2002 (10) TMI 769 - HC - VAT and Sales Tax

Issues Involved:
1. Applicability of Section 5(3)(ii) of the Kerala General Sales Tax Act, 1963.
2. Compliance with Form No. 18 declaration.
3. Impact of tax exemption under Notification S.R.O. No. 1729/93.
4. Interpretation of the first proviso to Section 5(3) of the Act.

Issue-wise Detailed Analysis:

1. Applicability of Section 5(3)(ii) of the Kerala General Sales Tax Act, 1963:
The primary issue revolves around whether the provisions of Section 5(3)(ii) are applicable to the assessee's case. The section stipulates that a dealer who fails to use the goods purchased under Form No. 18 declaration for the declared purpose shall be liable to pay the tax that would have been payable had the declaration not been furnished. The court noted that the conditions precedent for invoking this clause are: (1) the dealer should have purchased goods by furnishing Form No. 18 declaration, and (2) the dealer fails to make use of the same for the purpose for which the declaration was furnished.

2. Compliance with Form No. 18 Declaration:
The court examined whether the assessee complied with the requirements of Form No. 18. The assessee had purchased electronic goods using Form No. 18 declaration and used these goods to manufacture plastic film capacitors, which were sold within the state. The court observed that the assessee had indeed used the electronic goods for the declared purpose and sold the finished product within the state. The court concluded that the assessee satisfied all the requirements of Form No. 18 declaration, and thus, there was no scope for applying Section 5(3)(ii) of the Act.

3. Impact of Tax Exemption under Notification S.R.O. No. 1729/93:
The assessee, being a small-scale industrial unit, was entitled to tax exemption under Notification S.R.O. No. 1729/93. The court noted that the benefit of exemption is available only to the extent specified in the eligibility certificate. The assessing authority must compute the tax liability and adjust it against the exemption granted. Therefore, the court held that the assessee was liable to tax on its finished products under the Act, but it was not required to pay the tax due to the exemption.

4. Interpretation of the First Proviso to Section 5(3) of the Act:
The Government Pleader argued that the first proviso to Section 5(3) was violated because no tax was payable on the sale of plastic film capacitors. The court referred to the relevant rule and the wording of Form No. 18 declaration, which mentions the liability to tax. The court emphasized that the specific provision in Section 5(3)(ii) refers to the declaration furnished and its non-compliance. The court found that the provisions of the first proviso to Section 5(3) were not applicable in this case, as the declaration form clearly mentioned the liability to tax.

Conclusion:
The court agreed with the Tribunal's conclusion that the provisions of Section 5(3)(ii) were not attracted in this case. The court dismissed the revision petition, noting that the assessee had complied with the requirements of Form No. 18 declaration and was entitled to the tax exemption under Notification S.R.O. No. 1729/93. The court also clarified that the decision of the Supreme Court in "Vattukalam Chemicals Industries v. State of Kerala" did not apply to the present case due to different facts. The petition was dismissed, and the judgment was reported as "Greenex polymers v. State of Kerala [2003] 130 STC 184 (Ker)."

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