ACT 19 OF 2004

THE KERALA FINANCE ACT, 2004 [1]

An Act to give effect to certain financial proposals of the Government of Kerala for the financial year 2004-05.

      Preamble.- WHEREAS, it is expedient to give effect to certain financial proposals of the Government of Kerala for the Financial Year 2004-05;

      BE it enacted in the Fifty-fifth Year of the Republic of India as follows:-

      1. Short title and commencement.-(1) This Act may be called the Kerala Finance Act,2004

(2) Item (iv) (b) of sub-section (1) and sub-section (3) of section 3 shall be deemed to have come into force on the 1^st day of July, 1987,sub-section (14) of section 3 and sub-section (1) of section 6 shall be deemed to have come into force on the 4^th day of February, 2004 and the remaining provisions of this Act shall be deemed to have come into force on the 1^st day of April, 2004.

      2. Amendment of Act 35 of 1958.- In the Kerala Money Lenders Act, 1958 (35 of 1958),-

               (1) in section 7, after the existing proviso to sub-section(1), the following proviso shall be inserted, namely:-

               “Provided further that the Government may specify, by notification, the rate of interest under sub-section (1) from time to time.”;

               (2) in section 16B, in sub-section (1A), for the words “one hundred rupees” the words “three hundred rupees” shall be substituted.

               (3)   after section 16B, the following section shall be inserted, namely:—

               "16C, Fees for filing Interlocutory Applications.—Every interlocutory application prescribed by the Government and filed before, the authorities under this Act specified below, other than those filed by officers empowered by Government, shall be accompanied by the following fees, namely:—

                   (a)   before any Appellate Authority—One hundred and fifty rupees;

                  (b)   before any Revisional Authority—One hundred and fifty rupees.";

               (4), in section 20A, in sub-section (1A), for the words "two hundred and fifty rupees", the words "seven hundred rupees" shall be substituted.

      3. Amendment of Act 15 of 1963.—In the Kerala General Sales Tax Act, 1963,—

               (1)    in Section 2,-

                  (i) after clause (vi), the following clauses shall be inserted, namely:-

"(vi a) "Books of Accounts" means and includes ledger, day book, Cash book, accounts book and other records whether kept in written form or print-outs of data stored in a floppy, disc, tape or any form of electro magnetic data storage device.

(vi aa) "Brand name" means a name or trade mark whether registered or not registered under the Trade Marks Act, 1999 (Central Act 47 of 1999) and includes a name or mark, such as a symbol, monogram, label signature or intended words or any writing  which is used in relation to a product for the purpose of indicating or so as to indicate, a connection in the course of trade between the product and a dealer using such name or mark with or without any indication of the said dealer;";

               (ii)   after clause (x), the following clause shall be inserted, namely;—

"(x a)    "document" includes written or printed records of any sort, title deed and any electronic record as defined in the Information Technology Act, 2000 (Central Act 21 of 2000);";

               (iii)   after clause (xi), the following clause shall be inserted, namely:—

"(xi a)    "Fair market price" means the sale price for the sale of goods fixed by the assessing authority  if he has reason to believe that the dealer has practiced undervaluation and the sale price shall  be the value or price at which the goods of the kind or quality are sold or capable of being sold in the open market or the price obtained from the Kerala State Civil Supplies Corporation Ltd. Or Economics and Statistics Department of the State or other reliable sources on the date of sale pf such goods;.";

         (iv) in clause (xxvii),—

(a) in sub-clause (i) of Explanation (1 A), after the words "in the execution of such contract" the following shall be added at the end, namely:—

but shall not include the amount received or receivable by the contractor from the awarder for the execution of the contract towards labour charges and other service chargers.";

(b) after sub-clause (iii) of Explanation (1 A), the following sub-clause shall be added, namely:—

"(iv)   The turnover in respect of liquor imported or manufactured at any distillery, brewery, winery or other manufactory established under  section 14 of Abkari Act, 1 of 1077, shall include any duty of excise payable by such importer or manufacturer.";

               (2) in section 4, in clause (c) of sub-section (3), for the words "one lakh fifty thousand rupees" the words "three lakh rupees" shall be substituted;

               (3) in clause (i) of sub-section (2C) of section 5, after sub-clause (b), the following clause shall be inserted, namely:—

"(c) by any manufacturer of distillery, brewery, winery or other manufactory established under section 14 of Abkari Act, 1 of 1077, shall be liable to pay turnover tax on the turnover including any duty of excise leviable on such liquor at the hands of such person, whether such duty is paid by such person or any subsequent dealer as per the provisions in section 18 of the said Act.";

         (4) in section 5B,-

               (i) for the words and figures "serial number 46 and 60 of the First Schedule", the words and figures "serial number 46, 46A and 60 of the First Schedule" shall be substituted; -

               (ii) the existing section shall be numbered as sub-section (1) of that section and after the sub-section (1) as so numbered, the following sub-section shall be inserted, namely.—

               "(2) Catering units which supply cooked food to hotels, parties in connection with marriages and other ceremonial functions, whose total turnover in a year exceeds rupees five lakh shall pay an amount of rupees five hundred per annum for every one lakh rupees or part thereof in excess of rupees five lakh as licence fee in such manner as may be prescribed.";

         (5) for section 5BA, the following section shall be substituted, namely:—

"5BA. Levy of licence fee of lottery tickets.—Any dealer liable to pay tax under sub-section (1) of section 5 shall pay licence fee per draw at the following rates, in  lieu of tax payable under that section, namely:—

               "(a)   Paper Lottery—

Explanation:—-For the purpose of this section "retail outlet" means any premises where vending machine is placed for the purpose of selling on-line lottery tickets to customers and each vending machine from which tickets are generated shall be deemed to be a separate retail outlet";                                                  :

         (6)     for section 5C, the following section shall be substituted, namely:—

"5C. Computation of turnover of a denier in respect of transfer of goods involved in the execution of works contract.—The turnover of a dealer in respect of transfer of goods involved in the execution of works contract, where the transfer takes place not in the form of goods, but in some other form and the circumstances are such that the actual turnover is not ascertainable from the books of accounts of the dealer, may be computed after deducting labour and other charges as specified in the table below from the total amount of contract.

Serial Number	Type of works contracts	Labour or other charges as a percentage value of the works contract
(1)	(2)	(3)
1.	Electrical contract	20
2.	All structural contract	30
3.	Sanitary contract	33.5
4.	Retrading contract	50
5.	Dyeing and textile printing contract	50
6.	Photography and Printing contract	30
7.	Sculptural contracts or contracts relating to arts	70
8.	Refrigeration, air conditioning or other machinery,rolling shutters, cranes, installation contract	15
9.	All other contract	30";

in section -7,

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

    (a)    for clause (a) and the Explanation the following clause and explanation shall be substituted, namely:—

"(a) Any dealer in gold or silver ornaments or wares, may at his option instead of paying tax in accordance with the provisions of that sub section, pay tax at one hundred and thirty per cent of the tax payable by him as conceded in the return or accounts or the tax paid for the previous consecutive three years whichever is higher.

Explanation:-- For the purpose of this clause "tax payable as conceded in the return or accounts for the previous consecutive three years means tax payable on the sales turnover under sub-section (1) of section 5 and the tax payable on the purchase turnover under section 5A."

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

"(aa) an application for compounding tax as provided in clause (a) shall be filed before the assessing authority on or before 31st May of the respective financial year and the assessing authority shall issue the order of accepting or rejecting the application on or before 30th day of June thereof:

Provided further that the option for the financial year 2004-05 shall be filed before the assessing authority on or before 31st,day of August, 2004 and the assessing authority shall issue the order of accepting or rejecting the option on or before 30th September, 2004:                                                                         ^:

Provided further that a dealer who had already filed the option for the financial year 2004-05 as per clause (aa) above may withdraw or file fresh option within the above said period."

         (c) in clause (b), for the Explanation, the following Explanation shall be substituted, namely:—

  "Explanation:—For the purpose of this clause primary crusher shall also be reckoned for computation of the quantum of compounded tax and the rate of compounded tax applicable to primary crusher shall be 50 per cent of therates  mentioned in items (i), (ii) and (iii) above.";

         (ii) for sub-section (7), the following sub-section shall be substituted, namely:—

"(7) Notwithstanding anything contained in sub-section,(l) of section 5, every contractor; in civil works may, at his option, instead of paying tax in accordance with clause (iv) of that sub-section, pay tax at the rate of two per cent on the whole amount of contract.

Explanation:- For the purpose of this section "civil works" means construction or repair or maintenance of buildings, bridges, roads, runways, dams, canals, wells, ponds, swimming pools, water tanks or culvert including any masonry work or any other, work of the like nature as may be, notified by Government in this behalf, from time to time, but shall not include any improvement or upgradation of such, civil work by means of fixing or laying of  all kinds of floor tiles, mosaic tiles, slabs, stones, marbles, glazed tiles, painting, polishing, partitioning, wall panelling  interior decoration, false sealing, carpeting, electrification, air conditioning or any other improvement on an existing structure.";

 (iii)   for sub-section (7C), the following sub-section shall be substituted,namely:-

"(7C) Every awarder shall obtain from the contractor or assessee who is liable to pay tax under sub-section (1) of section 5 including those who opted payment of tax under section 7, a declaration from the contractor or assessee with the details of tax liability at the time of every payment in relation to the works contract including the advance payment:

Provided that the awarder shall obtain quarterly certificate issued by the assessing authority, showing the tax liability or the tax remittance as the case may be, of the contractor upto the previous quarter from the contractor or assessee:

Provided further that the awarder shall be personally liable for any tax escaped frorn collection for the reason of payments effected without obtaining the certificate as stated in the preceding, proviso.";

(8) section 12, shall be re-numbered as sub-section (1) of that section and after sub-section (1) as so re-numbered the following sub-sections shall be inserted, namely:-

"(2) The burden of proving that the dealer has not received fair market price on any transaction shall lie on such dealer.

 3.   The burden of proving the genuineness of the transport of goods using the documents prescribed in section 29, shall lie on such dealer".

         (9) in section 14,-

 (i)   in sub-section (1).—

(a) for clauses (a) to (d), the following, clauses shall be substituted, namely:- 

“(a)	Where the total turnover is less than three lakh ruppes	Five hundred rupees
(b)	Where the total turnover is three lakh rupees and above but is less than ten lakh rupees	Seven hundred and fifty rupees
(c)	where the total turnover is ten lakh rupees and above but less than fifty lakh rupees	One thousand rupees plus  twenty five rupees for each lakh or part thereof above ten lakh
(d)	were the total turnover is fifty lakh rupees and above	Two thousand rupees-plus fifty rupees for each lakh or part thereof above fifty lakh:

           Provided that the total registration fee payable shall in no case exceed twenty thousand rupees.";

(b) in the second proviso, for the words "one thousand rupees" the words "one thousand and five hundred rupees" shall be substituted;

(c) after the second proviso, the following proviso shall be inserted, namely:-

“Provided also that the certificate issued to casual traders shall be valid for a period of three months from the date of issue of the certificate.";

(ii) in sub-section (3), for the words- "one hundred rupees" the words "one hundred and  fifty rupees'' shall be substituted;

(iii) after sub-section (3), the following sub-section shall be inserted, namely:-

               “ (3 A) A dealer conducting exhibitions, exchange melas or any prize schemes for sales promotion, shall obtain a written permission from the assessing authority, in whose  jurisdiction the dealer is registered under the Act, for conducting  the same by remitting a fee of rupees five hundred for each   such scheme and the  assessing authority shall issue a certificate in the manner prescribed and such certificate shall be exhibited at a conspicuous place where exhibitions or exchange rnelas or prize schemes are conducted.

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

              "(5A) A certificate issued under sub-section (2) shall be valid for a period of one year and shall be renewed annually on payment of the fees as specified below;— 

(a)	dealers registered under the Kerala General Sales Tax Act, 1963	Rs. 500 (Rupees five hundred)  per year
(b)	dealers registered under the Kerala General Saks Tax Act, 1963 and the Central Sales Tax Act, 1956	Rs.  1,500 (Rupees  One  thousand and five hundred) per year.

              (5B) Every registered dealer shall be issued an electronic identity card subject to such conditions as may be notified by Government in this behalf.";

              (10) in section 15,—

                    (i)   in sub-section (4), for the words "one hundred rupees" the words "one hundred and fifty rupees" shall be substituted;

                    (ii) in sub-section (6), for the words "one hundred rupees" the words" one hundred and fifty rupees" Shall be substituted;

              (11) in section 17,—

                    (a)in sub-section (8), after the proviso, the following provisos shall , be inserted, namely:—   .

           "Provided further that any modified assessment or modified re-assessment in pursuance of an order of the appellate or  the revisional authority shall be completed within a period of one year from the expiry of the year in which the order was received:

           Provided also that all such modified assessments pending as on 1^st day of April, 2004 shall be completed on or before the 31^st day of March, 2005.”;

                       (b)after sub-section (8), the following sub-section shall be inserted, namely:-

           "(8A) Notwithstanding anything contained in sub-section (8) in case any investigation or enquiry is pending under this Act or any other law, where any assessment cannot be completed within the period specified under the said sub­section, the Commissioner may, for good and sufficient reasons, extend the period of completion of the assessment not exceeding a period of six months from the period specified in that sub-section.";

           (12) in section 19B, in sub-section (1), for the words "prevailing market price" the words "fair market price" shall be substituted;

            (13) in section 23, for sub-section (3A), the following sub-section shall be substituted, namely:-

                  “(3A) Where any dealer has failed to include any turnover or taxable turnover of his business or to pay the tax due thereon on the taxable turnover in any return filed or where any turnover or tax due has escaped assessment, interest under sub-section (3) shall accrue on the tax due on the turnover with effect from such date on which the  tax due would have fallen due for payment, had the dealer included the same in the return relating to the period to which the turnover or tax as the case may be, relates.”;

            (14) after section 23 AA, the following section shall be inserted, namely:—

                  “23B.”Reduction of interest in certain cases.— ( 1) Notwithstanding anything contained in this Act, or in any judgment, decree or order of any Court or Tribunal, an assessee, who is in arrears  to pay tax or any other amount due under this Act upto the period ending on 3.1^st March, 2003 may opt for settling the arrears, by availing  a reduction of interest, by paying the amount as shown below:—

                  (i) outstanding tax amount along with 30 per cent of interest already due on the date of payment, if paid on or before 29^th  February, 2004.                                                                      

                  (ii) outstanding tax amount with 40 per cent of interest already due on the date of payment if paid on or before 31st March, 2004;

         Provided that the reduction in interest granted under this section shall be applicable to cases in which revenue recovery proceedings have already been initiated and where the amount is settled under this section, the assessing authority shall withdraw the revenue recovery proceedings against such assessee;

         Provided further that the assessing authority shall have the power to collect the tax advised for revenue recovery.

            (2) A dealer who opt for payment of the arrears under this section shall make an application to the assessing authority in writing on or before the 15^th February, 2004.

            (3) On receipt of an application under sub-section (2), the assessing authority shall intimate the quantum of tax or other amount due under this Act and the interest payable under sub-section (3) of section 23 as on date of payment after allowing the reduction of interest under sub-section (1).

            (4) Where any second appeal or revision filed by the Government is pending against any order  or proceedings giving rise to any demand and an assessee has opted to avail himself of the benefit under this section in respect of such demand, such appeal or revision may be continued as if the dealer had not opted for the benefit under this section.";

(15)    in section 28A, in sub-section (1), for the words "prevailing market price", the words " fair market price" shall be substituted;

(16)       in section 30E, in sub-section (9), for the words   "rupees five hundred", the words " rupees seven hundred" shall be substituted;

(17)       in section 34, in sub-section (2), for the words  "two hundred rupees", the words " three hundred rupees" shall be substituted;

(18)       in section 36, in sub-section (2), for the words   "two hundred rupees", the words " three hundred rupees" shall be substituted;

(19)       in section 38, in sub-section (2), for the words   "five hundred rupees", the words " seven hundred rupees" shall be substituted;-

(20)       in section 39, in sub-section (3), for the words   "five   hundred rupees", the words " seven hundred rupees" shall be substituted;

(21)    in section 42 A, in clause (a) for the words "one hundred rupees", the words " one hundred and fifty rupees" shall be Substituted;

(22)   in section 45A, in sub-section (5A), for the words   "rupees two hundred" and "rupees five hundred",   the words "rupees three hundred"  and "rupees seven hundred" shall, respectively, be substituted;

23. Amendment of the Schedule,—

 (i)  in the First schedule,—

(a) after serial number 5 in column (1) and the entries against it in
columns  (2)  to   (4),  the  following  serial  number  and  entries  shall, respectively be inserted, namely:—

            (b) against serial number 20, in column (4) for the figure '4' the figure '1' shall be substituted;

(c) after serial number 26 in column (1) and the entries against it in columns (2) to (4), the following serial number and entries shall, respectively be inserted, namely:—-

"27.  Cement including white cement           do.             15";

(d) after serial number 46 in column (1) and the entries against it in columns (2) to (4) the following serial number and entries shall, respectively be inserted, namely:— 

“46A.

Cooked   food  including  beverages,  not falling under entry 60 of the Schedule, sold  to Airline service Companies and Institutions, Shipping Companies, for serving in Aircraft ships or steamers or served in Air craft, ship or steamers

do.

8”

                    (e) against item No. (1) of serial No. 54, for the figure 8 in column (4), the figure ‘12’ shall be substituted;       

                    (f)after serial number 54 in column (1) and the entries against it in columns (2) to (4),  the following serial numbers and entries  shall, respectively be inserted, namely:—

“55.	Electronic systems, instruments, apparatus and appliances other than those specified elsewhere   in  this   schedule   and   spare part and accessories thereof	do.	8”;
56.	Computers of all descriptions	do.	4";

                                                                                                                                          

                    (g) after serial number 61 in column (1) and the entries against it in columns(2) to (4), the following serial number and entries shall, respectively be inserted, namely:—

“62.

Food    including   vegetative   or  animal preparations sold in airtight containers and food colours,essences of all kinds and powers or tablets used for  making food preparations

do.

12";

                    (h)   after serial number 63 in column (1) and the entries against it in columns (2) to   (4),  the   following  serial  number  and  entries  shall, respectively be inserted, namely:—

“64.

Furniture of all kinds  whether  sold as finished goods or in unassembled form

do.

12”;

Explanation.—Slotted angles when assembled form furniture or rack shall be deemed to be furniture for the purpose of this entry";

            (i) after serial number 81 in column (1) and the entries against it in columns (2) to (4), the following serial number and entries shall, respectively, be inserted, namely:—

"82.       Linoleum and flexible flooring material";                                 do.           12";

(j)   after serial number 86 in column (1) and the entries against it in columns (2) to (4), the following serial number and entries shall, respectively be inserted, namely:—

"87.

Medicines   and   drugs     including Allopathic, Ayurvedic, Homoeopathic, Sidha and  Unani preparations  and glucose I.P.

do.

8";

 (k) against serial number 92, the entries in columns (2) to (4) shall be renumbered as item (i), thereof and after the entry as so numbered the following item and entries shall, respectively, be inserted, namely:— 

"(ii)

Fresh   milk   including   pasteurised, tonned or reconstituted milk

At the point of first sale in the State by a dealer who is liable to tax under section 5

2";

 (l) after serial number 92 A in column (1) and the entries against it in columns (2) to (4) the following serial numbers and entries shall, respectively be inserted, namely:—

"'92B.

Mobile phone

At the point of first sale in the State by a dealer who is liable to tax under section 5

4";

    (m) after serial number 96 in column (1) and the entries against it in columns (2) to (4), the following serial number and entries shall, respectively be inserted, namely:— 

"97.

Non-alcoholic drinks, whether or not bottled, canned or packed

do.

25

 Explanation.—Powders, Tablets, Granules and concentrates used for the prepa­ration of non-alcoholic drinks shall, whether or not they are bottled or canned, be liable to tax under this entry";           -

(n)after serial  number 102 in column (1) and the entries against it in columns(2) to (4), the following serial, number and entries shall, respectively be inserted, namely :- 

“103.

Paints, Colours, Laquers, Varnishes, Pigments, Polishes, Indigo, dyes, Enamel, Putty, Baleoil, Turpentine oil, Wood preservation oil (Primers and Thinners

do.

15”

(o) for serial number L08 in column (1) and the entries against it in columns (2) to (4) the following  serial number and entries shall, respectively, be substituted, namely:-

“108. Petroleum products namely:- 

(i)	High speed Diesel Oil	At the point of sale in the State by any oil company liable to tax under section 5 except where the sale is by an oil company to another oil company and at the point of first sale in the State by a dealer who is liable to tax under section 5 when the sale is not by an oil company	40
(ii)	Kerosene	do.	24
(iii)	Motor spirit including Light Diesel Oil (LDO) and excluding petrol, aviation turbine fuel and high speed diesel oil	At the point of sale in the State by any oil company liable to tax under section 5 except where the sale is by an oil company to another oil company and at the point of first sale in the State by a dealer who is liable to tax under section 5 when the sale is not by an oil company	50
(iv)	Naphtha	do.	40
(v)	Petrol other than Naphtha	do.	44
(vi)	Other petroleum products namely	do.	30
	1. Aromex
	2. Base oil
	3. Benzene
	4. Bitumen
	5. Carbon Black Feed Stock
	6. Civol
	7. Cutting oil
	8. Glass cleaner
	9. Heavy Petroleum Stock
	10. Hexane
	11.HHS
	12.Tomax
	13. J.S.P.
	14. Low Sulphur Heavy Stock
	15. Menthol
	16. Methmix
	17. Mineral Turpentine Oil
	18. Mosquito Larvicidal Oil
	19. Polyisobutene
	20. Process Oil
	21. Residual Fuel Oil, and furnace oil
	22. Slop Cut
	23. Solvent 1425
	24. Solvent Oil
	25. Special Boiling Point Spirit
	26. Spray Oil
	27. Toluene
	28. Transformer Oil Feed Stock
	29. Water Menthanol Mix
	30. Wax
	31. White Oil
	32. Any    other    petroleum products not elsewhere mentioned in this Schedule or in the Second Schedule