2005 (12) TMI 539 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether the Cochin Port Trust is a "dealer" under the Kerala General Sales Tax Act, 1963 (KGST Act) and liable to pay sales tax.
2. The applicability of the Supreme Court's decision in the Madras Port Trust case [1999] 114 STC 520 to the Cochin Port Trust.
3. The assessment of turnover under works contract and hire charges.
4. The constitutional provisions relevant to the legislative competence of the State Legislature to enact sales tax laws.

Issue-wise Detailed Analysis:

1. Dealer Status of Cochin Port Trust under KGST Act:
The main issue was whether the Cochin Port Trust qualifies as a "dealer" under the KGST Act and is liable to pay sales tax. The Cochin Port Trust contended that it is not a "dealer" based on the Supreme Court's decision in the Madras Port Trust case [1999] 114 STC 520, which held that port trusts are not established for carrying on business and their sales of unserviceable or unclaimed goods are incidental to their main activities. The Kerala High Court examined the definition of "dealer" under Section 2(viii) of the KGST Act, which includes any person who carries on the business of buying, selling, supplying, or distributing goods, executing works contracts, transferring the right to use any goods, or supplying goods as part of any service. The court noted that the KGST Act's definition of "dealer" is broader than that of the Tamil Nadu General Sales Tax Act (TNGST Act) and includes clauses (e), (f), and (g), which were absent in the TNGST Act. Therefore, the court concluded that the Cochin Port Trust falls within the meaning of "dealer" under Section 2(viii) of the KGST Act and is assessable to tax.

2. Applicability of Madras Port Trust Case:
The Cochin Port Trust argued that the provisions of the TNGST Act are in pari materia with the KGST Act and that the Supreme Court's decision in the Madras Port Trust case should apply. The Special Government Pleader contended that the provisions of the two Acts are not identical and that the reasoning in the Madras Port Trust case is not applicable to the Cochin Port Trust. The Kerala High Court agreed with the Special Government Pleader, noting that the KGST Act's definition of "dealer" is broader and includes specific clauses that were not present in the TNGST Act. Consequently, the court held that the reasoning in the Madras Port Trust case does not apply to the Cochin Port Trust under the KGST Act.

3. Assessment of Turnover:
The Cochin Port Trust challenged the assessment of turnover under works contracts and hire charges. The appellate authority had set aside the addition to turnover and remitted the matter back to the assessing authority for re-examination. The Kerala High Court noted that the appellate authority had directed the assessing authority to re-examine the assessability of receipts under various heads, including crainage, hire on equipment for container handling, and miscellaneous income. The court found no illegality in the findings of the Tribunal, which upheld the directions given by the appellate authority.

4. Constitutional Provisions:
The court examined the relevant constitutional provisions, including Article 246 and the entries in the Seventh Schedule of the Constitution of India, which define the legislative competence of the Union and State Legislatures. Entry 54 of List II of the Seventh Schedule enables the State Legislature to enact laws in respect of tax on the sale or purchase of goods. The court noted that both the TNGST Act and the KGST Act were framed under this entry. The court also referred to Article 366, which provides definitions for terms used in the Constitution and emphasized that terms defined in the Constitution should be given the same meaning in the relevant statutes.

Conclusion:
The Kerala High Court held that the Cochin Port Trust falls within the meaning of "dealer" under Section 2(viii) of the KGST Act and is assessable to tax. The court dismissed the tax revision case and the sales tax revision cases, upholding the findings of the Tribunal and the appellate authority. The court declared that the Cochin Port Trust is liable to pay sales tax under the KGST Act.