1996 (3) TMI 515 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of entries 94 and 95 in the First Schedule of the Kerala General Sales Tax Act, 1963 for levy of sales tax.

Analysis:
The case involved two assessment years, 1985-86 and 1986-87, where the question was which entry, 94 or 95 in the First Schedule, would govern the levy of sales tax under the Kerala General Sales Tax Act, 1963. Entry 94 pertained to splints and veneers taxed at 4%, while entry 95 covered plywood, veneer plywood, and hardboard taxed at 10%.

The petitioner-assessee, trading as "Southern Veneers and Wood Works Ltd.," had turnover for the years in question. The assessing authority considered the veneer manufactured by the dealer as veneer plywood, falling under entry 95, and levied tax accordingly.

The first appellate authority and the Kerala Sales Tax Appellate Tribunal upheld the decision, stating that the veneer manufactured was veneer plywood taxable at 10% under entry 95. However, the Tribunal's interpretation was based on the use of the term "veneer" rather than the specific items listed under each entry.

The High Court noted that entry 94 referred to veneers separately from those specified in entry 95, which included plywood and its varieties. The Court emphasized that the taxable article should be determined based on the entry and not its use, as clarified by the Finance Act, 1987.

The Court highlighted the distinction made by the Finance Act between splints and veneers for matches (entry 180) and plywood, veneer plywood, and hardboards (entry 6), showing the legislative intent to avoid confusion between different categories. Ultimately, the Court held that the article sold was veneer, governed by entry 94 and subject to 4% tax for the assessment years in question.

As a result, the Court allowed the petitions, quashed all previous orders, and directed the assessing authority to proceed with the levy of sales tax based on entry 94 for the petitioner.