2001 (3) TMI 1006 - HC - VAT and Sales Tax

Summary

Issues:
Tax liability on the sale of note books made from paper products under the Kerala General Sales Tax Act, 1963.

Analysis:
The case involved four tax revision cases challenging the Sales Tax Appellate Tribunal's order regarding the tax liability on the sale of note books made from paper products. The Tribunal held that paper, paper products, note books, and books are liable to sales tax at the rate of 8 per cent under entry 136 of the First Schedule to the Kerala General Sales Tax Act. The petitioner contended that the sale of note books should not attract tax liability as it was not the first sale. The Tribunal's decision was based on a Supreme Court judgment related to the production of note books using tax-exempt paper under the Orissa Sales Tax Act.

The High Court referred to a Supreme Court judgment in Rameswarlal Murlidhar v. State of Orissa, which discussed the conversion of paper into exercise books. The Orissa High Court had held that paper undergoes a process of change when converted into specific products like exercise books, ceasing to be paper as such. However, the Supreme Court reversed this decision, emphasizing that there is no change in the nature of paper even when converted into paper products. The Supreme Court's decision in Maharaja Book Depot v. State of Gujarat was also cited, where the term "paper" was interpreted broadly to include products like exercise books.

Based on the above analysis, the High Court set aside the Tribunal's order and directed a fresh consideration of the appeals in accordance with the law. The Court concluded by disposing of the petition accordingly.