1991 (12) TMI 256 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the exemption granted by S.R.O. 504/89.
2. Legality of the penalties imposed under section 45A of the Kerala General Sales Tax Act.
3. Constitutionality of exhibit P1 notification under articles 301 and 304(a) of the Constitution.

Issue-wise Detailed Analysis:

1. Validity of the exemption granted by S.R.O. 504/89:
The petitioners argued that the blanket exemption from sales tax on the sale of poultry feed and cattle-feed granted by S.R.O. 504/89 was not validly revoked or varied by another notification under section 10 of the Kerala General Sales Tax Act. They contended that the exemption continued to be in force, and therefore, they were not liable to collect sales tax on these goods. The court, however, noted that S.R.O. 131/90, issued on 2nd February 1990, specifically amended S.R.O. 504/89 by omitting poultry feed and cattle-feed from the list of exempted items. Consequently, the exemption granted by S.R.O. 504/89 ceased to have any effect from 2nd February 1990. Therefore, the petitioners were not entitled to claim the benefit of S.R.O. 504/89, and the sale of poultry feed and cattle-feed was exigible to tax. The court overruled the first contention raised by the petitioners.

2. Legality of the penalties imposed under section 45A of the Kerala General Sales Tax Act:
The petitioners did not include the turnover on the sale of poultry feed and cattle-feed in their returns for the accounting year 1990-91, arguing that they were not liable for penalties under section 45A of the Act. The court found that since S.R.O. 504/89 was effectively revoked by S.R.O. 131/90, the petitioners were required to include the turnover in their returns. The failure to do so subjected them to proceedings under section 45A of the Act. The court held that there was no reason to interfere with the steps taken by the authorities under section 45A, and thus, the petitioners' claim for relief from penalties was dismissed.

3. Constitutionality of exhibit P1 notification under articles 301 and 304(a) of the Constitution:
The petitioners contended that exhibit P1 notification, which conferred benefits to the Kerala Livestock Development Board Limited and milk producers' co-operative societies, was violative of articles 301 and 304(a) of the Constitution. They argued that this created an unfair advantage for the Board and the societies, making it difficult for them to compete. The court examined the notification in light of the principles stated by the Supreme Court in Atiabari Tea Co. Ltd. v. State of Assam and Video Electronics Pvt. Ltd. v. State of Punjab. The court concluded that the exemption granted to the Board and the co-operative society was valid and justified in public interest. The court noted that the Board, an organ of the State, was given certain benefits to promote public interest, and the co-operative societies were supported to aid the milk trade and control milk prices. The court held that these concessions did not violate the constitutional mandates and upheld the validity of exhibit P1 notification.

Conclusion:
The court dismissed the original petitions, concluding that the petitioners were not entitled to any of the reliefs sought. The exemptions granted by S.R.O. 504/89 were validly revoked, and the penalties imposed under section 45A of the Act were lawful. The concessions provided in exhibit P1 notification were found to be constitutionally valid and in public interest. The petitions were dismissed with no costs.

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