1999 (7) TMI 658 - HC - VAT and Sales Tax

Summary

Issues:
1. Applicability of tax rate on goods sold under the Kerala General Sales Tax Act, 1963.
2. Entitlement to exemption under S.R.O. No. 1728 of 1993 for sales to Kerala Water Authority.

Analysis:
1. The revision petitioner, an assessee under the Kerala General Sales Tax Act, 1963, contended that the G.I. pipes and fittings sold by them should be taxed at 4% as declared goods under the Second Schedule. However, it was clarified that for the relevant assessment year 1994-95, the specific item in question was not included in the Second Schedule. Therefore, the contention that the tax rate should be 4% for these items was not accepted by the court.

2. The assessee also claimed exemption under S.R.O. No. 1728 of 1993 for sales exclusively to the Kerala Water Authority. However, the court determined that the benefit of reduced tax rates under this order is applicable only for sales to entities listed in the Fifth Schedule, which includes Central and State Government Departments. Since the Kerala Water Authority is not a department of the Government of Kerala, the assessee was not entitled to claim any reduction in the tax rate for sales to them.

3. The court referenced the distinction between a Government department and a Corporation, highlighting that a Government department is fully controlled and financed by the government without its own identity, while a Corporation is autonomous and can hold property, contract, and sue independently. Despite the Kerala Water Authority being incorporated under statute, it was not considered a department of the Government. The court also cited a Karnataka High Court case where similar contentions were rejected regarding sales to Zilla Parishads and Nationalized Banks, emphasizing that statutory bodies with independent corporate identities are distinct from Government departments.

4. Ultimately, the court rejected both contentions raised by the assessee, concluding that they were not entitled to the benefit of reduced tax rates under S.R.O. No. 1728 of 1993 for sales to the Kerala Water Authority. As a result, the tax revision case was dismissed.