IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER THURSDAY, THE 12TH JUNE 2008 / 22ND JYAISHTA 1930 S.T.Rev.No.84 of 2006 --------------------------------------- T.A.NO.711/2004 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDL. BENCH-I, ERNAKULAM - ORDER DATED 24.6.2005 (ASSESSMENT YEAR 2001-02) .................... PETITIONER:- -------------------- HINDUSTAN LUBRICANTS & CO.(P) LTD., IIND FLOOR, CORPORATION BUS STAND BUILDING, KALOOR, KOCHI-17. BY ADV. SRI.V.M.KURIAN RESPONDENT:- ----------------------- STATE OF KERALA. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 12/06/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu, C.J. & A.K.Basheer, J. ------------------------------------------------ S.T.Rev.No.84 of 2006 ----------------------------------------------- Dated, this the 12th day of June, 2008 ORDER H.L.Dattu,C.J. The assessee is a Private Limited Company, engaged in the manufacture of lubricating oil, grease, etc. It is also registered as a Small Scale Industrial Unit (for short “SSI Unit”). It has its factory at Edathala in Aluva. 2. For the assessment year 2001-02, the assessee in its annual returns filed in Form-9 before the assessing authority had claimed the reduced rate of tax at 8% on sales turnover of grease for Rs.4,34,122/-. Even according to him, the said grease was manufactured on job work basis in a SSI Unit at the Industrial Estate in Malayinkil in Thiruvananthapuram District. 3. The assessing authority while completing the assessments, after rejecting the claim made by the assessee, has taxed the sales turnover of grease at 24%. 4. The orders passed by the assessing authority in this regard is confirmed by the first appellate authority as well as by the Tribunal. Aggrieved by these orders, the assessee is before us in this revision. 5. The questions raised for our consideration and decision are as under: “(1) Whether on the facts and circumstances of the case the Appellate Tribunal is correct in holding that for availing the concessional rate of 8% under notification SRO No.1091/99 it is necessary that the manufacture should take place in the unit run by the assessee claiming exemption. (2) When condition in the notification for entitlement of concessional rate is manufacture by the claimant small scale industrial unit within the State, whether the Appellate Tribunal is right in holding that the manufacture has to be in the claimant's own unit”. S.T.Rev.84 of 2006 - 2 - 6. The learned counsel appearing for the assessee would contend that in view of the Government notification, S.R.O.No.1091/99, the sales turnover of the goods manufactured by a SSI Unit is taxable only at the reduced rate of tax and it cannot be at 24%. It is further stated that the manufacturer should be located within the State and if such unit is located within the State, it is entitled for the benefit of reduction in the rate of tax under the aforesaid notification. Therefore submits, the orders passed by the assessing authority and its superior authorities and the Tribunal should be interfered with by this Court. 7. Per contra, Mr.Muhammed Rafiq, learned counsel appearing for the Revenue, would contend that since the assessee gets the grease manufactured on a job work basis in a SSI Unit situate in the Industrial Estate in Malayinkil in Thiruvananthapuram District and since the assessee is not the manufacturer of the grease, it is not entitled to the benefit of the notification, S.R.O. No.1091/99. In aid of his submission, the learned counsel invites our attention to the observations made by a Division Bench of this Court in the case of M/s.Solve Plastic Products Pvt. Ltd. v. State of Kerala (T.R.C.No.80 of 2002 dated 10th July, 2003). 8. The admitted facts are: The assessee is a SSI Unit. It has its factory located at Edathala in Aluva. On a job work basis, it gets grease manufactured by a SSI Unit situate in an Industrial Estate. It is not the case of the assessee, either before the assessing authority or before us, that it is the manufacturer of grease. The contention of the learned counsel for the assessee is that if the manufacture takes place within the State, irrespective of whether it is manufactured by the assessee or by any other SSI Unit, then also the assessee is entitled for the reduced rate of tax under the Government notification, S.R.O.No.1091/99. S.T.Rev.84 of 2006 - 3 - 9. Schedule II appended to the notification S.R.O.No.1091/99 provides the persons the rate of tax on the turnover of whose sales or purchase, as the case may be, of goods is reduced under sub clause (2) of Clause I. Serial No.6 of the said Schedule speaks of SSI Units registered with the Director of Industries and Commerce, Kerala and when it comes to the description of goods and its turnover, it is stated that “turnover of sale of goods manufactured by them within the State” and in so far as reduced rate of tax is concerned, it is at 8%. 10. On a bare reading of Schedule II to the notification, S.R.O. No.1091/99, it is crystal clear that the assessee should be a SSI Unit, it should be registered with the Director of Industries and Commerce, Kerala and the turnover sales of goods is in respect of the goods manufactured by the SSI Unit, viz., the assessee. No other meaning can be attached to the expression “manufactured by them within the State”. Our conclusion is also supported by a decision of this Court in the case of M/s.Solve Plastic Products Pvt. Ltd. 11.That was a case where the assessee had supplied raw materials to the sister concern by name M/s.Solve Plastic Products on job work basis. The goods manufactured by the said sister concern was sold by the assessee and had collected tax at the concessional rate of 4%. It was the stand of the assessee before the Courts that since the semi manufacturing work alone was done by the sister concern and the actual manufacturing work was done by the assessee, it is entitled for the benefit of reduction in the rate of tax under the aforesaid notification. While repelling this contention, a Division Bench of this Court, after noticing the language employed in the notification, has come to the conclusion that the benefit of concessional rate of tax can only be to a SSI Unit which manufactures and sales its manufactured product. S.T.Rev.84 of 2006 - 4 - 12.In the instant case, as we have already noticed, the assessee, on a job work basis, gets the grease manufactured by yet another industrial unit situate in an Industrial Estate. If this is the correct factual position, then, in our opinion, the assessing authority and the Tribunal were justified in coming to the conclusion that the assessee is not entitled to the reduced rate of tax as envisaged under the notification, S.R.O.No.1091/99. In that view of the matter, we find no illegality, irregularity or impropriety in the orders passed by the Tribunal. Therefore, interference with the said order is not called for. Accordingly, the revision petition requires to be rejected and it is rejected and the questions of law framed by the assessee is answered against the assessee and in favour of the Revenue. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer vku/dk. Judge