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TMI Blog1998 (2) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of the Act. According to the Tribunal, as resin is exempted from tax on the first sale point in the hands of the supplier it qualified for exemption from tax both under section 5 and section 5A of the Act and hence no purchase tax is payable on the purchase value of the goods purchased from a newly set up small-scale industrial undertaking qualified for exemption even though there is no exemption for the purchaser. This order of the Tribunal dated September 22, 1993 is questioned in this revision application filed by the Revenue. 2.. The question to be decided is whether purchase tax under section 5A can be levied from a person who purchased taxable goods from a dealer who is a newly set up small-scale industrial unit eligible for exemption on the strength of the notification issued under section 10 of the Act. 3.. To answer the above question we may quote section 5A(1) of the Act which is as follows: 5A. Levy of purchase tax.-(1) Every dealer who, in the course of his business, purchases from a registered dealer or from any other person any goods, the sale or purchase of which is liable to tax under this Act, in circumstances in which no tax is payable under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the contention of the assessee-respondent that the object of the notification S.R.O. No. 968/80 is to grant financial incentive to small-scale industrial units and if the purchaser from the SSI unit is asked to pay tax under section 5A on the purchase made from the SSI unit, it will work as a disincentive to the purchaser from the SSI unit. Therefore, there is no justification to impose purchase tax under section 5A of the Act on the turnover of goods purchased from an exempted unit. It is contended by the Revenue that purchase tax will be levied only if the purchased goods are used for contingencies mentioned in clauses (a), (b) and (c) of section 5A and in all other cases no purchase tax is leviable so that benefit of exemption is available to the small-scale undertaking in all transactions. In any event, we are only concerned with the question whether on the plain wording of the Act tax can be levied under section 5A from the hands of the assessee. If the wordings are clear there is no necessity for going into the supposed objectives or alleged intentions of the Legislature. The intention of the Legislature has to be gathered from the expressed wordings in the enactment. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eby exempts from the tax payable under the said Act the sales of dressed chicken , tax leviable under section 6-A of the Act is also tax under the Act. What is sale by the vendor of the respondent-dealers is purchase in the hands of the said dealers. Therefore, under G.O. Ms. No. 60, if the transaction of the sale by the vendor in favour of the dealers is exempted, the same transaction cannot be taxed as being purchase by the dealers-assessees. In both these cases the commodity itself was fully exempted from payment of tax under the respective Acts. In such circumstances, court held that no purchase tax can be payable as exemption granted to the commodity is total. In this case the commodity is not totally exempted. Only the sales turnover on the hands of a newly set up industrial undertaking is exempted. 6.. In the decision reported in T.S. Govindarajulu Naidu v. State of Kerala [1979] 43 STC 233 this Court referred to the decision of the Supreme Court in State of Tamil Nadu v. M.K. Kandaswami [1975] 36 STC 191. The Supreme Court considered the difference between taxable person , taxable event and taxable goods . In the above case the Supreme Court was considering fort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to tax under the Act in circumstances in which no tax is payable under the Act. In such a case, the purchaser is sought to be taxed under section 5A provided the conditions are satisfied. The case of growers selling goods to persons to whom section 5A thus applies is covered by this example. After approving the above observations the Supreme Court held as follows: In our opinion, the Kerala High Court has correctly construed section 5A of the Kerala Act which is in pari materia with the impugned section 7-A of the Madras Act. Goods, the sale or purchase of which is liable to tax under this Act in section 7-A(1) means taxable goods , that is, the kind of goods, the sale of which by a particular person or dealer may not be taxable in the hands of the seller but the purchase of the same by a dealer in the course of his business may subsequently become taxable. According to us, ratio of this decision is squarely applicable to the facts of this case also. Resin is a taxable items. It is not totally exempted under the Act. But, because of the circumstance that the seller was a newly set up smallscale industrial unit qualifying for exemption under the notification, it was exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Sales Tax (Law) v. Indian Oil Corporation Ltd. [1987] 64 STC 160 (Ker) the court was considering the question whether the purchase turnover on petroleum products purchased by the assessee, Indian Oil Corporation, from the Cochin Refineries is exempted from tax under section 5A of the Act. At that time, sale of petroleum products by an oil company to another oil company was exempted from payment of tax. It was held that notwithstanding the exemption purchase tax is payable under section 5A by the Indian Oil Corporation if the petroleum products are used in contingencies mentioned in clauses (a), (b) and (c) of section 5A of the Act. The court held as follows: Applying the same principle a Division Bench of this Court in Deputy Commissioner of Sales Tax v. International Fisheries Ltd. [1981] 48 STC 409 held that even though the turnover in respect of water sold by a municipal corporation is not liable to tax under section 5 by virtue of a notification issued by the Government under section 10(1) of the Act, the purchase turnover is liable to tax in the hands of the assessee under section 5A of the Act. An earlier decision of a Division Bench of this Court in T.S. Govindarajulu N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -90. There the industrial unit which availed exemption and sold material to the assessee is set up after 1980. In such cases, it is clearly held that purchase tax is payable. The Supreme Court held as follows: It is not disputed that the first order, namely, the one dated April 11, 1979, gave more of tax exemption than the second one. The second notification withdrew the exemption relating to purchase tax and confined the exemption from sales tax to the limit specified in the proviso of the notification. All parties before us who in response to the order of April 11, 1979, set up their industries prior to October 21, 1980, within the State of Kerala would thus be entitled to the exemption extended and/or promised under that order. Such exemption would continue for the full period of five years from the date they started production. New industries set up after October 21, 1980, obviously would not be entitled to that benefit as they had notice of the curtailment in the exemption before they came to set up their industries. 11.. The above decision will not support the case of the assessee. As already held by us, resin is not fully exempt from taxation under the Act. It is a tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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