1996 (9) TMI 583 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of tax laws for concessional rate on rubber purchase turnover for manufacturing Hawai chappals for assessment year 1988-89.

Analysis:
The High Court of Kerala addressed the issue of whether the assessee, a manufacturer of Hawai chappals, was entitled to a concessional rate of tax on the purchase turnover of rubber used for manufacturing rubber products for the assessment year 1988-89. The assessing authority disallowed the claim based on Government Order G.O. (MS) No. 124/88/TD and S.R.O. No. 968/80, which were found irrelevant to the assessment year in question. The Deputy Commissioner (Appeals) upheld the decision, leading to the Tribunal's consideration of the matter.

The Tribunal focused on determining the applicability of S.R.O. No. 641/81, which provided for a reduced tax rate of 3 per cent on the purchase turnover of rubber used for manufacturing rubber products. It was undisputed that the assessee was a small-scale industrial unit engaged in manufacturing Hawai chappals, and the Tribunal confirmed that the purchase turnover of rubber for chappal production was taxable at the reduced rate as per S.R.O. No. 641/81.

The Court emphasized the specific provisions of S.R.O. No. 641/81, which reduced the tax rate on rubber purchase for manufacturers of finished rubber products within the State. The Court found that the Tribunal's reliance on S.R.O. No. 1516 of 1990 was misplaced, as it was effective only from January 1, 1989, onwards. The Tribunal's unnecessary examination of entry No. 76 of the First Schedule, applicable to all types of footwear, was deemed irrelevant since S.R.O. No. 641/81 addressed the specific situation of rubber purchase for manufacturing rubber products.

Ultimately, the High Court ruled in favor of the assessee, allowing the claim for the concessional rate of tax in accordance with S.R.O. No. 641/81 for the assessment year 1988-89. The Court concluded that there was no justification to deviate from the specific provisions of S.R.O. No. 641/81 and ordered the petition to be allowed.