IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER THURSDAY, THE 4TH DECEMBER 2008 / 13TH AGRAHAYANA 1930 ST.Rev.No. 444 of 2006 ------------------------- AGAINST THE ORDER DATED 29.11.05 IN TA.325/2005 of SALES TAX APPELLATE TRIBUNAL,ADDL.BENCH,PALAKKAD .................... REVISION PETITIONER/RESPONDENT : ----------------------------------------------------- STATE OF KERALA, REP.BY JOINT COMMISSIONER (LAW) IN-CHARGE, COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER, SRI.MUHAMMED RAFIQ RESPONDENT: APPELLANT/ASSESSEE: -------------------------------------------------------- PALMA DAIRY, ATTAYMPATHY, KEERAMPARA. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 04/12/2008, ALONG WITH CONNECTED CASES, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T.Rev. No. 444 OF 2006 S.T.Rev. No 38/2007 and I.A. No.188 of 2007 S.T.Rev. No 43/2007 and I.A. No.242 of 2007 AND S.T.Rev. No 57/2007 and I.A. No.331 of 2007 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 4th day of December, 2008 ORDER H.L.DATTU, C.J. The delay in filing the revision petitions is condoned. (2) Since the assessee is common in all these revision petitions and since the legal issues involved are the same, these petitions are clubbed, heard and disposed of by this common order. (3) The revenue, being aggrieved by the orders passed by the Sales Tax Appellate Tribunal, in TA Nos.325/05, 328/05, 326/05 and 327/05 dated 29.11.2005, has presented these tax revision cases. (4) The respondent herein is a dealer in milk and ghee. He is also a dealer registered under the provisions of the Kerala General Sales Tax Act, 1963 (“KGST Act” for short) and Central Sales Tax Act, 1956 (“CST Act” for short). (5) In the monthly returns filed for the months of April, July, May, and June, 2004, the assessee had claimed exemption in respect of the sales turnover of toned milk, pasteurized milk by placing reliance on SRO No. ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:2:- 940 of 2004 dated 21st August, 2004, which has been given effect from 1st of April, 2004. (6) The assessing authority, while completing the provisional assessment for the aforesaid month, has rejected the claim of the assessee, on the ground, that, the assessee is not a charitable society nor a milk producer within the State and accordingly has completed the provisional assessment for the months of April, July, May, and June, 2004. (7) The assessee had carried the matter in appeal before the first appellate authority. The appellate authority is of the view that the assessee is a milk producer in the State of Kerala by engaging himself in milk processing after purchasing milk from local dairy farms and processing it into pasteurized milk, toned milk and reconstituted milk. Though the sales turnover of the aforesaid products are taxable at 2% and since the State Government had issued notification exempting the charitable societies and milk producers from payment of tax under the KGST Act, the first appellate authority is of the opinion that the assessing authority was not justified in rejecting the claim of the assessee. Accordingly, after setting aside the provisional assessment order passed for the months of April, July, May, and June, 2004, the appellate authority had directed the assessing authority to ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:3:- grant exemption from payment of tax on the sales turnover of toned milk/pasteurized milk in view of the notification issued by the State Government, SRO No.940 of 2004. (8) The revenue being aggrieved by the orders passed by the first appellate authority had carried the matter in appeal before the Tribunal. The Tribunal in its order has come to the conclusion that the assessee is a milk producer in the State of Kerala and therefore entitled for exemption from payment of tax under the KGST Act in view of SRO No.940/04, though the contention of the revenue before the Tribunal was that the assessee is not a milk producer, but, only a dealer in the State. (9) The revenue being aggrieved by the orders passed by the Tribunal is before us in this tax revision case. (10) Following are the questions of law framed by revenue for our consideration and consequent decision. They are as under: “A. Whether the First Appellate Authority as well as the Tribunal were justified in sustaining the claim for sales tax exemption put forward by the assessee - who is only a trader, relying on SRO 1090/99 as amended by 940/04 ? B. Is not on a true construction of SRO 940/04, provides ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:4:- exemption only to charitable societies and milk producers and not to a trader in milk ?” (11) The findings and the conclusion reached by the Tribunal are as under: “We have heard the rival contentions. The only issue to be decided in this case is whether the respondent is a Milk Producer or not. Admittedly the respondent procures fresh milk from Dairy farmers and process it into various products such as tonned milk, pasturised milk, reconstituted milk etc. and a portion of the milk is processed into butter milk and gee etc. The respondent is also dealer availing exemption being an SSI Unit the sales turnover of butter milk and gee produced by them. In our view the respondent is a milk producer and not a dealer in milk as claimed by the appellant/State. The appellant has not produced any other evidence to prove that the respondent is only a dealer in milk and not a milk producer. The nature of business of the respondent coupled with the facts that they are ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:5:- enjoying SSI exemption conclusively proves that the respondent is a milk producer eligible for the benefits under SRO 940/2004. In the result, the order of the First Appellate Authority is upheld. Consequently the cross objections filed by the respondent are allowed and the State appeals are dismissed. Order accordingly.” (12) Sri.Muhammed Rafiq, learned Senior Government Pleader would submit, that, the benefit of the notification, SRO No.940 of 2004 is extended by the State Government only to the charitable societies and milk producers within the State, on the sales turnover of fresh milk including pasteurized, toned or re-constituted milk. Since the assessee is not a milk producer within the State, he is not entitled for the benefit of notification, SRO No.940 of 2004. (13) In exercise of its powers under Section 10 of the KGST Act, the State Government has issued notification, SRO No.940 of 2004 dated 21st August, 2004, granting exemption from payment of tax under the Act by the charitable societies and milk producers within the State on the sales turnover of fresh milk, toned milk, pasteurized milk and re-constituted milk. The notification makes it clear that the benefit of the notification would be ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:6:- available only to the charitable societies and milk producers within the State. (14) Therefore, the only question arises for our consideration and decision is whether the assessee is a milk producer within the State. Answer to the aforesaid issue, in our opinion, is no more debatable in view of certain observations made by us while disposing of ST.Rev.No. 310 of 2008, dated 28th November, 2008. In the said decision at paragraphs 13 and 14 we have observed as under: “13. Even otherwise also, admittedly, the assessee procures milk from outside the State and mixes it with certain quantity of powder and markets the milk as “pasteurized milk”. The Division Bench of this Court in the case of Ernakulam Regional Co-operative Milk Producers Union Limited v. State of Kerala [(2001) 9 KTR 459(Ker)] has made a distinction between “fresh milk” and “pasteurized milk”. According to the Division Bench, “pasteurized milk” cannot be equated with “fresh milk”. While making this distinction, the Division Bench of this Court has stated as under: “Milk in question is pasteurized milk. Skimmed milk powder is not fresh milk. Further, what is sold is pasteurised milk .................. Entry says fresh milk. The ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:7:- word 'fresh' has the meaning of 'original', 'new' etc. According to us, Entry 23 means original milk, that is, the milk obtained from the farm. Hence, the pasteurised milk is not exempted.” (14) In the notification issued, in number S.R.O 201/2005, the State Government, in exercise of its powers under Section 10 of the Act and in public interest, has exempted payment of tax under the Act on the sale of pasteurized milk, homogenized milk, the toned milk, standardized milk, skimmed milk, full cream milk and recombined or reconstituted milk sold by milk producers within the State. The Explanatory Note appended to the notification once again uses the expression, that, 'the notification can be made applicable only to the milk producers within the State'. (15) In view of the observation made by us therein, may be while considering a notification, SRO No.201/05, those observations will also apply to the facts and circumstances of the present case. (16) In view of the aforesaid observation, in our opinion, there cannot be any doubt that the respondent herein is a milk producer within the State and therefore eligible and entitled for exemption under SRO No.940 of 2004 dated 21st August, 2004. Therefore, in our opinion, the first ST.Rev.Nos.444/06, 38/07, 43/07 and 57/07 -:8:- appellate authority and the Tribunal are justified in granting relief to the assessee. (17) In view of the discussion, the questions of law framed by the Revenue, required to be answered against the Revenue and in favour of the Assessee. Accordingly, while agreeing with the findings and conclusions reached by the Tribunal, we reject these revision petitions. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE ttb