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1989 (3) TMI 363 - HC - VAT and Sales Tax
Issues Involved:
1. Whether the cess payable and paid by the manufacturers under the Rubber Act, 1947 and the Rules forms part of their purchase turnover under the Kerala General Sales Tax Act. Summary of Judgment: Issue 1: Whether the cess payable and paid by the manufacturers under the Rubber Act, 1947 and the Rules forms part of their purchase turnover under the Kerala General Sales Tax Act 1. Background and Conflict: - The petitioner argued that there is an apparent conflict between the decision in Deputy Commissioner of Sales Tax v. Bata India Ltd. [1986] 62 STC 436 and the subsequent decision in Madras Rubber Factory v. Rubber Board 1986 KLT 935. - The petitioner also contended that the former decision is inconsistent with the Supreme Court decisions in J.R.G. Mfg. Association v. Union of India AIR 1970 SC 1589 and McDowell & Co. Ltd. v. Commercial Tax Officer [1985] 59 STC 277. 2. Decision in Bata India Ltd. Case: - Held that the rubber cess payable under the Rubber Act, 1947, as amended in 1960, was part of the turnover of the manufacturer of rubber products and was exigible to sales tax under entry 38 of the First Schedule to the Kerala General Sales Tax Act, 1963 at the last purchase point. - Relied on the Supreme Court decision in McDowell & Co. Ltd. v. Commercial Tax Officer [1985] 59 STC 277, which stated that the liability for payment of excise duty was that of the manufacturer. 3. Rule 33-D and Supreme Court Decision in J.R.G. Mfg. Association Case: - Rule 33-D of the Rubber Rules, 1955, considered by the Supreme Court in J.R.G. Mfg. Association v. Union of India AIR 1970 SC 1589, concluded that the liability to pay cess was that of the manufacturer of rubber products who is the purchaser of rubber from the estate owner. - The Supreme Court stated that the demand notice is to be sent only to the manufacturers, and the amounts of duty are to be realized from them alone. 4. Section 12 of the Rubber Act: - Section 12, as amended, says the duty of excise shall be collected by the Board either from the owner of the estate on which the rubber is produced or from the manufacturer by whom such rubber is used. - The rules provide that duty can be collected only from the manufacturer and not from the estate owner. 5. Reconsideration of Bata India Ltd. Decision: - The court found much force in the submission that the decision in Deputy Commissioner of Sales Tax v. Bata India Ltd. [1986] 62 STC 436 requires reconsideration. - There is also force in the submission that the conclusion reached in Bata India Ltd. is inconsistent with the view expressed in Madras Rubber Factory v. Rubber Board 1986 KLT 935. 6. Full Bench Reference: - The case was referred to a Full Bench in terms of section 4 of the Kerala High Court Act due to the apparent conflict. 7. Full Bench Decision: - The Full Bench held that the cess payable and paid by the manufacturers under the Rubber Act and the Rules will not form part of their purchase turnover under the Kerala General Sales Tax Act. - The reasoning and conclusion of the Sales Tax Appellate Tribunal that the payment of cess to the Rubber Board constituted part of the purchase turnover of the revision petitioner was erroneous in law. - The Full Bench set aside the common order of the Appellate Tribunal and allowed the tax revision cases filed by the assessee. 8. Dissenting Opinion: - M. Fathima Beevi, J., dissented, holding that the decision in Deputy Commissioner of Sales Tax v. Bata India Ltd. [1986] 62 STC 436 was correctly decided. - The cess paid by the manufacturer is a duty of excise on production and forms part of the purchase turnover. 9. Final Orders: - The Full Bench set aside the common order of the Kerala Sales Tax Appellate Tribunal, allowed the tax revision cases filed by the assessee, dismissed T.R.C. No. 101 of 1983 filed by the Revenue, set aside the judgment in O.P. No. 5767 of 1986-J, and allowed W.A. No. 681 of 1986. - The court also quashed exhibits P1 to P3 notices and allowed O.P. No. 1344 of 1987. 10. Certificate to Appeal: - The court granted a certificate to appeal to the Supreme Court, acknowledging that the cases involve a substantial question of law of general importance.
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