Division bench of Kerala HC confirms single bench’s order refusing exemption to ‘Cleaning Materials’ under KVAT Act.
Recently, the division bench of the Kerala High Court confirmed the decision of the Single bench’s decision, in which the Court refused to grant exemption to‘Cleaning Materials’ under section 6(7)(b) of KVAT Act.
Earlier, the Single bench observed that the exemption under section 6(7)(b) of the KVAT Act, 2003 is not available to ‘cleaning materials’ since they are not ‘consumables’ as per the provisions of the said section. The single bench held that, as per the said section, the exemption is available only to the consumable used by the developer or industrial unit or establishments situated in the Special Economic Zone for the purpose of setting up of the unit or use in the manufacture of other goods. Therefore, cleaning material used for the purpose of cleaning the building and other facilities, furniture etc cannot be treated for the above purpose. Hence no exemption is available to such products.
The above decision was challenged by the assessee through writ appeal. While upholding the order of the single bench, the division bench comprising Justices Thottathil B.Radhakrishnan and Devan Ramachandran opined that no interference is needed to the impugned order.
However, the Court reduced the penalty imposed on the appellant-assessee. “we have bestowed our anxious consideration to the question as to whether the authorities are justified in imposing penalty equal to double the amount of tax sought to be evaded. Weighing the different materials and factors and contentions raised by the appellant before the statutory authorities, we are of the view that ends of justice would be satisfied if the penalty is confined to the amount equivalent to the tax sought to be evaded, and we do so.”
Read the full text of the Judgment below.
