1974 (3) TMI 100 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of rule 9(i) of the Kerala General Sales Tax Rules, 1963 regarding excise duty deduction.
2. Applicability of exemptions during the financial year.
3. Effect of notification omitting rule 9(i) from 1st January, 1966.
4. Comparison of principles in income-tax law with sales tax assessment.

Analysis:

1. The primary issue in this tax revision case was the interpretation of rule 9(i) of the Kerala General Sales Tax Rules, 1963, specifically regarding the deduction of excise duty paid to the State Government. The question was whether the excise duty paid by the petitioner from 1st January, 1966, to 31st March, 1966, could be deducted in determining the turnover for the year 1965-66.

2. The contention raised by the petitioner's counsel focused on the unit of assessment for sales tax, which is an annual basis starting from 1st April and ending on 31st March of the subsequent year. The argument emphasized that exemptions should apply for the entire financial year and cannot come into effect or cease in the middle of the year, relying on the Supreme Court ruling in Mathra Parshad and Sons v. State of Punjab.

3. The notification issued on 28th December, 1965, omitted clause (i) of rule 9, stating that it would come into effect from 1st January, 1966. The court analyzed the validity of this notification and concluded that it was valid under section 57 of the Kerala General Sales Tax Act, 1963. The judges held that the notification could take effect during the period for which the tax is imposed, rejecting the argument that it would only be operative from 1st April, 1966.

4. The comparison with income-tax law principles was also discussed, emphasizing that the law as of 1st April of a year should be applied for assessments. However, the court clarified that these principles do not directly apply to sales tax assessments under the Kerala General Sales Tax Act, 1963. The deletion of rule 9(i) from 1st January, 1966, was deemed effective from that date, and any excise duty payments made to the State Government from that day could not be exempted.

In conclusion, the court dismissed the petition and upheld the Sales Tax Appellate Tribunal's decision, directing the parties to bear their respective costs.