IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH TUESDAY, THE 30TH SEPTEMBER 2008 / 8TH ASWINA 1930 S.T.Rev.No.89 of 2006 --------------------------------- T.A.NO.407 OF 2004 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDL. BENCH-I, ERNAKULAM (ORDER DATED 4.7.2005) (ASSESSMENT YEAR 2002-2003) .................... REVISION PETITIONER/RESPONDENT/ASSESSEE:- ----------------------------------------------------------------------------- M/S.SRIKRISHNA ENTERPRISES, SHALON BUILDINGS, 41/1028, VEEKSHANAM ROAD, ERNAKULAM. BY ADV.SMT.K.LATHA. RESPONDENT/APPELLANT/REVENUE:- ---------------------------------------------------------- THE STATE OF KERALA. BY SPECIAL GOVERNMENT PLEADER (TAXES) SRI.VINOD CHANDRAN. SRI.P.PARAMESWARAN NAIR, ASSISTANT SOLICITOR GENERAL OF INDIA. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 30/09/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu,C.J. & Thomas P.Joseph,J. ------------------------------------------------- S.T.Rev.No.89 of 2006 ------------------------------------------------- Dated, this the 30th September, 2008 ORDER H.L.Dattu,C.J. The assessee is a dealer in cotton coated fabric, PVC coated fabric, etc. The relevant assessment year is 2002-03. The assessing authority had completed the assessment and in that had granted exemption on the turnover of imported PVC coated fabric. (2) Subsequently, by issuing a notice under sub-section (1) of Section 19 of the Kerala General Sales Tax Act, 1963 (“KGST Act” for short), the assessing authority has re-opened the assessments, primarily on the ground, that, the sales turnover of PVC coated fabrics had not suffered additional duties of Excise, under the provisions of Additional Duties of Excise (Goods of Special Importance) Act, 1957. After receipt of the notice issued under Section 19(1) of the KGST Act, the assessee had filed its objections and had specifically contended, that, the goods in question had suffered additional duties of Excise. (3) The assessing authority was not impressed by the explanation so offered by the assessee and, accordingly, has passed an order of reassessment, bringing to tax the turnover of imported PVC coated fabric, the purchase value of which was worked out to Rs.11,67,665/-. S.T.Rev.89/2006 - 2 - (4) This order of reassessment was called in question by the assessee before the first appellate authority, who, in turn, had allowed the appeal by its order dated 31.1.2004. (5) The State, being aggrieved by the orders so passed, had called in question the correctness or otherwise of the said order before the Sales Tax Appellate Tribunal, Additional Bench-I, Ernakulam in T.A.No.407 of 2004. (6) The assessee also had filed Cross Objections, in number 101 of 2004. (7) The Appellate Tribunal has allowed the State's appeal and has rejected the Cross Objections filed by the assessee. While allowing the State's appeal, the Tribunal, at paragraph 5 of its order, has observed as under: “In the present case now before us, it is an admitted fact that the goods dealt with by the respondent assessee are imported PVC coated fabrics. The goods were imported from Taiwan. The assessing authority found that the goods have suffered only customs duty and have not suffered additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957. We fail to understand how the Appellate Assistant Commissioner has come to the conclusion that the imported goods have suffered additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957. The relevant documents namely the S.T.Rev.89/2006 - 3 - invoices issued by the supplier on PVC coated fabrics, have not been produced before us to prove the assessee's contention that the goods have suffered additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957. Hence we cannot uphold the finding of the Appellate Assistant Commissioner on this issue. We reverse the finding of the Appellate Assistant Commissioner”. (8) Being aggrieved by the orders so passed by the Tribunal, the assessee is before us in this Sales Tax Revision. (9) The assessee has raised the following questions of law for our consideration and decision. They are as under: “(i) Whether the Tribunal is legally justifiable in confirming the revised assessment order U/S 19(1) of the KGST Act for the year 2002-2003 demanding Sales tax @ 12% by considering the product PVC coated cloths as PVC Pipes as per Entry No.113 of the First Schedule even after knowing that the product under consideration is only PVC coated cloths coming under the specific Entry number 10 of the second Schedule if the Additional Duties of Excise (Goods of Special Inportance) Act 1957 is not levied (Sales Tax under KGST Act is 4% only) or coming under the specific Entry number 11(i) of the Third Schedule if the Additional Duties of Excise (Goods of Special Importance) Act 1957 is levied (Sales tax under KGST Act is exempted)? (ii) Whether the decision of the Tribunal that the findings of the Appellate Assistant Commissioner should be reversed is tenable even after the appellant proved that the S.T.Rev.89/2006 - 4 - entire findings of the AAC was based on the corroborative evidences? (iii) Whether the Tribunal is justifiable in taking a view that they failed to understand how the Appellate Assistant Commissioner has come to the conclusion that the imported goods have suffered additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act 1957, when it is clear that the very document ie bill of entry even produced before the Tribunal itself proved that the imported goods have suffered additional duties of excise under the Additional Duties of Excise (Goods of Special Importance) Act, 1957? (iv) Whether the decision of the Tribunal that the findings of the Appellate Assistant Commissioner cannot uphold is tenable?” (10) This Court, while entertaining the revision petition, had directed the Assistant Solicitor General to verify whether the assessee had paid the special Additional duty of excise under Section 3A of the Customs Tariff Act, 1975. Pursuant to the directions so issued, the Assistant Solicitor General of India has filed his statement. It reads as under: “On the basis of the instructions received from the Additional 2nd respondent, I am filing this statement. The Department had levied the following duties from the appellant under Bill of Entry No.124386 dated 25.3.2003. The appellant had remitted an amount of Rs.1,94,193/- as Customs duty. It is levied under Section 12 of the Customs Act, 1962 read with Section 2 of the Customs Tariff Act, 1975. The S.T.Rev.89/2006 - 5 - Central Excise duty remitted was Rs.1,55,355/- under Section 3 of the Customs Tariff Act, 1975. The appellant had also remitted an amount of Rs.48,548/- as special Additional duty of excise under Section 3A of the Customs Tariff Act, 1975. Section 3A states that any article which is imported into India shall in addition be liable to a duty which shall be levied at a rate specified by the Central Government having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India. An amount of Rs.486/- was levied as educational cess collected under the Textile Committee Act, 1963”. (11) The Assistant Commissioner (Law) has filed an affidavit on behalf of the respondent and along with that he has also produced a letter issued by the Assistant Commissioner of Customs (Import) dated 10.7.2006. In the aforesaid letter, it is stated as under: “Please refer to your letter dated 06.07.2006 on the captioned subject. The details sought for on the above mentioned bill of entry is as given below: (a) Schedule 1 (Customs Duty) :Rs.1,94,193/- (b) Section-3 (Central Excuse duty) :Rs.1,55,355/- (c) Additional Duty of Excise (Goods on Special Important) Act 1957 : Rs. 48,548/- (d) Cess collected under Textile Committee Act 1963 : Rs. 486/- Total :Rs.3,98,582/-” (12) A perusal of the statement filed by the Assistant Solicitor General of India and the affidavit filed on behalf of the respondent herein S.T.Rev.89/2006 - 6 - would clearly show that the goods in question had suffered the additional duties of Excise under the provisions of Additional Duties of Excise (Goods of Special Importance) Act 1957. The Tribunal has reversed the finding of the first appellate authority mainly on the ground, that, the first appellate authority did not have any material before him to demonstrate that the imported PVC coated fabrics by the petitioner had suffered the additional duties of Excise. In view of the statement filed by the Assistant Solicitor General of India and also the letter dated 10.7.2006 of the Assistant Commissioner of Customs (Import), produced by the respondent herein, it is clear that the goods in question had suffered the additional duties of Excise. In that view of the matter, it is difficult for us to sustain the orders passed by the Tribunal. (13) Accordingly, we allow this revision petition, set aside the orders passed by the Tribunal and confirm the orders passed by the first appellate authority. Ordered accordingly. H.L.Dattu Chief Justice Thomas P.Joseph Judge vku/-