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 MONDAY, THE 17TH MARCH 2008 / 27TH PHALGUNA 1929 S.T.Rev.No.24 of 2005 ------------------------------- T.A.No.169/2001 OF KERALA SALES TAX APPELLATE TRIBUNAL, PRINCIPAL BENCH, THIRUVANANTHAPURAM (ORDER DATED 12-7-2001) (ASSESSMENT YEAR 1996-97) .................... REVISION PETITIONER/RESPONDENT/REVENUE:- ------------------------------------------------------------------------ STATE OF KERALA REPRESENTED BY THE DEPUTY COMMISSIONER (LAW), COMMERCIALL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. RESPONDENT/APPELLANT/ASSESSEE:- -------------------------------------------------------- M/S.INSTYLE DECORATOR AND DISTRIBUTORS, WOMENS COLLEGE LANE, VAZHUTHACAUD, THIRUVANANTHAPURAM. BY ADV. SRI.JOSE JOSEPH. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 17/03/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.Dattu,C.J. & K.T.Sankaran,J. --------------------------------------- S.T.Rev.No.24 of 2005 --------------------------------------- Dated, this the 17th day of March, 2008 ORDER H.L.Dattu,C.J. This revision petition is filed against the orders passed by the Kerala Sales Tax Appellate Tribunal, Principal Bench, Thiruvananthapuram in T.A.No.169 of 2001 dated 12.07.2001. 2. The revision petitioner is the State Government. The State calls in question the correctness or otherwise of the orders passed by the Tribunal in T.A.No.169 of 2001. By the impugned order, the Tribunal has held that the flexible flooring materials would come under Entry 101 of the first schedule to the Kerala General Sales Tax Act, 1963 (“Act” for short) and, accordingly, had directed the assessing authority to levy tax at the rate of 10%. 3. The assessment year in question is 1996-97. The assessing authority, after going through the records, has found that the assessee is a dealer in flexible flooring materials. Accordingly, has brought to tax the sale of flexible flooring materials under Entry 75 of the Act and has levied tax at 15%. 4. Aggrieved by the said order of the assessing authority, the assessee had carried the matter in appeal before the Appellate Assistant Commissioner of Commercial Taxes, Thiruvananthapuram in S.T.A.No.644 of 2000. The first appellate authority, after examining the sample of the item dealt with by the assessee that was produced before him, has come to the conclusion that the assessee is a dealer in flexible flooring material and, therefore, the rate of tax that requires to be levied is only at the rate of 15%. Accordingly, has sustained the orders passed by the assessing authority. S.T.Rev.No.24 of 2005 - 2 - 5. Aggrieved by these two orders, the assessee had carried the matter in appeal before the Tribunal in T.A.No.169 of 2001. The Tribunal, applying the decision of this Court in M.R.Somasundaran Nair v. State of Kerala [(1999) 7 KTR 55] and also the decision of the Tribunal in T.A.Nos.356 and 357 of 2000 dated 28.03.2001, has held that the flexible flooring materials are nothing but PVC sheets and rexine sheets and, therefore, the disputed item come under Entry 101 of the Act. Accordingly, has directed the assessing authority to issue appropriate demand notice by modifying the rate of tax from 15% to 10%. Aggrieved by the orders so passed by the Tribunal, the State is before us in this revision petition. 6. The State has framed the following questions of law for our consideration and decision. They are as under: 1) Whether in the circumstances and on the facts of the case the decision of the Tribunal that PVC sheets and Rexin Sheets will not fall under Entry 75 of the First Schedule of the KGST Act is against law, as there is a specific entry in respect of flexible flooring materials. 2) Is not the Tribunal erred in relying on decision reported in (1999) 7 KTR 55 (Somasundran Nair vs. State of Kerala) as in that case, the item in question was plastic storage Tanks and article made of plastic, which has got no connection with the facts of the present case”. 7. The assessing authority and the first appellate authority, after going through the books of accounts and also examining the item that is dealt with by the assessee, have come to the conclusion that the assessee is a dealer in flexible flooring materials. This is a finding of fact and the same cannot be disputed even by the assessee. S.T.Rev.No.24 of 2005 - 3 - 8. If we go by the item dealt with by the assesseee, then it can only come under Entry 75 of the Act, which reads as under: “75. Linoleum and Flexible flooring materials - Rate of tax 15%”. 9. The Tribunal, relying upon the observations made by this Court in M.R.Somasundaran Nair's case (supra), has come to the conclusion that the item dealt with by the assessee would come under Entry 101 of the Act, which deals with “plastic and articles of plastics including PVC pipes, etc.”. 10. In M.R.Somasundran Nair's case, the question before a Division Bench of this Court was whether plastic storage tanks would fall under Entry 145 or under Entry 217 of the first schedule to the Act. Admittedly, in the said decision the item “flexible flooring materials” did not fall for consideration. 11. Entry 75 of the First Schedule to the Act specifically deals with “Linoleum and Flexible flooring materials”. Entry 101 of the First Schedule to the Act speaks of “plastics and articles of plastics including PVC pipes, etc.”. 12. As we have already stated, the assessing authority as well as the first appellate authority after going through the records maintained by the dealer and after examining the item that is dealt with by the dealer, have positively come to the conclusion that the respondent herein is an assessee dealing in item “flexible flooring materials”. If that be so, the assessing authority and the first appellate authority were justified in holding that the sale of flexible flooring materials requires to be taxed only under Entry 75 of the first schedule to the Act. The Tribunal without keeping in view the relevant Entries under the Act and misapplying the ratio decidendi of the decision of this Court in M.R.Somasundaran Nair's case, has come to the conclusion that “flexible flooring materials” is PVC sheets or rexine sheets. S.T.Rev.No.24 of 2005 - 4 - The finding of the Tribunal, in our opinion, is contrary to the factual situation pleaded by the parties before the assessing authority and the first appellate authority. Therefore, the order passed by the Tribunal cannot be sustained by us. 13. Accordingly, the order passed by the Tribunal requires to be set aside and the questions of law raised by the Revenue requires to be answered in positive and against the assessee. Ordered accordingly. H.L.Dattu Chief Justice K.T.Sankaran vku/- Judge