1998 (7) TMI 664 - HC - VAT and Sales Tax

Summary

Issues:
Identification of the correct entry under the Kerala General Sales Tax Act for veneer plywood manufacturing to determine eligibility for tax exemption on softwood purchase turnover.

Analysis:
The judgment pertains to a tax revision case concerning the classification of veneer plywood manufactured by the assessee under the Kerala General Sales Tax Act. The primary issue was to ascertain whether the veneer plywood falls under entry 180 of the First Schedule or entry 5 of the Fifth Schedule of the Act. The crux of the matter was the eligibility of the assessee for tax exemption on the purchase turnover of softwood used in manufacturing veneer plywood.

The Court examined a notification (S.R.O. No. 148/72) granting exemption on the purchase tax of softwood for manufacturers of splints and veneers. The notification specified that only manufacturers of splints and veneers were entitled to this exemption. The assessing officer, first appellate authority, and Sales Tax Appellate Tribunal consistently determined that the assessee was engaged in manufacturing veneer plywood falling under entry 5 of the Fifth Schedule, not covered by the exemption notification.

The Court emphasized the strict interpretation of fiscal statutes and the significance of each word used by the Legislature. It highlighted that the notification referred to manufacturers of splints and veneers together, and the assessee, engaged in manufacturing veneer plywood, did not qualify for the exemption as it did not manufacture both splints and veneers. The Court rejected the argument that veneer and veneer plywood were the same commodity, as entry 180 and entry 5 referred to different products.

Referring to a previous case, the Court distinguished the current scenario from the precedent where the assessee was engaged in manufacturing veneers falling under a different entry. The Court concluded that the assessee, involved in manufacturing veneer plywood under entry 5 of the Fifth Schedule, was not entitled to exemption on the purchase turnover of softwood.

In light of the above analysis, the Court dismissed the revision petition, ruling against the assessee's entitlement to tax exemption on the purchase turnover of softwood used in manufacturing veneer plywood falling under entry 5 of the Fifth Schedule of the Kerala General Sales Tax Act.