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TMI Blog2002 (10) TMI 769X X X X Extracts X X X X X X X X Extracts X X X X ..... y certificate issued by the competent authority under the notification. 2.. In the assessment year 1995-96, the assessing authority, while completing the assessment, sought to collect the differential rate of tax from the assessee by resorting to section 5(3)(ii) of the Act which was introduced with effect from July 29, 1993 on the ground that the assessee failed to make use of the electronic goods purchased by issuing form No. 18 declaration for the purpose for which the declaration was furnished. The assessee, inter alia, had challenged the said levy in appeal before the Additional Appellate Assistant Commissioner, A.I.T. and S.T., Thrissur. The appellate authority, relying on the decision in Vattukalam Chemicals Industries v. State of Kerala [2001] 124 STC 234 (Ker); 1997 KLJ Tax Cases 11, upheld the levy, but granted relief by directing the assessing authority to adjust the said tax against the amount of exemption provided under the eligibility certificate obtained by the assessee. Both the assessee and the department filed appeals before the Tribunal. The Tribunal observed that there is no provision in the K.G.S.T. Act empowering the assessing authority to assess the diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not in dispute. The assessee is a small-scale industrial unit entitled to exemption from payment of sales tax under the Act, in view of the notification S.R.O. No. 1729/ 93 and the eligibility certificate issued by the competent authority under the said notification. The assessee had purchased electronic goods by issuing form No. 18 declaration and that it has used the electronic goods for manufacture of the end-product, the plastic film capacitors. The assessee had also sold the same to various customers inside the State. However, the assessee has not collected or paid any tax on such turnover for the assessment year 1995-96. According to the assessee, the provisions of section 5(3)(ii) of the Act introduced by the Kerala Finance Act, 1993 published on July 29, 1993 do not apply to the facts of its case. On the other hand, the case of the respondent-department is that the said provision squarely applies to the assessee's case. 5.. In order to test the correctness of the rival submissions, it is necessary to refer to the said provision which reads as follows: Where any dealer, after purchasing any goods by furnishing a declaration as mentioned in the second proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Kerala General Sales Tax Act, 1963 or Central Sales Tax Act, 1956. It is also necessary to refer to the two provisos to section 5(3) which reads as follows: Provided that this clause shall not apply where no tax is payable by the said industrial units on such finished products either under this Act or under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) or when such finished products are exported out of the territory of India. 6.. What section 5(3)(ii) provides is that where a dealer purchases any goods by furnishing a declaration as mentioned in the second proviso to clause (i), fails to make use of the same for the purpose for which the declaration was furnished, he shall be liable to pay the tax that would have been payable by him, had the declaration not been furnished, less the tax, if any, paid by him and the same shall be levied and collected as if it is a tax due from him. Thus, the conditions precedent for invoking the said clause are: 1.. that the dealer should have purchased goods by furnishing form No. 18 declaration, and 2.. that the dealer fails to make use of the same for the purpose for which the declaration was furnished. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of the tax liability of the assessee, has only to adjust the liability so determined towards the exemption granted under the eligibility certificate. In that view of the matter, it cannot be said that the assessee is not liable to tax on its finished products under the Act. It can only be said that it is not liable to pay the said liability only to the extent of the amount specified in the eligibility certificate. Hence, we are of the view that the assessee has satisfied all the requirements of form No. 18 declaration and consequently, there is no scope for application of the provisions of section 5(3)(ii) of the Act to the present case. In fact, the very question has come up for consideration before another division Bench of this Court in T.R.C. No. 182 of 2002 and this Court, by judgment dated August 27, 2002, has held on similar facts that the provisions of section 5(3)(ii) are not attracted. On a perusal of the said judgment, we find that the division Bench has extracted section 5(3)(ii) of the Act and held that the only requirement of the said sub-section is that the goods purchased by issuing the form No. 18 declaration must be used in the manufacture of the finished p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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