IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN FRIDAY, THE 19TH AUGUST 2011 / 28TH SRAVANA 1933 ST.Rev..No. 84 of 2011() ------------------------ TA.463/2009 of S.T.A.T.ADDL.BENCH,ERNAKULAM .................... REVISION PETITIONER/APPELLANT/ASSESSEE ---------------------------------------------------------- CHLOROPLASTS, AKANAD, MUDAKKUZHA, PERUMBAVOOR, ERNAKULAM DISTRICT, REP. BY ITS MANAGING PARTNER N.SURESH. BY ADV. SRI.S.ANIL KUMAR (TRIVANDRUM) SRI.K.S.HARIHARAN NAIR SRI.K.UMAMAHESWAR RESPONDENT/RESPONDENT/REVENUE ---------------------- STATE OF KERALA, REP. BY THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-695033. BY G.P. SRI.MOHAMMED RAFFEQ THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 19/08/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURE I: TRUE COPY OF ASSESSMENT ORDER DT.31.1.2007 FOR THE YEAR 2003-04 UNDER THE KGST ACT. ANNEXURE II: TRUE COPY OF ORDER DT.24.1.2008 OF THE DY. COMMISSIONER (APPEALS), ERNAKULAM. ANNEXURE III: TRUE COPY OF ORDER DT.15.11.2010 OF THE APPELLATE TRIBUNAL. ANNEXURE IV: COPY OF THE REVISED ORDER DT.30.3.2011. TRUE COPY P.S. TO JUDGE C.R. C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... S.T. Rev. No.84 of 2011 .................................................................... Dated this the 19th day of August, 2011. JUDGMENT Ramachandran Nair, J. Question raised is whether the Sales Tax Appellate Tribunal was justified in confirming the rate of tax applied i.e. 12% on the turnover of PVC pipes sold by the petitioner under brand name during the year 2003-2004. We have heard counsel for the petitioner and Government Pleader for the respondent. 2. Admittedly appellant got PVC pipes manufactured in their brand name “Sakthiman” from a SSI unit which claimed exemption from sales tax based on the declaration in Form No.25D issued by the petitioner stating that petitioner is paying tax on sale of the products in the brand name which is the point of levy by virtue of operation of Section 5(2) of the Act. Section 5(2) itself was introduced to the statute to levy tax on wholesale market price of the goods when sold by the brand name holder. Petitioner also concedes their liability under S.T. Rev.84/2011 2 Section 5(2) as deemed first seller of goods being brand name holders selling goods after purchase from SSI units who manufactured the goods in the brand name of the petitioner. However, the only claim made by the petitioner is that concessional rate is availed at 8% under SRO 1091/99 which grants reduction of tax as provided under Entry 11 of the Second Schedule to the said notification. Relevant entry is as follows: Sl. No. Description of person/unit Description of goods and turnover Reduced rate of tax(%) Condition 11 Any dealer Turnover of sale of goods which are purchased from SSI Units enjoying exemp- tion and sold under brand name. 8 The dealer claiming exemption shall produce a certificate in the form in Annexure- IV obtained from the selling SSI unit. ANNEXURE IV (To be issued by the seller in duplicate) 1. I/We have sold goods of the description given below to Sri./M/s. ...................... (here enter the purchasers name and complete address) during the financial year ................... 2. My/Our Registration Certificate No. is .................... (here enter the sellers registration number) 3. I/We have been granted exemption under notification S.R.O.1729/93 as per Proceeding No............... date .................... of the District Level Committee .................. (here enter name of district) for the period from ................. to ................... and the total quantum of exemption sanctioned has not been exhausted. S.T. Rev.84/2011 3 DESCRIPTION OF GOODS SOLD Sl. No. No. and date of sale bill issued by the seller Description of goods Quantity Value (1) (2) (3) (4) (5) Place: Name and status of the person signing the certificate Date: Name and address of the SSI unit. This notification shall come into force on the 1st day of January 2000. 3. The claim made by the petitioner is that even though the rate of tax on PVC pipes under the relevant entry of the First Schedule to the KGST Act is 12%, petitioner is entitled to concessional rate at 8% as their purchase is from SSI unit. However, Government Pleader submitted that what is required is not purchase from SSI unit but such SSI unit should issue Annexure-IV Form prescribed under the very same notification which clearly states that concessional rate is available only for purchase made during the period the SSI unit was enjoying sales tax exemption under SRO 1729/93. What we notice is that the condition for granting concessional rate is production of declarations in Annexure IV obtained from the SSI unit from which petitioner purchased the goods. Admittedly petitioner has not obtained Annexure S.T. Rev.84/2011 4 IV. On the other hand, petitioner issued Form No.25D to the SSI unit which is the Form prescribed under Section 5(2) of the KGST Act for the dealer making sales to the brand name holder to claim exemption. Clause 6 of the notification above clearly indicates that but for Form No.25D issued the selling SSI unit would have been entitled to concessional rate of tax at 8% as against the Schedule rate of 12%. Even though counsel for the petitioner contended that the object of Entry 11 is to grant the same concessional rate of tax available to SSI unit to the brand name holder also, we are unable to accept this contention because concessional rate is available for the brand name holder purchasing and selling goods from SSI units only if the manufacturing SSI unit was enjoying sales tax exemption under SRO 1729/93. In other words, when the SSI unit ceased to be entitled to sales tax exemption, the concessional rate will not be available under the above notification to the brand name holder who purchases and sells the goods under brand name making them liable for payment of tax under Section 5(2) of the Act. S.T. Rev.84/2011 5 4. Even though counsel for the petitioner contended that necessity of Annexure-IV Form declaration in terms of the above provision of the notification was not considered by any of the authorities and petitioner should be given an opportunity to obtain and produce the same, we do not think there is any scope for it because the very fact that SSI unit has obtained Form No.25D from the petitioner proves beyond doubt that but for the declaration obtained and produced by them, they would have been liable to pay tax on the products sold to the petitioner, no matter petitioner happens to be liable under Section 5(2) by virtue of the sale by them under brand name. In other words, the declaration 25D provided is only a mechanism to ensure assessment, levy of tax on sale by the brand name holder which is declared as deemed first sale under the provision so that the previous seller is not liable to pay tax. The only conclusion possible is that the SSI unit that was manufacturing and selling the goods under brand name to the petitioner would be outside the period of exemption provided to them under notification SRO 1729/93 and so much so, they were ineligible to issue declaration in Annexure IV to the above S.T. Rev.84/2011 6 notification. Consequently petitioner was rightly declined concessional rate under notification SRO 1091/2009. We, therefore, dismiss the S.T. Revision case. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms