1999 (1) TMI 508 - HC - VAT and Sales Tax

Summary

Issues:
1. Inclusion of rubber cess in purchase turnover for purchase tax under Kerala General Sales Tax Act.
2. Challenge to notification granting exemption to dealers.
3. Allegation of discrimination between dealers and manufacturers in the notification.

Analysis:
1. The petitioner, engaged in manufacturing tyres and tubes in Tamil Nadu, purchased raw rubber from Kerala. The assessment for the year 1993-94 initially did not consider the rubber cess paid in the taxable turnover. However, following a Supreme Court decision, the assessment was reopened, and the rubber cess was included in the turnover for taxation purposes.

2. The petitioner filed a petition to challenge the assessment order and a notification granting exemption to dealers for goods purchased until a specific date. The petitioner argued against the inclusion of rubber cess in their turnover and questioned the legality of the notification providing exemption to dealers.

3. The Court referred to a previous decision stating that judicial interpretation merely clarifies existing law. It upheld the inclusion of rubber cess in the turnover for purchase tax, citing the Supreme Court's declaratory judgment applicable from the date the relevant provisions came into force.

4. Regarding the alleged discrimination between dealers and manufacturers in the exemption notification, the Court analyzed Section 10 of the Kerala General Sales Tax Act, which empowers the government to grant exemptions. The notification differentiated between dealers and manufacturers/planters, justifying the exemption for traders to prevent undue hardship.

5. The Court found no arbitrariness or discrimination in granting exemption to dealers while taxing manufacturers and planters for rubber cess. The distinction aimed to protect dealers from unexpected liabilities, and the government's reasoning for the exemption was deemed valid. Consequently, the petition challenging the assessment order and notification was dismissed.

In conclusion, the Court upheld the inclusion of rubber cess in the petitioner's turnover for taxation and deemed the exemption granted to dealers as non-discriminatory and justified under the law.