2010 (7) TMI 783 - SC - VAT and Sales Tax

Concessional rate of sales tax - goods - The Assistant Commissioner, Commercial Tax came to the conclusion that the concession has been extended to non-taxable goods also and formed an opinion that the concession is applicable only to goods and newspaper was not a goods within the meaning of section 2 of the Act. - Kerala General Sales Tax Act, 1963 - held that - The matter is remanded to the High Court for consideration afresh in accordance with law on both the aforesaid submissions while leaving all the contentions of the assessee and the Department open for the year 2000-01, in relation to imposition of penalty under section 45A of the Act.

Summary

Issues:
Interpretation of statutory provisions under the Kerala General Sales Tax Act, 1963 regarding concessional tax rate for purchase of raw materials, specifically printing ink for newspaper production. Application of penalty under section 45A for alleged misuse of statutory forms. Jurisdiction of High Court in entertaining a writ petition under article 226 of the Constitution of India challenging the correctness and legality of the notice and order issued by the Assistant Commissioner. Examination of the definition of "goods" under the Act in the context of newspaper production. Consideration of legal amendments in section 5(3) of the Act and their impact on the case.

Analysis:
The case involved M/s. Malayala Manorama Co. Ltd. purchasing printing ink for newspaper production, claiming concessional tax rate under the Kerala General Sales Tax Act, 1963. The Department alleged misuse of statutory forms, leading to a penalty notice under section 45A. The firm contended that the amendments to section 5(3) of the Act, particularly the substitution of "manufacture" with "production," affected the applicability of the penalty. The High Court, while dismissing the writ petition, directed a reexamination of the penalty imposition, emphasizing that newspapers may not qualify as "goods" under the Act.

The High Court's judgment was challenged before the Supreme Court, arguing that the legal amendments and their impact were not adequately considered. The Court noted the significance of the amendments to section 5(3) and the lack of discussion on these core legal issues in the High Court's decision. Consequently, the Supreme Court set aside the High Court's order and remanded the matter for fresh consideration, directing a comprehensive review of the contentions raised by both parties regarding the penalty imposition for the relevant year under section 45A of the Act. The legality of the notice issued by the Assistant Commissioner was also left subject to the High Court's final decision.

In conclusion, the Supreme Court intervened due to the inadequate consideration of legal amendments and core issues by the High Court. The case was remanded for a fresh assessment, emphasizing the importance of examining the impact of statutory changes on the penalty imposition and the definition of "goods" under the Act. The judgment highlighted the necessity for a thorough legal analysis in determining the applicability of penalties and statutory provisions in tax matters.