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 MONDAY, THE 14TH JULY 2008 / 23RD ASHADHA 1930 S.T.Rev..No. 123 of 2006 --------------- ------------------------- ORDER DATED 30.6.2005 IN TA.444/2001 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM .................... REVISION PETITIONER/ASSESSE ------------------------------------------------ M/S. THANKAM MATCH INDUSTRIES, PERINGALA, KAYAMKULAM, REPRESENTED BY ITS MANAGING PARTNER, CELIN THOMAS, KARIYADIL HOUSE, PERINGALA P.O., KAYAMKULAM. BY ADV. SRI.P.C.JOSEPH PAZHEPARAMBIL RESPONDENT/REVENUE ------------------------------------ STATE OF KERALA, REPRESENTED BY ITS CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. BY SR.GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 14/07/2008, ALONG WITH STRV NO.125 OF 2006 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- S.T.Rev.Nos.123 & 125 of 2006 ------------------------------------------ Dated, this the 14th day of July, 2008 ORDER H.L.Dattu, C.J. These sales tax revisions pertain to the assessment years 1991-92 and 1992-93. 2. The assessee is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 ('the KGST Act' for short) and the Central Sales Tax Act, 1956 ('the CST Act' for short). 3. Petitioner is also a small scale industrial unit. Pursuant to the Government orders issued from time to time, the petitioner had filed an application dated 3.8.1990, before the General Manager, District Industries Centre, Alappuzha for grant of exemption from payment of tax both under the KGST Act and the CST Act. The General Manager by his order dated 4.4.1991, has granted exemption to the petitioner unit from payment of tax both under the KGST Act and the CST Act for the period from 19.10.1989 to 18.10.1994. Along with the revision petition papers, the petitioner has also produced the Government notification S.R.O.No.499/90. Apart from the other conditions for claiming exemption from payment of tax, clause 8 of the said notification would clearly indicate that sales tax, if any, collected shall be paid over to the State Government. S.T.Rev.Nos.123 & 125 of 2006 2 4. In the present case, the assessee has effected inter-state sales of match splints, veneers, etc. It has raised sale bills and in that has indicated the CST payable by the purchasing dealer. 5. Since the purchasing dealer had not paid the tax under the provisions of the CST Act, the assessee had filed a civil suit in O.S.No.415 of 1994 before the Sub Court, Mavelikkara, for recovery of sales tax dues from the purchasing dealer. The Sub Court by its judgment and decree dated 30.6.1997 has decreed the suit allowing the plaintiff in the suit, namely the petitioner herein, to realise a sum of Rs.51,786/- with 6% interest per annum from the date of the suit till its realisation from the defendant in the suit, namely the purchasing dealer. 6. The assessing authority for the assessment years 1991-92 and 1992-93 had completed the assessments, inter alia, quantifying the tax payable by the petitioner under the CST Act, since the petitioner had shown the same in the sale bills raised for effecting inter-state sales of match splints and veneers. Aggrieved by the quantification so made by the assessing authority, the assessee had filed appeal before the first appellate authority in S.T.A.Nos.710 and 711 of 1996. Before the first appellate authority the petitioner had produced the judgment and decree passed in O.S.No.415 of 1994 dated 30.6.1997. The first appellate authority by its order dated 30.12.1997 has allowed the appeal and has remanded the matter to the assessing authority to redo the matter in accordance with law. S.T.Rev.Nos.123 & 125 of 2006 3 The operative portion of the order passed by the first appellate authority is as under: “The main dispute in these cases are that the appellant firm has not received the CST charged in bills and issued to M/s.Wimco Ltd. It is seen that the appellant firm has filed the suit against M/s.Wimco Ltd., since the purchaser company has refused to pay the CST. As per the judgment in OS No.415/94 dt.30.6.97 the suit is decreed allowing the plaintiff to realise the sum of Rs.51,186/- with 6% interest per annum from the date of suit. In view of the decision reported in 106 STC 460 (S.C.) penal interest is not leviable on CST (India Carbon Ltd., Vs. State of Assam). In the circumstances I think that the whole aspects of the case has to be re-examined by the assessing authority. For this purpose the CST assessments made for 91-92 and 92-93 are set aside and the cases are remanded to the assessing authority for fresh disposal in accordance with law.” 7. After such remand, the assessing authority has passed the fresh assessment orders for the assessment years 1991-92 and 1992-93, and in that has taken into consideration the decree passed by the trial court and has further observed, that, since the assessee had reflected in the sale bills issued by them to the purchasing dealer that the purchasing dealer is liable to pay the CST, he is of the view that the CST amount should be paid by the petitioner within the time prescribed under the Act and the S.T.Rev.Nos.123 & 125 of 2006 4 Rules framed thereunder. Since that has not been paid, the assessing authority has once again quantified the tax liability of the petitioner under the provisions of the CST Act. 8. Aggrieved by the said order, the assessee had once again approached the first appellate authority in S.T.A.Nos.564 and 565 of 1999. The said authority by its order dated 12.1.2001 has rejected the appeal and has confirmed the orders of assessment passed by the assessing authority. Aggrieved by these two orders passed for the assessment years in question, the assessee was before the Kerala Sales Tax Appellate Tribunal, Additional Bench, Kottayam in T.A.Nos.444 of 2001 and 445 of 2001. The Tribunal has rejected the appeals. That is how the assessee is before us in these sales tax revisions. 9. The assessee has framed the following questions of law for our consideration and decision. They are as under: “(1) Whether, on the facts and in the circumstances of the case, the petitioner is entitled to exemption in paying Central Sales Tax as per order No.B1-6302/90 dated 4.4.1991 of the General Manager, District Industries Centre, Alappuzha (Annexure-II) and S.R.O.No.499/90 (Annexure-III) to the tune of Rs.2,48,571/- for the period from 19.10.1989 to 18.10.1994. (2) Whether, on the facts and circumstances of the S.T.Rev.Nos.123 & 125 of 2006 5 case, that mere mentioning of C.S.T. in the sale bills can be presumed that the amount shown as C.S.T. is only payable and not paid by the purchaser M/s.Wimco Ltd. (3) Whether, on the facts and circumstances of the case if C.S.T. was paid by the purchaser as per the sale bills filing of suit as O.S.No.415 of 1994 against the purchaser M/s.Wimco Ltd. is necessary or not? (4) Whether, on the facts and circumstances of the case, levy of interest on the C.S.T. due to the Government is legally sustainable? (5) Whether, on the facts and circumstances of the case, 'Sale Price' is defined in section 2(h) of the Central Sales Tax Act Section 2(h) specifies 'amount payable to a dealer as consideration for the sale of any goods. The tax charged was in dispute said amount should not have been treated as consideration received or receivable for sales or not?” 10. At the time of hearing of these revision petitions, the learned counsel appearing for the assessee would contend, that, since the assessee had not collected any tax under the provisions of the CST Act, the assessing authority was not justified in quantifying the tax liability of the assessee under the provisions of the CST Act. In support of that contention the learned counsel has invited our attention to the exemption S.T.Rev.Nos.123 & 125 of 2006 6 certificate issued by the General Manager, District Industries Centre, Alappuzha and the ex parte decree passed by the Sub Court. 11. The one and the only question that would arise for our consideration in these revision petitions is, whether the assessing authority was justified in directing the petitioner to pay tax under the provisions of the CST Act. 12. The admitted facts are; by an order dated 4.4.1991, the General Manager, District Industries Centre, Alappuzha had granted tax exemption, both under the KGST Act and the CST Act to the petitioner - small scale industrial unit for the period from 19.10.1989 to 18.10.1994. In view of the said tax exemption there was no reason for the assessee to have reflected the tax payable by the purchasing dealer when they effected inter-state sales of match splints and veneer. 13. In the instant case, the assessee while raising the sale bills for having effected the sales of match splints and veneers to the purchasing dealer outside the State had indicated the CST payable by the purchasing dealer. Since the said tax was not paid by the purchasing dealer, the assessee had filed a civil suit for recovery of the tax payable under the CST Act. Now a decree is passed in favour of the petitioner by the civil court. 14. Admittedly, the assessee in its sale bills has claimed the CST payable by the purchasing dealer. Having raised such a bill, it is not S.T.Rev.Nos.123 & 125 of 2006 7 now open to the assessee to contend that since the purchasing dealer has not paid the tax, it is not liable to pay the tax under the provisions of the CST Act. It is immaterial whether the purchasing dealer pays the tax or not, but it is for the seller who has to collect the tax and deposit the same with the State Government. Since that has not been done in the instant case, the assessing authority was justified in quantifying the tax liability of the dealer under the CST Act. 15. In view of the above, in our opinion, none of the authorities have committed any error which would call for our interference in a petition filed under Section 41 of the KGST Act. 16. Therefore, while answering the questions of law framed by the assessee against the assessee and in favour of the Revenue, we reject these sales tax revisions. 17. Consequently, I.A.Nos.1376 of 2006 and 1403 of 2006 also stand rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns/dk.