2003 (1) TMI 678 - HC - VAT and Sales Tax

Issues Involved:
1. Tax exemption on the sale of a lorry under the Kerala General Sales Tax Act, 1963.
2. Classification of lorry as a different commercial commodity from chassis and body.
3. Applicability of the amendment to entry 94 with an explanation added by the Finance Act 8 of 2000.
4. Deduction of tax already paid on chassis and body from the tax payable on the lorry.

Issue-wise Detailed Analysis:

1. Tax exemption on the sale of a lorry under the Kerala General Sales Tax Act, 1963:
The assessee, a dealer in iron and steel, sold a lorry used for transporting iron and steel during the assessment year 1995-96. The assessee claimed exemption on the sales turnover of the lorry, arguing it was a second sale of a single point commodity that had already suffered tax in the State. Initially, the assessing authority granted this exemption but later reopened the assessment under section 19 of the Act, contending that the lorry sold was a motor vehicle, a different commercial commodity from the chassis and body, thus liable to tax under entry 86 of the First Schedule to the Act.

2. Classification of lorry as a different commercial commodity from chassis and body:
The court examined whether the lorry, as a motor vehicle, could be treated as the same commodity as the chassis and body. The court referred to entry 86 of the First Schedule, which lists motor vehicles, chassis of motor vehicles, and motor bodies built on chassis of motor vehicles as separate items. The court cited the Supreme Court's decision in State of Tamil Nadu v. Pyare Lal Malhotra [1976] 37 STC 319, which established that different commercial commodities listed together in an entry are distinct for sales tax purposes. The court concluded that the lorry, a motor vehicle, is commercially different from the chassis and body, making the sale of the lorry a taxable event.

3. Applicability of the amendment to entry 94 with an explanation added by the Finance Act 8 of 2000:
The assessee argued that the amendment to entry 94, effective from January 1, 2000, clarified that once the chassis and body had suffered tax, the motor vehicle made from them should not be taxed again. The court, however, noted that this explanation was not available during the relevant assessment year and was not merely clarificatory but conferred a new benefit. Therefore, the court held that the explanation could not be applied retrospectively to the assessee's case.

4. Deduction of tax already paid on chassis and body from the tax payable on the lorry:
The assessee alternatively requested that the tax already paid on the chassis and materials used for the body be deducted from the tax payable on the lorry. The court, however, found no provision in the law applicable at the relevant time to support this deduction. The court emphasized that the explanation added to entry 94, which allows such a deduction, was not in effect during the assessment year in question and could not be applied retrospectively.

Conclusion:
The court concluded that the authorities and the Tribunal were justified in taxing the sales turnover of the lorry sold by the assessee. The lorry, being a different commercial commodity from the chassis and body, was liable to tax under the Act. The court dismissed the assessee's revision petition, affirming the orders of the Tribunal and the authorities. The court also denied the request to apply the benefit of the explanation to entry 94 retrospectively. The petition was dismissed.

← Previous Next →