- (1.) These appeals, by special leave, arise from the Judgment of the Division Bench of the Kerala High Court dt. February 20, 1989 in T.R.C. 213-14/87 which relate to the assessment years 1981-82 and 1982-83. The Sales Tax Officer by his order dt. August 16, 1983 assessed sales to sales tax the income derived by the appellant from the sales of the books excluding the income actually utilised for charitable purpose. On appeal, the Assistant Appellate Commissioner by his proceedings dt. April 23, 1985 confirmed that order. However, the Tribunal by its order dt. February 20, 1989, in further appeal brought before it, accepted the case of the appellant and reversed the decisions of the lower authorities and held that the entire income derived during the assessment years went towards utilisation of charitable purpose and, therefore, remitted the matter to the Sales Tax Officer for reconsideration in the light of the decision of the Tribunal, But on revision, as stated earlier, the High Court held that though the burden was on the assessee to establish that the income derived by sales of the books during ther assessment years was utilised during that year for charitable purpose, the assessee did not discharge that burden and that, therefore, the appellant was not entitled to the exemption. Accordingly, it allowed the revision, set aside the order of the Trubunal and confirmed the orders of the lower authorities.
(2.) Shri V. Ramachandran, learned senior counsel for the assessee, contended that the High Court was in error in its conclusion that the appellant has to prove that it had utilised the income derived for charitable purpose, in the respective assessment years themselves. As per the procedure prescribed under the Kerala General Sales Tax Act. Act 15 of 1963 (for short 'the Act') the assessee was required to submit his return at the end of every month and it is not possible to prove that the income derived from the sale of the books had gone in that month towards charitable purpose, when the assessment could not have been completed during the relevant assessment year, utilisation of income may spill over or set apart to the subsequent years. It was, therefore, contended that it was not parcticable to establish that the income derived by the sale of the books was utilised for the charitable purpose during the year of its earning itself. It was also contended that if the income derived had been set apart or utilised for charitable purpose, i.e. stock-in-trade and proved to have been used for that purpose, the assessee would be entitled to the exemption under Section 10 of the Act. Shri Nambiar, learned counsel for the Revenue contended that the appellant admitted before the Assistant Appellate Commissioner that the sale proceeds were utilised for purchase of the books, i.e. stock-in-trade. The appellate authority, according to him, had found that for the relevant assessment years only a fraction of the income had been utilised for charitable purpose, It was, therefore, contended by him that the Sales Tax Officer and the Assistant Appellate Commissioner were right in concluding that the appellant had not utilised the income from sale proceeds of the books for charitable purpose. The High Court was, therefore, Justified in its conclusion that it had not been proved that the appellant had utilised the sale proceeds of the books for the charitable purpose during the relevant assessment years.
(3.) From the respective contentions, two questions would airse for our consideration. Firstly, whether the appellant is required to prove that the income derived from the sale of the books was utilised for charitable purpose and secondly, whether the amount should be utilised during that assessment year alone and the assessese would be entitled to set apart the income for utilisation for charitable purpose before the assessment year is completed The notification issued under 'Section 10 of the Act reads thus: "SRO No. 342/63 - In exercise of the powers conferred by Section 20 of the Kerala General Sales Tax Act, 1963 (15 of 1963) the Government of Kerala, having considered it necessary in the public interest so to do hereby make an exemption in respect of the tax payable under the said Act on the sale or purchase of the goods specified in Schedule-I hereto appended and by persons specified in Schedule-II in regard to their turunover on the sales of goods specified therein subject to the conditions specified therein: ********** 2- Sales by any charitable trust or charitable institution, the profit of which is solely utilised for charitable purposes." ;