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TMI Blog2003 (9) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the respondent-assessee challenging the provisions of section 5A(1)(c) of the Act. This writ petition even according to the petitioner is filed by way of an alternate plea in case the petitioner's contention regarding the scope of section 5A(1)(c) is not accepted in the tax revision cases. 3.. We will first consider the statutory revisions. As suggested by the petitioner in the O.P., only if the assessee's case is not accepted in the revisions the question of challenge to the provisions of section 5A(1)(c) of the Act is to be considered. 4.. Four tax revision cases are filed by the State. The assessee is the respondent. T.R.C. Nos. 20 and 24 of 1996 relate to the assessment year 1990-91; T.R.C. No. 26 of 1996 relates to the assessment year 1989-90 and T.R.C. No. 338 of 2000 relates to the assessment year 1992-93. Thus the assessment years are 1989-90, 1990-91 and 1992-93. Since a common question as to whether the turnover of voltage stabilisers purchased by the assessee from registered dealers, who are S.S.I. units exempted from payment of sales tax by notification issued under section 10 of the Act, are liable to tax under section 5A of the Act when they despatch the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Sales Tax Appellate Tribunal by order dated May 30, 1995 set aside the orders of the two authorities on the levy of purchase tax under section 5A. This is the subjectmatter of T.R.C. No. 26 of 1996. 6.. For the assessment year 1990-91, the assessing authority included the goods purchased from tax exempted dealers and despatched out of State for sale in neighbouring States in the taxable turnover and assessed to tax under section 5A. In first appeal filed by the assessee the first appellate authority directed deletion of the said turnover holding that section 5A has no application. The appeal filed by the State against the said order was dismissed by the Appellate Tribunal. T.R.C. Nos. 20 and 24 of 1996 arise from the said order. For the assessment year 1991-92 the assessing authority included the goods purchased from tax exempted dealers and despatched out of the State in the taxable turnover and assessed the said turnover under section 5A. This was cancelled by the first appellate authority. However, the appeal filed by the State against the said order is pending before the Tribunal. For the assessment year 1992-93 the assessing authority completed the assessment without reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 the tax was reduced to 4 per cent. For the assessment years 1992-93 and 1993-94 the said item fell under entry 49 of the First Schedule to the Act liable to tax at the rate of 20 per cent and by virtue of S.R.O. No. 371 of 1992 the tax wa reduced to 5 per cent. However, the Notification S.R.O. No. 371 of 1992 was superceded by S.R.O. No. 1728 of 1993 with effect from January 1, 1994 but the tax rate continued at 5 per cent. During the assessment year 1994-95 voltage stabilisers were included as item 5 in the Sixth Schedule taxable at all points (VAT) at 6 per cent. There is no dispute with regard to the point of levy or regarding the rate of tax as such in these revisions. The dispute, as already noted, is regarding the liability to tax under section 5A. There is no dispute that the item voltage stabilisers at all the relevant times was a single point commodity taxable at the point of first sale in the State by a dealer liable to tax under section 5 and by virtue of the notification voltage stabilisers are liable to tax only at the rate of 4 per cent up to March 31, 1992 and thereafter at 5 per cent. The case of the petitioner is that voltage stabiliser is an item liable to tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at under the scheme of the Act when a particular commodity is taxable only at a single point and when under the notification issued under section 10 exemption from payment of tax is granted to the dealer, who is liable to tax under the Act there is no question of taxing the same turnover again at the hands of the purchaser or at any subsequent sale. The counsel submits that the provisions of section 5A of the Act were enacted only for the purpose of getting at the commodity which has escaped taxation at the point of first sale for the reason that the first sale was effected either by a person whose turnover is below the taxable limit or by agriculturists or unregistered dealers. The counsel further submitted that the policy behind the enactment of section 5A is that a particular commodity must suffer tax at some point of time and in a case where the Government itself exempt a person from liability to tax at the point of levy there is no question of levying the tax on the purchaser or at a subsequent stage in which case the very purpose of the grant of exemption to the first seller is frustrated. 12.. We have considered the rival submissions and have perused the judgment of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dealers in the State and despatched the said goods out of State while no similar tax is leviable on similar category of goods purchased in similar circumstances but resold subsequently within the State is an invidious distinction violative of the provisions of article 14 of the Constitution of India. It is stated that since the object behind the enactment of section 5A(1)(c) is to compensate escapement of tax on thwarted subsequent sale transactions inside the State, no rational distinction can be drawn between single point taxable goods purchased from tax exempted dealers and resold in the State, without any yield of tax and similar category of goods purchased in similar circumstances and despatched out of State. The contention is that insofar as section 5A(1)(c) singles out the latter clause of transactions alone for levy of purchase tax the said provision is violative of article 14 of the Constitution of India. It is also stated that single point taxable goods purchased from tax exempted dealers in the State and resold within the State are not brought to tax under section 5 of the Act. It is also his contention that the levy of tax under section 5A(1)(c) of the Act on single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods sold within the State, goods taken outside the State by way of inter-State sale or otherwise, goods used for manufacture of other goods and goods used or disposed of in any manner other than by way of sale in the State are all subjected to tax and in that manner there is no discrimination between goods transferred out of the State and goods remaining in the State. It is stated that article 301 of the Constitution has no application and that even assuming that article 301 is attracted (not admitted) it is saved by article 304(a) and that the position is further fortified by rule 32(13) of the Kerala General Sales Tax Rules, 1963. The petitioner had filed a very detailed reply traversing the averments made in the counteraffidavit. Copies of sale bills issued by the S.S.I. units and charitable institutions are also produced. 16.. We have heard the elaborate arguments of Shri Chacko George, learned counsel for the petitioner in the O.P., who is the respondent-assessee in the revisions and Sri Raju Joseph, learned Special Government Pleader (Taxes) appearing for the State. The submission of Sri Chacko George is that section 5A of the Act is not attracted. He submitted that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State as already noted that the validity of section 5A of the Act has already been upheld by this Court and by the Supreme Court after considering all the possible contentions including the one based on articles 14 and 301 of the Constitution and that it is not open to this Court to take a different view stating that the Supreme Court did not have occasion to consider the question in the light of the contention taken by the petitioner. The Government Pleader submitted that, if at all, only the Supreme Court can consider the correctness of the decision in Kandaswami's case [1975] 36 STC 191. The Government Pleader submitted that as at present the matter is covered by the decision of the Supreme Court in Kandaswami's case [1975] 36 STC 191 and the decision of this Court in Supreme Board's case [1998] 111 STC 305. 18.. The validity of section 5A was upheld by this Court in Malabar Fruit Products Co.'s case [1972] 30 STC 537 and affirmed by the Division Bench in Yusuf Shabeer's case [1973] 32 STC 359. The Supreme Court in Kandaswami's case [1975] 36 STC 191 had specifically approved the view taken by this Court in the above two decisions. The Supreme Court observed thus: "In our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h resin is a taxable commodity. However, the Tribunal held that section 5A is not attracted as the dealer purchased resin from tax exempted S.S.I. units. The Tribunal was of the view that as resin is exempted from tax on the first sale point at the hands of the supplier, it qualified for exemption from tax both under section 5 and under section 5A and hence no purchase tax is payable on such transaction. The correctness of this decision was considered by the division Bench. The question posed was "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. The division Bench considered a number of decisions of this Court and of the Supreme Court including the decision in Govindarajulu Naidu's case [1993] 90 STC 35 (SC) and answered the question in the affirmative, i.e., purchase tax under section 5A can be levied. We find that the division Bench largely relied on the decision of the Supreme Court in M.K. Kandaswami's case [1975] 36 STC 191 which approved the decision of this Court in Mala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Notification S.R.O. No. 968 of 1980 and its subsequent disposal either within the State or outside the State by the assessee attracts section 5A provided the conditions specified in clauses (a) to (c) are satisfied. In this view of the matter there is no discrimination between goods sold in the State or despatched to outside the State either by way of stock transfer or for consignment sales. 23.. Though the counsel for the assessee submitted that neither this Court nor the Supreme Court had considered the circumstances that the commodity dealt with is a single point commodity taxable at the point of first sale and that the sale effected by the first seller was specifically exempted from tax under the notification issued under section 10 of the Act, that the sale of such goods purchased from tax exempted S.S.I. units was not taxed when sold locally, that section 5A tax is levied only when such goods are despatched to outside the State either by way of branch transfer or for consignment sale which attracts articles 14 and 301 of the Constitution we cannot consider the validity of section 5A of the Act independently when the Supreme Court has specifically upheld the validit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... article 134A of the Constitution. The counsel also wanted certain directions to be issued to the assessing authority in the judgment now pronounced. Since the judgment was delivered in a Bench in which one of the Judges (J.M. James, J.) was not sitting the case was adjourned to this date. The counsel for the assessee submits that since the legal issue is now decided against the assessee certain directions with regard to the following matters have to be issued to the assessing authority for consideration. (1) The assessing authority while completing the assessment had adopted the transfer value of the goods shown in the F forms accompanying the despatch of goods to outside the State instead of taking the actual purchase value of the goods obtained from both unregistered dealers and registered dealers in the State for levy of tax under section 5A. According to the assessee the value to be taken for the purpose of assessment under section 5A of the Act is the purchase value of the goods and not the transfer value shown in F forms which is only a notional value shown therein. (2) The assessee had purchased rubber both from registered dealers and from unregistered dealers; the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X
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