2001 (10) TMI 1126 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Applicability of the decision in Padinjarekkara Agencies Ltd. v. Assistant Commissioner.
2. Taxability of centrifuged latex versus raw rubber latex.
3. Interpretation of entry 161 of the First Schedule to the Kerala General Sales Tax Act.
4. Consideration of the Supreme Court decisions in Telangana Steel Industries and State of Tamil Nadu v. Pyare Lal Malhotra.
5. Impact of a circular issued by the Board of Revenue on the taxability of centrifuged latex.

Issue-wise Detailed Analysis:

1. Applicability of the decision in Padinjarekkara Agencies Ltd. v. Assistant Commissioner:
The assessing authority relied on the decision in Padinjarekkara Agencies Ltd. v. Assistant Commissioner to add Rs. 2,67,35,431 to the total turnover of the assessee. The assessee contended that this decision was not applicable, but the assessing authority overruled this contention.

2. Taxability of centrifuged latex versus raw rubber latex:
The Deputy Commissioner (Appeals) concluded that both raw rubber latex and centrifuged latex fell under sub-clause (a) of entry 161 of the First Schedule and were taxable at the point of last purchase within the State. The Deputy Commissioner directed the deletion of the sale value of centrifuged latex from the total turnover but maintained that the assessee was liable to pay tax on the purchase turnover of raw rubber latex. The Appellate Tribunal upheld this view, stating that centrifuged latex is a commercially different product from raw rubber latex.

3. Interpretation of entry 161 of the First Schedule to the Kerala General Sales Tax Act:
The main contention was whether raw rubber latex and centrifuged latex could be taxed separately under entry 161. The court referred to the Supreme Court's decision in Telangana Steel Industries, which clarified that different commercial commodities listed under a single entry could be taxed separately. The court held that raw rubber latex and centrifuged latex are different commodities and thus can be taxed separately.

4. Consideration of the Supreme Court decisions in Telangana Steel Industries and State of Tamil Nadu v. Pyare Lal Malhotra:
The court cited the Supreme Court's decision in State of Tamil Nadu v. Pyare Lal Malhotra, which supported the view that each item in a list of specified items is considered a separately taxable commodity. The court agreed with the Tribunal's view that centrifuged latex is a different commercial product from raw rubber latex, supported by the Supreme Court's rulings.

5. Impact of a circular issued by the Board of Revenue on the taxability of centrifuged latex:
The assessee relied on a circular issued by the Board of Revenue, which clarified tax exemptions under certain conditions. However, the court held that the circular could not override the statutory provisions of the Act. The court emphasized that the Board of Revenue could not exempt a commodity from tax through a circular; such power is vested with the Government under section 10 of the Act.

Conclusion:
The court found no error in the decision of the Appellate Tribunal and confirmed that the assessee was liable for tax on the purchase turnover of raw rubber latex. The revision petition was dismissed, and the decision of the Tribunal was upheld, emphasizing the distinction between raw rubber latex and centrifuged latex as separate taxable commodities.