2010 (8) TMI 842 - HC - VAT and Sales Tax

Summary

Issues:
1. Granting of exemption to the assessee on the purchase turnover of rubber latex used in the manufacture of gloves for export.

Analysis:
The judgment delivered by the Kerala High Court addressed the issue of whether the Tribunal was justified in granting exemption to the assessee on the purchase turnover of rubber latex used in the manufacture of gloves for export. The respondent-assessee, an industrial unit in the Cochin Export Processing Zone, purchased latex from another unit in the same zone. The court referred to Notification S.R.O. No. 1727 of 1993, which entitles exemption for export-oriented units for the purchase of industrial raw materials for use in manufacture. The notification requires a declaration from the purchasing unit stating that the purchase is for the manufacture of goods for export. The court noted that the seller of rubber latex was not liable for tax as the item was taxable at the last purchase point, making the purchaser liable to pay tax if exemption was not available. The Department did not dispute that the purchased rubber latex was used in the manufacture of gloves for export. The court held that the exemption could not be disallowed on a technical ground related to the declaration under the notification. It emphasized that the declaration requirement applied to taxable commodities at the sale point, not those taxable at the last purchase point where the tax liability falls on the industrial unit. As the respondent proved the use of rubber latex in manufacturing gloves for export, and the Department had no contrary evidence, the court upheld the Tribunal's order and dismissed the revision filed by the State.