IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.T.SANKARAN TUESDAY, THE 26TH FEBRUARY 2008 / 7TH PHALGUNA 1929 ST.Rev.No.53 of 2005 -------------------------------------- TA.No.461/1998 OF SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-I ERNAKULAM (ORDER DATED 8-11-2001) .................... REVISION PETITIONER/APPELLANT/REVENUE:- ------------------------------------------------------------------ STATE OF KERALA, REP. BY THE DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. RESPONDENT/RESPONDENT/ASSESSEE:- ----------------------------------------------------------- M/S. INDIAN OPTICALS, M.G.ROAD, ERNAKULAM. BY ADV. SMT.S.K.DEVI SRI.M.RAJ MOHAN SRI.SANTHOSH P.ABRAHAM SRI.FRANKUR D.JAYAN SRI.K.P.PRADEEP (PAYYANNUR) SRI.SHANMUGHAM D. JAYAN SMT.P.K.MAYA DEVI THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 26/02/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & K.T.SANKARAN, J. ------------------------------------------------------ S.T.Rev.No.53 of 2005 ------------------------------------------------------- Dated, this the 26th day of February, 2008 ORDER H.L.Dattu, C.J. The assessee is a registered dealer registered under the provisions of the Kerala General Sales Tax Act (“Act” for short). He is doing business in the sales of spectacles, glasses, goggles, blank lenses, framed attachments, parts and accessories thereof. For the assessment year 1995- 1996, the assessee had filed its annual returns conceding a particular turnover as the total and taxable turnover. Along with the returns filed, the assessee had also pressed into service the Notification issued by the State Government No.429/95 for claiming reduced rate of tax on the items sold by it. (2). The claim of the assessee is rejected by the assessing authority and after such rejection has quantified the tax liability of the assessee in a sum of Rs.3,630/-. Aggrieved by the said orders passed by the assessing authority, the assessee was before the first appellate authority, who by his order dated 31-1-1998 has allowed the appeal and has further directed the assessing authority to modify the assessment for the assessment year 1995-1996 deleting the tax levied at a higher rate. (3). The State being aggrieved by the orders so passed by the first appellate authority had carried the matter by way of appeal before the Tribunal in T.A.No.461/1998. The Tribunal has rejected the appeal filed by the Revenue. (4). Aggrieved by the afore-said orders passed by the Tribunal, the Revenue is before us in this tax revision case. The Revenue has framed S.T.Rev.53/2005 -2- the following question of law for our consideration and decision. It is as under: “Whether on the facts and in the circumstances of the case, the Tribunal is justified in holding that lenses, frames, goggles etc. were eligible for reduced rate of tax of 4% as per SRO 429/95?” (5). We heard Sri.Muhammed Rafiq, learned Government Pleader appearing for the Revenue and Smt.S.K.Devi, learned counsel appearing for the assessee. (6). In order to answer the question of law framed by the Revenue we need to notice the relevant Entries for the relevant assessment year and the Notification issued by the State Government in exercise of its powers under Section 10 of the Act. Entry 121 of the First Schedule to the Kerala General Sales Tax Act is as under: ----------------------------------------------------------------------------------------------- Sl.No. Description of Goods Point of levy Rate of Tax (per cent) ----------------------------------------------------------------------------------------------- 121 Spectacles, glasses,goggles, At the point rough blank lenses, framed of first sale in attachments, parts and the State by a 8 accessories thereof. dealer who is liable to tax under section 5 (7). The State has issued Notification in exercise of its powers under Section 10 of the Kerala General Sales Tax Act. The said Notification has amended the previous Notification No.154/1993 dated 3rd November, 1993. (8). In the said Notification the State has reduced the rate of S.T.Rev.53/2005 -3- tax on several items. We are only concerned with Item 40A. It speaks of Spectacles. The reduced rate of tax is from 8% to 4%. 40A Spectacles 8 4 (9). Time and again the Courts have stated that a beneficial Notification granting exemption is to be strictly construed. If a dealer falls within the purview of the Notification, then a liberal construction requires to be given. (10). Entry 121 of the First Schedule to the Act speaks of different items such as spectacles, glasses, goggles, rough blank lenses etc. The rate of tax is 8%. The State government by issuing SRO No.429/95 has reduced the rate of tax only on spectacles from 8% to 4%. (11). In the instant case, it is an admitted fact that the assessee is a dealer not only in spectacles, but also glasses, goggles, rough blank lenses, framed attachments, parts and accessories etc. If that is so, the assessing authority can grant reduced rate of tax only on the turnover of spectacles and not on other items which would fall under Entry 121 of the First Schedule to the Act. This aspect of the matter should have been kept in view both by the assessing authority as well as the Tribunal. The Tribunal in its order proceeds to hold that though SRO No.429/95 speaks of only spectacles, then also the assessee is entitled for exemption on glasses, goggles, rough blank lenses etc. This, in our opinion, is an error committed by the Tribunal. Therefore, the same requires our interference. Accordingly, we pass the following: S.T.Rev.53/2005 -4- Order (i). The revision petition is allowed. (ii). The question of law framed by the Revenue is answered in favour of the Revenue and against the assessee. (iii). The matter is remanded back to the assessing authority to re-do the matter, in accordance with law, in the light of the observations made by us in the course of our order. (iv). Needless to say, before any orders are passed by the assessing authority, he will issue notice to the parties. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (K.T.SANKARAN) JUDGE MS