2003 (9) TMI 721 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Scope and content of section 5A(1)(c) of the Kerala General Sales Tax Act, 1963.
2. Constitutional validity of section 5A(1)(c) of the Kerala General Sales Tax Act, 1963.
3. Applicability of section 5A to voltage stabilisers purchased from tax-exempt dealers and despatched out of state.
4. Validity of invocation of section 19 of the Act.
5. Whether the levy of purchase tax under section 5A is violative of articles 14 and 301 of the Constitution of India.

Detailed Analysis:

1. Scope and Content of Section 5A(1)(c) of the Kerala General Sales Tax Act, 1963:
The primary issue was whether the turnover of voltage stabilisers purchased by the assessee from tax-exempt dealers, such as charitable institutions and S.S.I. units, and despatched out of state, is liable to tax under section 5A of the Act. The court noted that the Tribunal had consistently held that section 5A did not apply to these transactions. However, the State contended that section 5A was applicable because the items were taxable at the first sale point, but the first sellers were exempt from tax due to notifications under section 10. The court referred to the decision in Supreme Boards [1998] 111 STC 305, which upheld the applicability of section 5A in similar circumstances, concluding that section 5A was indeed applicable.

2. Constitutional Validity of Section 5A(1)(c) of the Kerala General Sales Tax Act, 1963:
The petitioner challenged the constitutional validity of section 5A(1)(c), arguing that it violated articles 14 and 301 of the Constitution by creating an invidious distinction between goods despatched out of state and those resold within the state. The court upheld the validity of section 5A, citing previous judgments, including the Supreme Court's decision in Kandaswami's case [1975] 36 STC 191, which approved the constitutionality of similar provisions. The court found no merit in the argument that section 5A was discriminatory or violated the Constitution.

3. Applicability of Section 5A to Voltage Stabilisers Purchased from Tax-Exempt Dealers and Despatched Out of State:
The court examined whether the despatch of voltage stabilisers to other states by way of stock transfer or consignment sales attracted tax under section 5A. The court noted that the division Bench in Supreme Boards' case had already addressed this issue, holding that section 5A applied to such transactions. The court found that the Tribunal's decisions exempting these transactions from tax were incorrect and set them aside, upholding the assessing authority's orders.

4. Validity of Invocation of Section 19 of the Act:
The court briefly mentioned that the validity of invoking section 19 was also questioned in one of the cases. However, since the main issue regarding the applicability of section 5A was resolved, the court did not delve deeply into this issue, implying that the decision on section 5A would cover this aspect as well.

5. Whether the Levy of Purchase Tax under Section 5A is Violative of Articles 14 and 301 of the Constitution of India:
The petitioner argued that section 5A's levy of purchase tax on goods despatched out of state was arbitrary and discriminatory, violating articles 14 and 301. The court rejected this argument, reiterating that the Supreme Court had upheld the validity of section 5A in Kandaswami's case. The court emphasized that judicial discipline required following the Supreme Court's binding decision, even if some contentions were not explicitly addressed.

Conclusion:
The court allowed the revisions filed by the State, setting aside the Tribunal's orders and upholding the assessing authority's levy of tax under section 5A on the disputed turnover. The court also dismissed the writ petition challenging the constitutional validity of section 5A, affirming that the provision was intra vires and did not violate articles 14 and 301 of the Constitution. The court issued a certificate for appeal to the Supreme Court, acknowledging that the case involved substantial questions of law of general importance.