be treated as a separate place of business for the purpose of this clause, for that year.
Provided that this explanation shall not be applicable to dealers who had paid compounded tax in respect of their branches started in the year 2013-2014 on the basis of average tax paid for the principal place of business and other branches for the year 2014-2015.
Explanation 3.- Where a dealer paying tax under this clause, closes a branch during the year under option, proportionate reduction considering the number of business places, in the payment shall be granted in the next monthly instalment onwards, for the remaining months of the 'year.
Explanation 4.- Where a dealer is opting for payment of tax under this clause for the first time and had only business in the previous year and the tax payable as per return or accounts during such previous year is less than the output tax payable, then the tax payable for the year under option shall be notionally re-determined on the basis of output tax, for determining the tax liability for the year under option.
Explanation 5 - Tax payable as conceded in the accounts includes the tax payable on suppressed or assessed turnover also.
Explanation 6.- For the purpose of this clause, "branch" does not include any place of business which is exclusively engaged in job work, manufacturing of ornaments/articles or polishing, and where there is no buying and/or selling of goods,
(ii) save as otherwise provided in this clause, the compounded tax payable under this clause shall be determined for an year and shall be payable in 12 monthly instalments.
(iii) a dealer who opts for payment of tax under this clause may collect tax at the rate as shown in the Table below, but where the tax so collected during the year is in excess of the tax payable for the year under this clause, the tax collected in excess shall be paid over to Government in addition to the tax payable under this clause.
Provided that the tax collected by dealers at the rate not exceeding 1.25 % during the year 2013-14 shall be deemed to be validly collected
(iv) The assessing authority, for valid and sufficient reasons, such as shifting of place of business, furnishing of false information, suppression of relevant information, failure to furnish such information demanded, may refuse permission to pay tax under this section and cancel the permission, if any, granted:
Provided that no orders under this sub-clause shall be issued without giving the dealer an opportunity of being heard and without prior approval of the District Deputy Commissioner.
(v) Notwithstanding anything contained in section 55 or section 60 of this Act, orders under sub-clause (ii) shall appealable only to the Appellate Tribunals.
(vi) In case where permission has been cancelled, the amount, if any paid based on the permission, shall be apportioned against the output tax due from the dealer.
(vii) Where a dealer had paid tax tinder this clause for the previous year, the tax payable,-
(a) by a dealer whose total turnover for the previous year was rupees ten lakhs or below, shall be at the rate of one per cent on the turnover of sales in the State, during the year under option; and,
(b) by the class of dealers mentioned in column (1) of the Table below for the succeeding year under this clause shall be calculated at the appropriate rates mentioned in column (2) or column (3) of the Table below, whichever is higher.
Table
(5A) in section 10, in sub-section (1) for the words "the fifth day of the month" the words "the twentieth day of the month" shall be substituted;
(6) in section 12, in the second proviso before the word "plywood", the words "rubber latex, rubber wood" shall be inserted:
(7) in section 18B,-
(a) for the figures and words "30th September, 2013", the figures and words "31st August, 2014" shall be substituted ;
(b) in the first proviso, for the figures and words "1st April, 2013", the figures and words "1st April, 2014" shall be substituted;
(c) the second and third provisos shall be omitted;
(8) after section 18B, the following section shall be inserted, namely:-
"18C. Special provisions for hospitals-
(1) Notwithstanding anything contained in section 6 and section 18B, hospitals run by charitable institutions shall be exempted from tax on the sale of medicines, laboratory store items and consumables to their patients during the course of treatment, subject to the following conditions, namely:-
(a) they shall, on payment of a fee of ten thousand rupees, obtain a certificate from the Commissioner for an year, based on the orders of exemption applicable to charitable institutions under the Income Tax Act, 1961 (Central Act 43 of 1961).
(b) the hospitals availing exemption as per this sub-section shall purchase only medicines which had suffered tax on the maximum retail price as per clause (e) of section 8 of this Act and with regard to other laboratory store items and consumables, only from dealers registered under this Act:
Provided that for the period up to 31st March, 2013, the exemption would be made operative only based on the certificate issued by the Commissioner considering the orders of income tax exemption:
Provided further that such charitable hospitals shall not be liable to take registration or file returns under this Act.
(2) Notwithstanding anything contained in section 6 and section 18B, hospitals not covered under sub-section (1), shall be exempted from further tax liability on their sale of medicines and other consumables subject to the following conditions:-
(i) all the purchases of medicines shall be from dealers paying compounded tax as per clause (e) of section 8;
(ii) all the purchases of other consumables are made from dealers registered under this Act at the maximum retail price; and
(iii) they shall file option for availing this exemption before 30th April of every year:
Provided that if such hospitals pay the entire tax assessed/determined on or before 31st March, 2014, they shall not be liable to pay any penalty and/or interest under this Act.";
(9) in section 20A, the existing provision shall be numbered as subsection (1) and after sub-section (1), as so numbered, the following sub-section shall be inserted namely:-
"(2) With respect to works contracts awarded by Government of Kerala, Kerala Water Authority or Local Authorities, the Commissioner may, for valid and sufficient reasons to be recorded in writing, condone delay for filing of option under section 8 up to the date of filing of annual returns as prescribed under this Act. The application for condonation of delay shall be submitted along with the order of rejection of the option citing the reasons, of the assessing authority.";
(10) after section 25B, the following section shall be inserted, namely:-
"25C. Special provision regarding assessment of dealers paying presumptive tax.-
Notwithstanding anything contained in sub-section (4) of section 11 or sub-section (2) of section 12, if any assessment or other proceeding is initiated by the assessing authority denying the eligibility of a dealer to pay presumptive tax for the violation of conditions enumerated in subsection (5) of section 6, such dealer shall be granted input tax credit or special rebate, as the case may be";
(11) in section 30, to sub-section (1), the following proviso shall be inserted, namely:-
"Provided that notwithstanding anything contained in this section, no dealer shall collect any sum by way of turnover tax leviable under section 6A.".
(12) in section 31, in sub-section (5), after the words "twelve per cent per annum" the words "and in the case of tax collected by dealers from persons who had purchased goods from him, at the rate of thirty six per cent per annum shall be inserted;
(13) in section 42, in sub-section (1), after the existing proviso, the following proviso shall be inserted, namely:-
"Provided further that the Khadi and Village Industries Units shall, in lieu of the Statement and Certificate mentioned above, submit copy of the audited statement of accounts and certificate issued by the Kerala Khadi and Village Industries Board.";
(14) in section 55,-
(i) for the words, brackets and figures "other than those under sub-section (3), sub-section (8) or sub-section (9) of section 16, sub-section (8) of section 19;" the words, brackets and figures "other than those under section 16, section 19, sub-sections (8) and (9) of section 44, section 49, section 67, section 68, section 69 and section 70" shall be substituted ;
(ii) in the first proviso, for the figures and words "48, 49, 67, 69, 70, 70A and 72", the figures and words "48, 70A and 72" shall be substituted ;
(iii) after, the second proviso, the following proviso shall be inserted, namely:-
"Provided also that where an order of the assessing authority which has become not appealable with effect from 1st April, 2014 by virtue of the Kerala Finance Bill, 2014, is pending in appeal under this section, such appeal shall stand transferred to the appropriate authority under this Act and such authority shall consider the same as if it is an appeal filed before it.";
(b) in sub-section (5), after the existing proviso, the following proviso shall be inserted, namely:-
Provided that the power of the Deputy Commissioner (Appeals) to remand a case is limited to ex-parte orders only";
(15) in section 57, to sub-section (3), the following proviso shall be inserted, namely:-
Provided that the power of the Deputy Commissioner to remand a case is limited to ex-parte orders only";
(16) in section 67, for the existing proviso, the following proviso shall be substituted, namely:-
Provided that in the case of item (c) above, a minimum penalty of rupees One Thousand shall directed to be paid.";
(17) in the SCHEDULES,-
(a) in the First Schedule,-
(i) in serial number 4A, item number (2) and the entries against it in columns (2) and (3) shall be omitted;
(ii) after serial number 18 and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-
(iii) in serial number 35A, in the entry in column (2), the words "paper cups" shall be added at the end ;
(iv) in serial number 42, for the entry against it in column (2), the following entry and Note shall be substituted, namely:-
"Rice issued from Central/State Government depots or sold by Food Corporation of India for sale by authorized ration dealers
Note:- This entry shall be deemed to have come into force on the 1st day of April, 2005";
(v) after serial number 42A and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:---
(vi) after serial number 54 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,-
(i) for serial number 2B and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be substituted, namely:-
(ii) for serial number 2C and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be substituted, namely:--
(iia) after serial number 2C and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:
(iii) 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:
(iv) serial number 7 and the entries against it in columns (2) and (3) shall be omitted;
(c) in the Third Schedule,-
(i) in serial number 3, sub-item (j) of item (1) and the entries against it in columns (2) and (3) shall be omitted;
(ii) after serial number 7 and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-
(iii) in serial number 30A, in the entry in column (2), for the words "bar attached hotels and star hotels", the words "and five star hotels" shall be substituted;
"(iv) in serial number 36, to item (27), the following Note shall be inserted, namely:-
"Note: -This entry shall be deemed to have come into force on the 13th day of November, 2009.";
Provided that the tax, if any, collected during the period from the13th day of November, 2009 to the 31st day of March, 2012 shall not be refunded"
(v) after serial number 37 and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-
(vi) in serial number 69, item (27) and the entries against it in columns (2) and (3) shall be omitted;
(vii) in serial number 79A, for the entries against it in columns (2) and (3), the following entries shall, respectively, be substituted, namely:-
(viii) serial number 82A and the entries against it in columns (2) and (3) shall be omitted;
(ix) in serial number 93, to sub-item (c) of item (1), the following Note shall be inserted, namely:-
"Note:- The entry shall be deemed to have come into force on the 1st day of April, 2005.";
(x) to entry 98A, the following Notes shall be inserted, namely:-
Note 1.- For the sale of Domestic LPG by Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited and their agencies, no tax shall be levied on the amount of subsidy granted by the Central Government to such Corporations and passed on to the consumers during the sale of the same by the said Corporations and agencies;
Note 2.- This shall be deemed to have come into force on the 1st day of January, 2014,";
(d) in the List A, after serial number 135A and the entries against it in columns (2) and (3), the following serial number and entries shall, respectively, be inserted, namely:-
11. Amendment of Act 29 of 2013-
In the Kerala Finance Act, 2013 {29 of 2013), in section 11 -
(1) in sub-section (1), the words "including that of dining halls" shall be omitted;
(2) to sub-section (2), the following proviso shall be inserted, namely:-
"Provided that cess shall be levied only once for wedding and connected celebrations in respect of the same bride and bridegroom.".