DEPUTY COMMISSIONER OF SALES TAX LAW BOARD OF REVENUE TAXES Vs. C T KOCHOUSEPH
LAWS(KER)-2003-9-39
HIGH COURT OF KERALA
Decided on September 04,2003

DEPUTY COMMISSIONER OF SALES TAX LAW BOARD OF REVENUE TAXES Appellant
VERSUS
C T KOCHOUSEPH Respondents

JUDGEMENT

G. SIVARAJAN, J. - (1.) THE scope and content of section 5a (1) (c) of the Kerala General Sales Tax Act, 1963 (hereinafter REFERRED TO as "the Act") arise for consideration in these cases. Petitioner also incidentally challenges the constitutional validity of the said section. T. R. C. Nos. 20, 24 and 26 of 1996 and T. R. C. No. 338 of 2000 are filed by the Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam, under section 41 of the Kerala General Sales Tax Act, 1963 (for short "the Act") against the orders of the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam. THE appeals which are the subject-matter of T. R. C. Nos. 20, 24 and 26 of 1996 were disposed of by the Tribunal by a common order dated May 30, 1995 and the appeal which is the subject-matter of T. R. C. No. 338 of 2000 was disposed of by order dated June 19, 1999 in T. A. No. 1281 of 1998. O. P. No. 25135 of 2000 is filed by the respondent-assessee challenging the provisions of section 5a (1) (c) of the Act. This writ petition even according to the petitioner is filed by way of an alternate plea in case the petitioner's contention regarding the scope of section 5a (1) (c) is not accepted in the tax revision cases.
(2.) WE will first consider the statutory revisions. As suggested by the petitioner in the O. P. , only if the assessee's case is not accepted in the revisions the question of challenge to the provisions of section 5a (1) (c) of the Act is to be considered. Four tax revision cases are filed by the State. The assessee is the respondent. T. R. C. Nos. 20 and 24 of 1996 relate to the assessment year 1990-91; T. R. C. No. 26 of 1996 relates to the assessment year 1989-90 and T. R. C. No. 338 of 2000 relates to the assessment year 1992-93. Thus the assessment years are 1989-90, 1990-91 and 1992-93. Since a common question as to whether the turnover of voltage stabilisers purchased by the assessee from registered dealers, who are S. S. I. units exempted from payment of sales tax by notification issued under section 10 of the Act, are liable to tax under section 5a of the Act when they despatch the goods outside State either by way of stock transfer or for consignment sales. Since this is the common question involved in all the revisions they are disposed of by this common judgment. Of course in T. R. C. No. 338 of 2000 one more question regarding the validity of the invocation of section 19 of the Act is involved. This will also depend on the decision on the main issue. The respondent-assessee is a dealer in voltage stabilisers. He purchased voltage stabilisers from charitable institutions and S. S. I. units exempted from payment of sales tax under notifications issued under section 10 of the Act. The assessee sold substantial portion of such purchases locally. The assessee had also despatched a portion of such purchases to outside State as stock transfer to branches supported by valid F form declarations and other evidences. In the assessment under the Act for all these years the assessee claimed exemption in respect of the entire turnover. It is stated that final assessment for the year 1987-88 was completed excluding the turnover of stock transfer from the taxable turnover. The Deputy Commissioner cancelled the said assessment order by invoking section 35 of the Act and remanded the assessment to the assessing authority directing levy of purchase tax on goods despatched out of State. In appeal filed by the assessee the Appellate Tribunal set aside the order of the Deputy Commissioner by order dated March 28, 1994. The assessment has thus become final. For the assessment year 1988-89 the assessment was completed as per order dated February 22, 1992 without resorting to levy of purchase tax under section 5a. The assessment was however reopened under section 19 of the Act and assessed the turnover of goods purchased from tax exempted dealers and despatched out of State. In appeal filed by the assessee the Deputy Commissioner (Appeals), Ernakulam, allowed the appeal and deleted the turnover assessed under section 5a holding that section 5a has no application to the case. It is stated that the assessment for the year 1988-89 is now pending before the Tribunal. Similarly the assessment for the year 1989-90 was completed assessing the turnover of goods purchased from tax exempted dealers and despatched out of State for sale in neighbouring States to purchase tax under section 5a. This was confirmed in appeal by the first appellate authority. However, the Sales Tax Appellate Tribunal by order dated May 30, 1995 set aside the orders of the two authorities on the levy of purchase tax under section 5a. This is the subject-matter of T. R. C. No. 26 of 1996.
(3.) FOR the assessment year 1990-91, the assessing authority included the goods purchased from tax exempted dealers and despatched out of State for sale in neighbouring States in the taxable turnover and assessed to tax under section 5a. In first appeal filed by the assessee the first appellate authority directed deletion of the said turnover holding that section 5a has no application. The appeal filed by the State against the said order was dismissed by the Appellate Tribunal. T. R. C. Nos. 20 and 24 of 1996 arise from the said order. FOR the assessment year 1991-92 the assessing authority included the goods purchased from tax exempted dealers and despatched out of the State in the taxable turnover and assessed the said turnover under section 5a. This was cancelled by the first appellate authority. However, the appeal filed by the State against the said order is pending before the Tribunal. FOR the assessment year 1992-93 the assessing authority completed the assessment without resorting to levy of purchase tax under section 5a on goods purchased from tax exempted dealers and despatched out of the State for sale in the neighbouring States. However, this was set aside by the Deputy Commissioner, Ernakulam, in suo motu revision under section 35 and directed the assessing authority to levy purchase tax under section 5a on the said turnover. In appeal filed by the assessee the Tribunal set aside the order of the Deputy Commissioner. T. R. C. No. 338 of 2000 arises out of the said order. It so happened that pursuant to the order of the Deputy Commissioner, the assessing authority passed revised assessment orders subjecting the said turnover to tax under section 5a. In appeal filed by the assessee the Deputy Commissioner (Appeals), Ernakulam, cancelled the said order based on the decision of the Tribunal. The appeal filed by the department against the said order is pending before the Tribunal. The assessment for the year 1993-94 was also completed subjecting the goods purchased from tax exempted dealers and despatched to outside State for sale to tax under section 5a. The appeal filed by the assessee against the said order was dismissed. The assessee's appeal against the said order is pending before the Tribunal. The assessment for the year 1994-95 was completed subjecting the turnover of goods purchased from tax exempted dealers and despatched out of the State to tax under section 5a. The appeal filed by the assessee against the said order was dismissed. The second appeal filed before the Tribunal is now pending. Thus for the three years in question the issue that arises for consideration is as to whether voltage stabilisers purchased by the assessee from charitable institutions and S. S. I. units which are exempted from payment of sales tax by notification issued under section 10 of the Act and despatched out of the State either by way of stock transfer or for consignment sales is liable to be assessed under section 5a of the Act. For all the three years the Tribunal has held that the provisions of section 5a of the Act had no application to the present case. However, the department contends that voltage stabilisers during the assessment years 1987-88 to 1991-1992 fell within entry 68 of the First Schedule to the Act taxable at 15 per cent and that by virtue of Notifications S. R. O. No. 1171 of 1987 and S. R. O. No. 748 of 1989 the tax was reduced to 4 per cent. For the assessment years 1992-93 and 1993-94 the said item fell under entry 49 of the First Schedule to the Act liable to tax at the rate of 20 per cent and by virtue of S. R. O. No. 371 of 1992 the tax was reduced to 5 per cent. However, the Notification S. R. O. No. 371 of 1992 was superceded by S. R. O. No. 1728 of 1993 with effect from January 1, 1994 but the tax rate continued at 5 per cent. During the assessment year 1994-95 voltage stabilisers were included as item 5 in the Sixth Schedule taxable at all points (VAT) at 6 per cent. There is no dispute with regard to the point of levy or regarding the rate of tax as such in these revisions. The dispute, as already noted, is regarding the liability to tax under section 5a. There is no dispute that the item voltage stabilisers at all the relevant times was a single point commodity taxable at the point of first sale in the State by a dealer liable to tax under section 5 and by virtue of the notification voltage stabilisers are liable to tax only at the rate of 4 per cent up to March 31, 1992 and thereafter at 5 per cent. The case of the petitioner is that voltage stabiliser is an item liable to tax only at the point of first sale in the State and that since the first sale is effected by charitable institutions/small-scale industrial units, who were exempted from payment of sales tax by virtue of the exemption notification issued under section 10 of the Act the subsequent sale of voltage stabilisers cannot be subjected to tax under the Act. It is also the case of the assessee that the local sales of voltage stabilisers so purchased by the assessee were not subjected to tax at the hands of the assessee during any of these years. It is also their case that the goods so purchased cannot be subjected to tax under section 5a of the Act for the simple reason that they have despatched the same to outside State by way of stock transfer or for consignment sales.;


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