THADIKKADAVU SERVICE CO-OPERATIVE BANK LIMITED Vs. STATE OF KERALA
HIGH COURT OF KERALA
Thadikkadavu Service Co -Operative Bank Limited
STATE OF KERALA
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(1.) The matter arises under the Kerala General Sales Tax Act, 1963, for short, "the Act". The assessee is the revision petitioner in both these cases. State is the respondent. The assessment years concerned are 1990-91 and 1991-92 respectively. The assessee is Co-operative Bank mainly engaged in the business in chemicals, manure, agricultural implements, etc., for the welfare of its members and agriculturists. During the assessment years in question, the assessee was also acting as procuring agent of rubber and raw cashew nuts on behalf of CAPEX (Cashew Workers Apex Industrial Co-operative Society Limited) and CCR and AR (Cannanore District Co-operative Rubber and Agricultural Marketing Society Limited). During the said two assessment years, the assessee had procured rubber and raw cashew nuts by raising purchase bills of the CAPEX and CCR and AR. The assessee had entered the said transactions in its books and had also included the same in the returns filed for the said two years. However, in the assessment, the assessee had claimed that the said turnover is not liable to be included in the total turnover of the assessee for the purpose of levy of turnover tax under Section 5(2A) of the Act. If the said turnover is excluded the petitioner's turnover will be less than Rs. 50 lakhs in which case petitioner will not be liable to turnover tax. The assessing authority however included the turnover of the agency transaction in the total turnover for the purpose of levy of turnover tax. Though the assessee had filed appeals before the Appellate Assistant Commissioner (Commercial Taxes), Kannur and before the Tribunal, they were without success.
(2.) We have heard the learned counsel for the assessee and the learned Government Pleader appearing for the respondent. The only question that arises for consideration is whether the turnover of rubber and raw cashew nuts procured by the assessee for and on behalf of CAPEX and CCR and AR under the Monopoly Procurement Programmer of the State Government forms part of the turnover of the assessee and consequently part of the total turnover for the purpose of levy of turnover tax under Section 5(2A) of the Act. According to the assessee, since it had procured rubber and raw cashew nuts on behalf of CAPEX and CCR and AR by issuing the purchase bills of the said two concerns, the purchase turnover of rubber and raw cashew nut does not form part of the turnover the assessee. It is also their case that the CAPEX and CCR and AR had included the said turnover in their assessment and had paid turnover tax on the said transactions. On the other hand, the contention of the State is that even a procurement agent is a dealer as defined under Section 2(viii) of the Act and the agency transaction forms part of the turnover as defined under Section 2(xxvii) and consequently forms part of the total turnover under Section 2(xxvi). It is also the contention of the department that the assessee in its books had treated the transaction as part of their turnover and had also included the turnover covered by those transactions in the returns filed by them and further the assessee had obtained form 25 declarations from CAPEX and CCR and AR for getting the benefit of exemption from the levy of turnover tax. The Government pleader had also relied on the decisions of the Supreme Court in State of Madras v. Cement Allocation and Co-ordinating Organisation (1971) 2 SCC 587 Cardamom Planters Association v. Deputy Commissioner of Sales Tax  75 STC 118 and State of West Bengal v. O.P. Lodha  105 STC 561 and submitted that even the procurement agent is a dealer and that the agency transactions of the petitioner will form part of the total turnover for the purpose of levy of turnover tax.
(3.) We find that a Division Bench of this Court in the judgment dated September 17, 2001 in T.R.C. 401 of 2001 (Reported as Brothers Trading Company v. State of Kerala  138 STC 351) considered the question whether commission agents are liable to pay turnover tax. The Division Bench after due consideration of the definitions of "dealer", "total taxable turnover", "total turnover" and "turnover" in Section 2(viii), (xxv), (xxvi) and (xxvii) as also the provisions of Rules 8 and 9 of the KGST Rules, 1963 and the decisions of the Supreme Court State of Madras v. Cement Allocation and Co-ordinating-Organisation (supra) Cardamom Planters Association v. Deputy Commissioner of Sales Tax  75 STC 118 and State of West Bengal v. O.P. Lodha  105 STC 561 held that commission agents are liable to be assessed for turnover tax. The Division Bench has also relied on another decision of this Court in Kerala Produce and Export Company, Kozhikode v. State of Kerala  111 STC 357 ; (1997) 5 KTR 221 and observed that the principles laid down in the said decision does not in any way differ from the reasoning and conclusion which they have taken.;
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