IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN FRIDAY, THE 18TH DECEMBER 2009 / 27TH AGRAHAYANA 1931 ST.Rev..No. 251 of 2009() ------------------------- TA.320/2008 of S.T.A.TRIBUNAL,ADDL.BENCH,PALAKKAD .................... REVISION PETITIONER/APPELLANT/ASSESSEE ------------------------------------------------ M/S.ITEL INDUSTRIES LTD., NEW NO.II, ANNA AVENUE, BHAKTAVATSALAM NAGAR, ADAYAR, CHENNAI - 600 020, REPRESENTED BY ITS AUTHORISED SIGNATORY. BY ADV. DR.K.B.MUHAMED KUTTY, SENIOR ADVOCATE SRI.K.M.FIROZ RESPONDENT/RESPONDENT/REVENUE: ---------------------- THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, TAXES DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. BY G.P. SRI.MOHAMMED RAFIQ THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 18/12/2009, ALONG WITH STRV NO.204 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & V.K.MOHANAN, JJ. .................................................................... S.T. Rev. Nos.251 & 204 of 2009 .................................................................... Dated this the 18th day of December, 2009. JUDGMENT Ramachandran Nair, J. The question raised is on rate of tax payable on interstate sale of electronic push button telephone manufactured and sold by the petitioner in Kerala. Assessments involved are for the years 2000-2001 and 2002-2003. The assessment for 2000-2001 was completed initially by applying rate of tax at 2%. However, the assessment was revised for this year and regular assessment for 2002-2003 was completed fixing the rate of tax on interstate sales of electronic push button telephone at 4%. The petitioner was unsuccessful in the appeals at two levels and consequently these revisions are filed against the orders of the Tribunal. We have heard Senior counsel Dr.K.B.Mohammedkutty appearing for the petitioner and Government Pleader appearing for the respondent. 2. The contention of Senior counsel appearing for the petitioner is that there has been general reduction of tax on interstate sale of various 2 goods under Notification SRO 1731/93 issued under Section 8(5) of the CST Act. In fact, this Notification has been subject to several amendments periodically. When electronic push button telephone was introduced through Notification SRO 304/99 with effect from 1.4.1999 by inserting Entry 18A in Schedule II of SRO 1731/93, the rate of tax on push button telephone under this Entry was 2%. However, later Table to Schedule II was substituted by SRO 609/2000 wherein a general rate of 4% is fixed for various electronic goods specified thereunder, which Notification was issued in terms of Entry 11 of Schedule II of SRO 1731/93. The confusion arose because after the introduction of Entry 18A and Table to Schedule II under Entry 11 of the said Schedule, push button telephone attract tax at 2% and electronic push button telephone under Entry 1.11 of Table to Schedule II attract tax at 4%. The Assessing Officer found that both push button telephone and electronic push button telephone are two categories of goods and since petitioner is manufacturing and selling electronic push button telephones, the rate applicable is 4%. This order is confirmed in first appeal by the appellate authority and by the Tribunal in second 3 appeal, against which revisions are filed. 3. Senior counsel appearing for the petitioner contended that the subsequent introduction of electronic push button telephones under Entry 1.11 in the Table below Schedule II is a mistake without noticing Entry 18A of Schedule II of the Notification which specifically covers push button telephones. He has submitted that push button telephones are generally electronic and there is no mechanically operated push button telephone. If this is the position, certainly the inclusion of electronic push button telephones in the Table below Schedule II is a mistake because already push button telephone is covered by Entry 18A of Schedule II. Probably push button telephones which were operational mechanically may have been there in the market in the beginning. However, it is common knowledge that push button telephones generally produced and sold in the country for the last 10 years are electronic. The department has also no case that any industrial unit in Kerala is manufacturing push button telephones which are not electronic. Entry in the Notification should be considered with reference to products available in the market and when all push button 4 telephones produced and sold are electronic, it has to be assumed that the entry providing for push button telephone covers electronic push button telephones. Reduction is generally granted on representation from industry and petitioner itself is a successor of another manufacturing company namely, TATA who have closed down unit and petitioner took over thereafter only. Obviously in a failing market Government reduced rate of tax to sustain the industry. Therefore, we feel the two entries, one for push button telephone and the other for electronic push button telephone, is a mistake in the Notification because push button telephone referred to in Entry 18A of Schedule II will take in all forms of push button telephone, whether electronic or not. Further, there is no rationale behind fixing different rate of tax on push button telephone and electronic push button telephone because functionally both are the same. We, therefore, declare that Entry 18A providing for push button telephone takes in electronic push button telephone as well. Consequently the specific coverage of electronic push button telephone under Table below Schedule II has to be ignored. We, therefore, allow the revisions by reversing the order of 5 the Tribunal and that of the lower authorities and direct the Assessing Officer to revise the assessment of interstate sale of electronic push button telephones by the petitioner at 2% under Entry 18A of Schedule II to SRO 1731/93. C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms