2003 (4) TMI 562 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Legality of levying tax on the sale of 'Dolomite' under Entry 42 instead of Entry 50 in the First Schedule of the Kerala General Sales Tax Act, 1963.
2. Validity of reopening assessments for the years 1992-93, 1993-94, and 1994-95.
3. Applicability of the decision in Marbles India v. State of Kerala to the present case.
4. Determination of whether 'Dolomite' should be taxed as a fertilizer or as a material used for flooring work.

Issue-wise Detailed Analysis:

1. Legality of Levying Tax on 'Dolomite' under Entry 42 Instead of Entry 50:
The primary issue was whether the assessing authority's action of levying tax on the sale of 'Dolomite' under Entry 42 instead of Entry 50 was legal and valid. Entry 42 deals with various building materials, while Entry 50 specifically mentions 'Dolomite' as taxable at 2.5%. The court noted that the provisions of a fiscal statute must be strictly construed, and the specific mention of 'Dolomite' in Entry 50 implies that it should be taxed at the rate specified therein, not under the general category of building materials in Entry 42.

2. Validity of Reopening Assessments:
The assessments for the years 1992-93, 1993-94, and 1994-95 had been finalized with 'Dolomite' taxed at 2.5% under Entry 50. The reopening of these assessments was based on the decision in Marbles India v. State of Kerala, which led the assessing authority to reclassify 'Dolomite' under Entry 42, subjecting it to higher tax rates. The appellate authority remanded the case for fresh disposal, noting that the assessing authority had no evidence that 'Dolomite' was used for manufacturing mosaic tiles.

3. Applicability of the Decision in Marbles India v. State of Kerala:
The respondents relied on the Marbles India case to justify taxing 'Dolomite' under Entry 42. However, the court found this decision distinguishable, as it was based on the specific facts of that case where the assessee admitted using the material for manufacturing mosaic tiles. The court emphasized that 'Dolomite' is specifically listed under Entry 50, and its use for different purposes does not justify shifting its tax classification.

4. Determination of Whether 'Dolomite' Should Be Taxed as a Fertilizer or Flooring Material:
The court examined whether 'Dolomite' should be taxed as a fertilizer under Entry 50 or as a material used for flooring work under Entry 42. It was noted that 'Dolomite' can be used for various purposes, including as a fertilizer. The court held that the specific mention of 'Dolomite' in Entry 50 means it should be taxed at 2.5%, regardless of its potential use for making tiles. The principle of 'generalia specialibus non-derogant' was applied, meaning the specific entry (Entry 50) overrides the general entry (Entry 42).

Conclusion:
The court concluded that 'Dolomite' should be taxed under Entry 50 at the rate of 2.5%, not under Entry 42. The decision in Marbles India was based on specific facts and did not constitute a correct statement of law for the present case. The reopening of assessments and the consequential proceedings were deemed illegal. The Writ Petition was allowed, and it was held that the sales of 'Dolomite' can only be assessed under Entry 50. The parties were left to bear their own costs.