2008 (8) TMI 809 - HC - VAT and Sales Tax

Denial of exemption on purchase tax on the turnover of rubber wood used for manufacturing - levy of tax under section 5A - Held that - In the instant case the question is whether the assessee is entitled for exemption from payment of purchase tax. In fact in the certificate issued the General Manager of District Industries Centre has specifically stated that the petitioner is entitled for exemption only on goods manufactured and sold and no exemption is granted from payment of purchase tax. In that view of the matter it is difficult to accept the submissions made by Sri Muraleedharan Nair learned counsel appearing for the assessee. Therefore we are of the opinion that the Tribunal rightly understanding the scope of the exemption certificate issued by the General Manger of the District Industries Centre and also relying upon the observations made by the apex court in the case of State of Kerala v. Vattukalam Chemicals Industries 2001 (8) TMI 1143 - SUPREME COURT OF INDIA has rightly rejected the appeals filed by the assessee. We do not see any error of law in the orders passed by the Tribunal which would call for our interference. In that view of the matter the revision petitions require to be rejected and accordingly they are rejected.

Summary

Issues:
Assessment of exemption from purchase tax under the Kerala General Sales Tax Act, 1963 for a small-scale industrial unit manufacturing chemically treated rubber wood products for the assessment years 1998-99, 1996-97, and 2001-02.

Analysis:
The dealer, a small-scale industrial unit engaged in manufacturing chemically treated rubber wood products, sought exemption from purchase tax under the Act based on an exemption certificate granted by the General Manager, District Industries Centre. The assessing authority initially granted exemption for certain assessment years but later initiated reassessment proceedings under section 19 of the Act. The assessing authority contended that the dealer was liable to pay tax on the purchase turnover of rubber wood purchased from unregistered dealers for manufacturing finished products. The assessing authority's decision was based on the interpretation of the exemption certificate and the applicability of section 5A of the Act.

The dealer challenged the reassessment orders before the Sales Tax Appellate Tribunal, which upheld the assessing authority's decisions. The dealer then approached the High Court, raising questions of law regarding the correctness of the Tribunal's decisions. The High Court considered the arguments presented by both parties. The dealer's counsel argued that the exemption certificate entitled the dealer to exemption from purchase tax under section 5A of the Act based on previous court decisions and observations. However, the Government Advocate representing the Revenue relied on a Supreme Court decision to assert that the dealer was not entitled to the exemption.

The High Court analyzed the exemption certificate issued by the District Industries Centre and the relevant legal precedents. The Court noted that the exemption certificate specifically stated that no exemption was granted from payment of purchase tax. Considering this, along with the Supreme Court decision cited by the Revenue's counsel, the High Court concluded that the Tribunal had rightly rejected the dealer's appeals. The Court found no legal errors in the Tribunal's decisions and dismissed the revision petitions. Consequently, all pending interlocutory applications were closed in light of the judgment.