- (1.) The question relates to the concessional rate of tax payable by a dealer in respect of sale of industrial raw materials under Section 5(3) of the Kerala General Sales Tax Act (for short the Act) for the period from 1.1.2000. The answer to the said question is contained in Section 5(3) itself. However the difficulty has arisen only because of the successive amendments that are being made in the form of Taxation Laws (Amendments) Ordinances, General Sales Tax (Amendment) Act, Finance Acts, etc. The result is that those engaged in the administration of sales tax laws are not sure about the rate of tax payable at a particular point of time. This is what happened in this case also.
(2.) Under Section 5(3) of the Act as it stood prior to 1.1.2000 the tax payable by a dealer in respect of any sale of industrial raw materials, component parts, containers or packing materials which are liable to tax at a rate higher than two and a half percent but not higher than 4% when sold to industrial units for use in the production of finished products inside the State for sale shall be at the rate of only two and a half per cent and where the tax liability exceeded four per cent then only at the rate of three per cent.
(3.) Clause (i) of sub-section (3) of Section 5 of the Act was amended by the Kerala Taxation Laws (Amendment) Ordinance, 1999 (Ordinance No.7 of 1999) with effect from 1.1.2000. Clause (i) of sub section 5(3) except the proviso reads as follows: (i) Notwithstanding anything contained in sub-section (1), the tax payable by a dealer in respect of any sale of industrial raw materials, component parts, containers or packing materials which are liable to tax at a rate higher than four per cent when sold to any industrial unit for use in the production of finished products inside the State for sale or for packing of such finished products inside the State for sale, as the case may be, shall be at the rate of four per cent on the taxable turnover relating to such industrial raw materials, component parts, containers, or packing materials as the case may be. By the said amendment the concessional rate was made available only in cases where the tax payable by a dealer in respect of any sale of industrial raw materials, etc. which are liable to tax a rate higher than 4% when sold to industrial units and the concessional rate was 4%. This was the rate for the period from 1.1.2000. However by the Kerala General Sales Tax (Amendment) Act, 2000 (Act 8 of 2000) clause (i) of sub-section (3) of Section 5 except the proviso was substituted with retrospective effect from 1.1.2000 as follows: (i) Notwithstanding anything contained in sub-section (1), the tax payable by a dealer in respect of any sale of industrial raw materials, component parts, containers or packing materials which are liable to tax at a rate higher than three per cent when sold to any industrial unit for use in the production of finished products inside the State for sale or for packing of such finished products inside the State of sale, as the case may be, shall be at the rate of three percent on the taxable turnover relating to such industrial raw materials, component parts, containers, or packing materials as the case may be. By virtue of the above amendment the concessional rate of tax under Section 5(3) of the Act from 1.1.2000 is only at the rate of 3%.;