Deepa Panels vs State Of Kerala

3. The appellant herein is an assessee manufacturing

chemically treated rubberwood products. The assessee filed

its annual returns claiming exemption from payment of

purchase tax. In that context, the issue that arose for

consideration is whether the assessee is entitled for

exemption from payment of purchase tax.

4. The contention of the appellant was that the appellant

is eligible for exemption from payment of tax in respect of

purchase of rubberwood from unregistered dealers. For the

assessment year 1998-99, 1996-97, the assessing authority

completed the assessments and granted exemption even from

payment of purchase tax. However, after the aforesaid

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assessment orders were passed, action was taken for re-

opening of the assessment for the aforesaid assessment years

in question and a notice to that effect was issued to the

assessee who in receipt of the aforesaid notice filed its

reply contending, interalia, that in view of the exemption

certificate granted by the General Manager, District

Industries Centre, the assessee is entitled for exemption

from payment of purchase tax. The assessing authority

considered the records including the objections taken by the

assessee and thereafter it held and passed an order of

assessment that the assessee is not entitled from exemption

of levy of purchase tax under Section 5A of the Karnataka

General Sales Tax Act [for short "KGST Act"].

5. Aggrieved by the orders of the assessment passed for

the assessment year 2001-2002 and orders of re-assessment

passed by the assessing authority for the assessment years

1998-99 and 1996-97, the assessee filed appeals before the

Kerala Sales Tax Appellate Tribunal, Addl. Bench, Palakkad.

The Tribunal by its orders dated 10.08.2004 and 06.08.2007

rejected the appeals filed by the appellant against the

order of re-assessment for the years 1996-97 and 1998-99 and

also the order of assessment for the year 2001-2002.

6. Aggrieved by the aforesaid orders passed by the

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Tribunal, revision petition was filed before the Kerala High

Court which was registered as Sales Tax Revision No. 6 of

2008. The High Court, after hearing the counsel appearing

for the parties held that the article manufactured by the

assessee is not covered by the Notification SRO No. 1729 of

1993 and, therefore, the issue that arises for consideration

according to the High Court was covered by the decision of

this Court in the case of State of Kerala Vs. Vattukalam

Chemicals Industries 2001(6) SCC 764. In that view of the

matter, it was held that the assessee was not entitled for

exemption from payment of purchase tax. The High Court

further held that the assessee at best could be entitled for

exemption only on the goods manufactured and sold and no

exemption could be granted from payment of purchase tax.

The aforesaid findings which are recorded by the High Court

are under challenge in these appeals in which we have heard

learned counsel appearing for the parties.

7. Having considered the submission of the learned counsel

appearing for the parties and also the decisions referred

to, we are of the view that the facts of the case in hand

are similar to the one which was decided by this Court in

the case of State of Kerala Vs. Vattukalam Chemicals

Industries(supra). Learned counsel appearing for the

appellant, however, relied upon two decisions of this Court

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being Pondicherry State Cooperative Consumer Federation Ltd.

Vs. Union of Pondicherry 2008(1) SCC 206 and Vadilal

Chemicals Ltd. Vs. State of A.P. and others 2005(6) SCC 292.

8. Having considered the ratio laid down by the aforesaid

decisions in the light of the Notifications relevant for the

purpose of deciding this case and referred to by the learned

counsel appearing for the parties, we are of the opinion

that the two decisions which are relied upon by the learned

counsel appearing for the appellant are distinguishable on

facts. In the aforesaid two decisions relied upon, the

exemption certificates which were issued by the District

Industries Department consisting of experts on the subject

were sought to be interpreted by the assessing authority and

thereby arriving at the conclusion for denial of the benefit

of exemption to the assessee therein.

9. This Court also noted that there is a turn around by

the State by taking two contradictory stands at two

different points of time, which according to this Court,

should not have been done, and in that view of the matter,

the aforesaid two decisions were rendered. In our

considered opinion, the ratio of the aforesaid two decisions

are distinguishable on facts but so far as the decision of

this Court in Vattukalam Chemicals Industries(supra) is

concerned, the facts are almost similar. In that Judgment,

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this Court has clearly held that the assessee therein is not

entitled for exemption from payment of purchase tax as the

article manufactured is not included in the Notification,

namely, SRO No. 499/1990. Learned counsel appearing for the

appellant, however, sought to submit that SRO No. 499/1990

which was considered in the aforesaid case i.e. Vattukalam

Chemicals Industries case(supra)was superseded by a

subsequent Notification SRO No. 1729 of 1993.

10. We have perused and considered the said Notification

very carefully but in the said Notification also, we find

that no exemption was granted to the article manufactured by

the appellant as well. The ratio of the decision in the

case of Vattukalam Chemicals Industries (supra) was laid

down in the context of the Notification SRO No. 499/1990. There is no change in the ground situation in the subsequent

Notification also and, therefore, we see no reason as to why

the ratio of the decision in Vattukalam Chemicals Industries

(supra) would not be applicable to the facts and

circumstances of the present case.

11. We are also of the opinion that the assessee could be

said to be entitled for exemption only on goods manufactured

and sold but it cannot claim any exemption from payment of

purchase tax.

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12. Having held thus, we find no merit in these appeals

which are accordingly dismissed. No costs.

.......................J. (DR. MUKUNDAKAM SHARMA)

.......................J. (ANIL R. DAVE)

NEW DELHI JULY 12, 2011.

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