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 FRIDAY, THE 20TH JUNE 2008 / 30TH JYAISHTA 1930 ST.Rev..No. 178 of 2008 ------------------------------- TA.159/2007 of S.T.A.TRIBUNAL, ADDL.BENCH, PALAKKAD .................... PETITIONER/APPELLANT: ------------------------------------- M/S.ALUKKAS EXPORTERS, POOMA COMPLEX, M.G.ROAD, THRISSUR BY ADV. SRI.JOSE JOSEPH RESPONDENTS/RESPONDENT: ------------------------------------------- STATE OF KERALA BY SR.GOVT.PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 20/06/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L. DATTU, C.J. & A.K. BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T.Rev.No. 178 of 2008 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 20th day of June, 2008 Judgment H.L. Dattu, C. J: This revision is directed against the orders passed by the Sales Tax Appellate Tribunal in T.A.No.159/2007 dated 23/1/2008. 2. The facts in nut shell are, petitioner is a firm engaged in the export of gold jewellery, manufactured out of bullion purchased from local market. Petitioner has purchased 7 special import licenses issued to different exporters with a view to import bullion without paying customs duty. Later on, these import licences were sold for a consideration of Rs.11,33,236/- because of practical difficulties in importing bullion. Before the authorities it was stated by the petitioner that insofar as five licences are concerned, the petitioner is only a third seller within the State and regarding the other two licences, the claim of the petitioner was that he is the second seller within the State. It is the further case of the petitioner that special import licences are goods taxable only at the point of first sale within the State and that subsequent sales are exempted from payment of tax. 3. The assessing authority had not accepted the claim of the petitioner and accordingly had completed the original assessment proceedings by levying tax at the rate of 8% on the sales turnover of import licenses. S.T.Rev.178/2008 2 4. The Deputy Commissioner of Commercial Taxes has exercised his revisional powers by invoking the provisions of Section 35 of the Kerala General Sales Tax Act (KGST Act for short). 5. After hearing the petitioner, the revisional authority had remanded the matter to the assessing authority, inter alia, indicating to the assessing authority that the rate of tax to be levied on the sales turnover of import licences is 10% as against 8% adopted by the assessing authority. 6. Pursuant to the order of the Deputy Commissioner, the assessing authority had completed the assessment after ignoring the objections filed by the assessee and had levied tax at 10% on the sales turnover of import licences. Aggrieved by the orders so passed by the assessing authority in levying tax at the rate of 10%, the assessee had preferred an appeal before the first appellate authority. The first appellate authority had rejected the appeal. The assessee had carried the matter in an appeal before the Tribunal. The Tribunal by its order dated 23rd of January 2008 has rejected the appeal and in that has stated as under: “4. We find force in the contention raised by the revenue. As per Rule 32(13) every dealer in goods taxable at the point of first sale in the State, shall, if he is not liable to tax on such goods by reason of his not being the first seller of the goods in the State, obtain a certificate written and signed underneath or on the other side of the bill or cash memorandum to the effect that the goods covered S.T.Rev.178/2008 3 by the bill or cash memorandum had suffered tax at his hands or at the hands of any other dealer mentioned in the certificate. The seller in such goods shall give such a certificate on every sale made by him. In the instant case, the assessee have not complied with Rule 32(13) of the K.G.S.T Rules with regard to claim for exemption towards second sale and hence we are of the view that the findings of the lower authorities to disallow the claim of exemption being second sales is in accordance with law and hence confirm the decision of the lower authorities. In the result the appeal filed by the assessee for the year 1997-1998 is dismissed. Order accordingly.” 7. Being aggrieved by the orders passed by the Tribunal, the assessee is before us in this Sales Tax Revision filed under Section 41 of the Act. The assessee has framed the following questions of law for our consideration and decision. They are as under: “(i) Whether the order of the Tribunal without adverting to and considering the materials produced before it evidencing that the petitioner is only a second or subsequent seller of the Special Import Licences is legal and sustainable? (ii) Whether the Tribunal is correct in proceeding as if compliance with Rule 32(13) of the KGST Rules is mandatory to claim exemption on S.T.Rev.178/2008 4 second or subsequent sales and the fact to be proved for claiming exemption on the sale being second or subsequent sale cannot be proved by adducing other evidence? (iii) Whether the order of the Tribunal is legal and sustainable in the light of the materials on record and in the light of the principles stated by the Supreme Court in the case of State of Orissa Vs. M.A.Thulloch & Company Ltd. (15 STC 641) and the principles stated by the Karnataka High Court in the case of G.Subramanya Reddi & Company (59 STC 84)?” 8. At the time of hearing of this revision petition, the learned counsel Sri.Jose Joseph would submit, that, Rule 32(13) of the KGST Rules are not mandatory and therefore the assessee can demonstrate before the authorities under the Act that he is the second seller in the State with the available documents. 9. In our considered opinion, the submission of the learned counsel for the assessee has no merit whatsoever. Sub-Rule (13) of Rule 32 of the Rules prescribes procedure by which a second dealer can claim exemption from payment of tax due on the goods. That provision requires to be strictly adhered to by the assessee while claiming exemption. The said provision, by no stretch of imagination, can be said as directory. Therefore, if a dealer has to claim exemption as a second seller in the State, he has to comply with the provisions of the Act and the Rules framed thereunder. Keeping this principles S.T.Rev.178/2008 5 in view the Tribunal, in our opinion, has rightly rejected the appeal and thereby has confirmed the orders passed by the Appellate Assistant Commissioner and the assessing authority. Therefore the question of law framed by the assessee requires to be answered against the assessee and in favour of the revenue. Accordingly the revision petition is rejected. Ordered accordingly. H.L. DATTU Chief Justice A.K. BASHEER Judge an/dk.