KURIAN ARRAHAM PVT LIMITED Vs. ASST COMMISSIONER
HIGH COURT OF KERALA
Kurian Arraham Pvt Limited
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(1.) IS the Circular dated May 28, 1998 issued by the Department of Revenue (Taxes) clarifying that "field latex and centrifuged latex are one and the same commodity"
binding on the Revenue? This is the primary question that arises for consideration in
these petitions under Art.226 of the Constitution. The facts as given in O.P. No.12376
of 2003 may be briefly noticed.
(2.) THE petitioner is a registered dealer under the Kerala General Sales Tax Act, 1963 and the Central Sales Tax Act, 1956. It buys raw rubber including latex. It processes
latex and produces centrifuged latex and crumb rubber. By this process, the water
content of raw latex is reduced.
In the present case, the dispute relates to the levy of purchase and sales tax for the assessment years 1997-98 and 1998-99. The assessments for the year 1997-98 under
the State and the Central Statutes were finalised vide orders dated May 14,2001 and
May 31, 2001 respectively. Copies of these orders are on record as Exts.P10 and P11
respectively. A perusal of the order at Ext. P10 shows that the petitioner had shown a
total turnover of Rs.26,04,47,281/-. It had claimed exemption in respect of the turnover
of Rs.18,57,66,989/-. The taxable turnover shown by the petitioner was
Rs.7,46,80,300/-. On a consideration of the matter, the Assessing Authority had found
that the taxable turnover was Rs.8,15,64,680/-. Similarly, under the Central Sales Tax
Act, the petitioner had shown a total turnover of Rs.13,58,52,997.72. It had claimed
exemption in respect of the total turnover. On a consideration of the matter, the
Assessing Authority had found that tax at the rate of 4% was leviable on a turnover of
Rs.1,93,05,306/-. The petitioner had paid the tax in full.
(3.) ON October 11, 2001 a Division Bench of this Court decided the case of M/s. Supersonic Industrial Complex, Muvattupuzha v. Dy. Commissioner of Sales Tax (Law),
Ernakulam (TRC No.37 of 2001). It was inter alia held that raw rubber latex and
centrifuged latex are different commodities. Consequently, a dealer who purchases raw
rubber latex and produces centrifuged latex is liable to pay tax on the purchase of raw
rubber latex under Entry 110 as the last purchaser of rubber. Still further, it was also
held that the Circular dated May 28, 1998 "cannot have binding force in the place of the
conclusion that is to be arrived at based on an appreciation of rival arguments on the
scheme of the Act ...... The Board of Revenue cannot issue a Circular exempting a
commodity from tax." This decision is reported in ((2002) 10 KTR 203).;
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