1994 (11) TMI 387 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Jurisdiction of the Deputy Commissioner under Section 35(2A) of the Kerala General Sales Tax Act, 1963.
2. Taxability of rubber cess.
3. Applicable tax rate on jute hessian for the assessment year 1982-83.

Detailed Analysis:

1. Jurisdiction of the Deputy Commissioner under Section 35(2A):
The primary issue was whether the Deputy Commissioner had the jurisdiction to revise the assessment order under Section 35(2A) of the Kerala General Sales Tax Act, 1963, while an appeal was pending before the Appellate Assistant Commissioner. The Tribunal held that the revisional order violated sub-section (2)(b) of Section 35, as the appeal was pending. However, the Court clarified that sub-section (2A) operates "notwithstanding anything contained in sub-section (2)" and allows the Deputy Commissioner to pass an order on any point not decided in an appeal or revision. The Court emphasized that sub-section (2A) is intended to prevent the escape of tax and can be exercised even during the pendency of an appeal if the point in question is not likely to be decided by the appellate authority.

2. Taxability of Rubber Cess:
On the merits of the case, the Tribunal held that no tax is payable on the element of rubber cess in the purchase of rubber, referencing the decision of the Full Bench in *Madras Rubber Factory Limited v. State of Kerala [1989] 74 STC 56*. The Court agreed with this view, affirming that the Tribunal's decision on this point does not require any interference.

3. Applicable Tax Rate on Jute Hessian for the Assessment Year 1982-83:
The Tribunal based its decision on the applicable tax rate for jute hessian on a clarification issued by the Government under Section 59A, which stated that the tax rate was 4 percent. However, the Court noted that Section 59A was declared unconstitutional in *Travancore Chemical & Manufacturing Company Ltd. v. State of Kerala [1991] 81 STC 313; [1991] 1 KLT 196*. Consequently, any clarification issued under this section is null and void. Therefore, the Court remitted the matter back to the Tribunal for reconsideration of the proper tax rate on the merits, without relying on the invalidated clarification.

Conclusion:
The Court allowed the tax revision case, remitting the issue of the applicable tax rate on jute hessian back to the Sales Tax Appellate Tribunal for reconsideration. The Tribunal's decision on the non-taxability of rubber cess was upheld. The Court clarified the jurisdiction of the Deputy Commissioner under Section 35(2A), allowing the exercise of revisional power even during the pendency of an appeal, provided the point in question is not likely to be decided by the appellate authority. The petition was allowed with no order as to costs.