1993 (7) TMI 326 - HC - VAT and Sales Tax

Summary

Issues:
1. Whether the sale of recorded cassettes is taxable under the Kerala General Sales Tax Act.
2. Whether recorded cassettes are to be assessed as an unclassified item at the general rate of tax.
3. Whether the recorded cassettes retain their identity as cassettes after the recording process.

Analysis:
The High Court of Kerala heard a batch of three cases where the Revenue was the petitioner. The cases involved the sale of recorded cassettes by the assessees, who claimed that the sale of recorded cassettes was a second sale and therefore non-taxable. The Sales Tax Appellate Tribunal had allowed the exemption claimed by the assessees for the year 1987-88 for the period after July 1, 1987. However, for the period up to July 1, 1987, the Tribunal held that recorded cassettes were exigible to tax as an unclassified item. The Revenue challenged this decision through revisions against the Tribunal's order.

In the analysis, the Court noted that recorded cassettes were to be assessed as an unclassified item at the general rate of tax for the years 1986-87 and 1987-88, based on a previous decision. The Court found that the challenge against this decision was not raised in one of the cases related to the assessment year 1986-87, leading to the dismissal of that particular case. However, for the assessment year 1987-88, the Court examined the relevant entry in the First Schedule to the Kerala General Sales Tax Act, which indicated that both empty and recorded cassettes were taxable only at the point of first sale. The Court upheld the Tribunal's conclusion that the sale of recorded cassettes by the assessees was not taxable under the Act.

The Court also criticized the Tribunal for unnecessarily delving into whether the recording process altered the identity of the cassettes, stating that such discussion was unnecessary. The Court left this question open for future consideration in an appropriate case. Ultimately, the Court dismissed the tax revision cases, holding that the Tribunal's order did not disclose any error of law.

In conclusion, the Court upheld the Tribunal's decision that the sale of recorded cassettes by the assessees was not taxable under the Kerala General Sales Tax Act. The Court dismissed the revisions filed by the Revenue, emphasizing that the recorded cassettes retained their identity as cassettes and were not commercially distinct articles.