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 11TH DECEMBER 2008 / 20TH AGRAHAYANA 1930 S.T.Rev.No.396 of 2006 ----------------------------------------- T.A.NO.289/2005 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-II, ERNAKULAM (ORDER DATED 20.12.2005) (ASSESSMENT YEAR 1998-1999) .................... REVISION PETITIONER/RESPONDENT/REVENUE:- --------------------------------------------------------------------------- STATE OF KERALA, REP. BY JOINT COMMISSIONER (LAW) IN-CHARGE, COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. RESPONDENT/APPELLANT/ASSESSEE:- ----------------------------------------------------------- M/S.PHILIPS CARBON BLACK LTD., ERNAKULAM. BY ADV. SRI.R.MURALIDHARAN (AROOR) THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 11/12/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu,C.J. & A.K.Basheer,J. -------------------------------------------- S.T.Rev.No.396 of 2006 -------------------------------------------- Dated, this the 11th December, 2008 ORDER H.L.Dattu,C.J. Though the revision petition is posted for admission, by consent of the learned counsels appearing for the parties to the lis, the matter is taken up for final hearing. (2) The Revenue, being aggrieved by the orders passed by the Sales Tax Appellate Tribunal, Additional Bench-II, Ernakulam in T.A.No.289 of 2005 dated 20.12.2005, is before us in this Sales Tax Revision. (3) The Revenue has framed the following questions of law for our consideration and decision. They are as under: “A. Whether the Appellate Tribunal is right in law in the facts and circumstances of the case in holding that the purchase turnover of water is not exigible to tax under Section 5A of the KGST Act? B. Is not the Tribunal in error in its construction/ interpretation on Section 5A, while holding that purchase turnover of water is not exigible to tax under Section 5A? C. Is not the decision of the Tribunal unsustainable and liable to be annulled in view of 2006 (3) KLT 380?” (4) The assessee is a dealer, registered under the provisions of the Kerala General Sales Tax Act, 1963 (“KGST Act” for short) and Central Sales Tax Act (“CST Act” for short). S.T.Rev.No.396 of 2006 2 - (5) The assessing authority has completed the assessments for the assessment years 1998-1999 and 1999-2000 and, in that, has levied purchase tax under Section 5A of the KGST Act on the purchase of water by the assessee. (6) Aggrieved by the quantification so made by the assessing authority, the assessee was before the first appellate authority. The first appellate authority has confirmed the orders passed by the assessing authority. (7) The assessee has carried the matter by way of second appeal before the Tribunal in T.A.No.289 of 2005. The Tribunal is of the opinion, that, the levy of purchase tax on the purchase of water by the assessee is illegal and, accordingly, has set aside the quantification made by the assessing authority in so far as the levy of purchase tax under Section 5A of the KGST Act is concerned. It is the correctness or otherwise of the said order passed by the Tribunal is called in question by the Revenue before us in this revision. (8) The questions of law raised by the Revenue are no more debatable in view of the decision of a Division Bench of this Court in the case of State of Kerala v. Cochin Shipyard Ltd. [2006 (3) KLT 380]. In the said decision, this Court has held as under: “The intention of the legislature is to bring to purchase tax in either event of consumption of goods in the manufacture of goods for sale or consumption of goods in any other manner. Once goods are utilised in the construction of buildings the goods cease to exist or cease to be available in that S.T.Rev.No.396 of 2006 3 - form for sale or purchase so as to attract the tax and therefore the correct meaning to be attributed to the said provision would be that tax will be attracted when such goods are consumed in the manufacture of other goods or are consumed otherwise. Even if water is consumed otherwise S.5A of the Act would apply. Water charges paid by the petitioner is exigible to purchase tax under S.5A of the Act even if not consumed for making of the end product since he has consumed it otherwise”. (9) In view of the decision of this Court in the aforesaid case, the questions of law framed by the Revenue require to be answered in favour of the Revenue and against the assessee. (10) Accordingly, we allow the revision petition and set aside that portion of the order passed by the Tribunal in setting aside the orders passed by the assessing authority in levying purchase tax under Section 5A of the KGST Act on the purchase of water by the assessee. Ordered accordingly. H.L.Dattu Chief Justice A.K.Basheer Judge vku/-