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TMI Blog2003 (4) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992-93, 1993-94 and 1994-95 on the basis that the sales were covered under Entry 42. The tax was levied at the rate of 12.5% for the years 1992-93 and 1993-94. For the year 1994-95, the rate of tax was fixed at 10%. Aggrieved by the order passed by the assessing authority, petitioner No. 1 had filed an appeal. It was, inter alia, pointed out that the sales had been effected to dealers in fertilizers. The tax had been collected at the rate of 2.5% only. The decision of the Court in M/s. Marbles India had no relevance. The appellate authority considered the matter. It noticed that the assessing authority has no case that the appellant had used dolomite powder for the manufacture of mosaic tiles so as to attract the rate of tax applicable to mosaic chips and mosaic powder. It had presumed that the powder sold by the appellant was used for manufacturing mosaic tiles for flooring purpose. This presumption was raised on the basis that the assessee was dealing in building materials. The appellate authority further noticed that the assessee had produced certain sale bills for verification which shows that sale of dolomite powder is mainly effected to a fertilizer dealer, namely, M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First Schedule to the Kerala General Sales Tax Act . In view of the decision of this Court in M/s. Marbles India case (supra), emphasis is to be given to the use to which the material is put in order to determine the distinctive feature of an article and not to the common parlance in which the material is referred to . The assessments were made after giving adequate opportunity to the petitioners. When the petitioners had failed to pay amounts due to the Government, steps for recovery were initiated. The procedure is in accordance with law. On this basis, the respondents maintain that the Writ Petition deserves to be dismissed. 5. The matter was posted before a Division Bench of this Court. It noticed that there was a conflict of view in the two Division Bench judgments of this Court in Marbles India v. State of Kerala, (1996) 4 KTR 445 and Southern Veneers Wood Works Ltd. v. State of Kerala, (1997) 5 KTR 437. Thus, the matter was referred to a Full Bench. 6. Learned counsel for the parties have been heard. On behalf of the petitioners, it has been contended by Mr. Abraham Mathew that the action of the respondents in reopening the assessments and levying tax under Entry 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be strictly construed. The assessee is entitled to take advantage of the loopholes in an Act. It is not for the court to plug those loopholes. Still further, when the goods are clearly described under different entries in the Schedule and different rates of levy are fixed, the court can assume that the Legislature intended to levy the tax on the goods mentioned in an Entry at the rate specified therefor. Another rule followed by Courts is that the dealers are not technically qualified persons. They are not botanists, engineers or scientists. The goods have to be seen from the view point of the trade. Even the dictionary may not be a good guide. 9. Under the Act, the taxable event is the sale or purchase of goods. The levy of sales tax is normally not dependant on the 'use' of the goods. It is not unknown that an item can be used for different purposes. When a particular item is specifically mentioned under a specific Entry, the mere fact that the article can be used for another purpose as well, would not mean that the specific Entry can be ignored and that tax can be levied on the basis of a general Entry. When the Legislature has clearly included a particular commodi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Article can be used for different purposes cannot mean that the assessing authority shall have the wide discretion to tax it under one or the other Entry. Its discretion shall be essentially limited by the Entry. In case there is a specific Entry, the assessing authority shall not be entitled to impose the tax under a general Entry. The levy of tax has to be at the rate as specified under the relevant Entry. 13. Mr. Raju Joseph submitted that the petitioners are dealing in hardware materials. They are selling cement, chips and steel. Thus, it can be safely assumed that they are selling even Dolomite for use as a building material. 14. The contention cannot be accepted. It is not unknown that one can buy a large variety of goods under one roof. Today, some of the big stores provide almost everything in one place. On can buy anything, from a ear to curry powder, under one roof. Thus, the mere fact that the petitioners are selling certain items of building material cannot mean that they are precluded from selling other goods. There is no ban on the petitioners selling Dolomite, which can be used as a fertilizer also, in the same store in which they are conducting sale of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It has also not been held that Dolomite is not a fertilizer. In fact, as noticed above, Dolomite can be used for a variety of purposes. Since it has been specifically mentioned in Entry 50, it cannot be taxed under the general Entry 42. The Act does not authorize the Authority to shift an item from one Entry to another on the basis of its use. While interpreting a taxing Entry, the use of a particular item for a purpose other than that mentioned in the Special Entry cannot be the basis for the levy of tax at a higher rate. If the goods, which form the subject matter of transaction of sale, are covered under an Entry, the benefit of concessional rate cannot be denied to the assessee on the basis of the fact that the goods could also be used by the purchaser for some other purpose. Once the Entry is clear, there can be room for invoking 'use' and creating confusion. Only Entry has to be seen. All else shall be extraneous. The rule in this behalf was clearly enunciated by a Division Bench of this Court in Dy. Commissioner v. Western India Plywoods, 1980 KLT 592. Eradi, C.J. (as his Lordship then was) had categorically observed as under:- Once it is found that the commodi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rate mentioned in the relevant Entry. The petitioners or any other dealer shall have no control over the actual use of the goods after these have been sold. The purchaser may use them for making tiles or as fertilizer. Very often, a salesman shall not record the name or the particulars of the person who purchases any item. In any event, he may not have any means to verify the actual name of the purchaser. Still further, it can be easily assumed that a person may purchase Dolomite from a dealer with a written undertaking that he will use it as fertilizer. Having got it, he may use it for making tiles. In such a situation, it cannot be said that the petitioner shall be liable to pay tax at a higher rate than that specified in Entry 50. The reason is that he would have no control over the purchaser with regard to the use of the goods. Since the petitioners are not engaged in the manufacture of goods, the possible use of the goods cannot determine their liability. Entry 50 being absolutely clear, the liability could be determined only at the rate fixed therein. 20. Mr. Raju Joseph contended that the petitioners are liable to pay tax as leviable on the sale of tiles etc. Otherwise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t can be assumed that the legislative intent was to tax the commodity at the rate mentioned in the Entry and not at a higher rate under any other entry on the basis of a possible use of the commodity. In such a case, the user-test is not a safe guide as various items can always be used for different purposes. (3) In the present case, it is clear that 'Dolomite' can be used as a fertilizer. It is also clear that the petitioners are not manufacturing tiles or any items of building material. The mere fact that the commodity can be used for making tiles cannot mean that the tax can be levied under Entry 42. If the rule in M/s. Marbles India case (supra) is to be interpreted as entitling the assessing authority to levy tax under Entry 42, in our opinion, it does not contain the correct enunciation of law. So far as the present case is concerned, 'Dolomite' can only be assessed under Entry 50 of the First Schedule in the Act. Resultantly, the Writ Petition is allowed. It is held that the sales of dolomite can be assessed only under Entry 50. The view taken by the Division Bench in Marbles India v. State of Kerala, (1996) 4 KTR 445 was based on the admission of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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