2009 (6) TMI 944 - HC - VAT and Sales Tax

Whether form 25A is not required to be furnished by a dealer if he is first seller of goods falling under the Fifth Schedule? Held that - Even if form 25A was obtained and produced by the respondent, the same would have served the very same purpose of getting details of the purchasers who are registered dealers in the State. In other words, in our view, the sale bills will serve the purpose of form 25A, when the first sale is to a registered dealer in the State. Therefore the later order of the Tribunal allowing the claim in favour of the respondent-assessee is correct and is in accordance with rule 32(13C) of the Rules. The first order of the Tribunal issued for this year was patently wrong as it was against the express provision in the rule. There is nothing wrong in the Tribunal correcting it through review proceedings.

Summary

Issues:
Challenge to Tribunal's order in a review application for assessment year 1998-99. Interpretation of rule 32(13C) of the Kerala General Sales Tax Rules, 1963 regarding the requirement of form 25A for dealers in goods taxable at the point of first and last sale under the Fifth Schedule to the Act.

Interpretation of Rule 32(13C) of the Rules:
The case involved a manufacturer of goods effecting first sales in Kerala, collecting and remitting tax at 10% on goods covered by the Fifth Schedule to the Act. The assessment was made at the full rate of 12.5% as the dealer did not produce form 25A as required by rule 32(13C) of the Kerala General Sales Tax Rules, 1963. The Tribunal initially dismissed the appeal, but later reversed its decision in a subsequent year, holding that form 25A is not required for first sellers of goods under the Fifth Schedule. The Court analyzed the rule and found that form 25A is meant for dealers to claim exemption on sales between the first and last sale, not for those engaged in the first sale or last sale directly to registered dealers. The Court reasoned that sale bills issued by the dealer would serve the purpose of form 25A in tracing purchasers for tax payment verification. Thus, the Tribunal's later decision aligning with this interpretation was deemed correct, and the initial order was considered erroneous against the rule's provision.

Review of Tribunal's Order:
The primary issue was whether the Tribunal was justified in reviewing its earlier decision and allowing the claim of the assessee. The Court found that the Tribunal's reversal was based on a consistent interpretation of the rule across different years, indicating a correction of the earlier erroneous order. Since the later decision was in line with the rule's explicit provisions and the purpose of form 25A, the Court upheld the Tribunal's review decision as valid. The Court emphasized that the review proceedings were necessary to rectify the initial error and ensure compliance with the law. Consequently, both issues were decided in favor of the assessee, and the tax revision filed by the State was dismissed.

This detailed analysis of the judgment highlights the Court's thorough examination of the legal provisions, the Tribunal's decisions, and the correct interpretation of the rule regarding the necessity of form 25A for dealers in goods taxable at the point of first and last sale under the Fifth Schedule to the Act.