IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN TUESDAY, THE 9TH FEBRUARY 2010 / 20TH MAGHA 1931 OT.Rev.No. 11 of 2009() ----------------------- TAVAT.190/2008 of DY.CMRR.KERALA AGRL.IT & STAT,EKM. .................... REVISION PETITIONER/APPELLANT: --------------------------------------- K.S.SHEKHAR,SUN MARK,THENUR,PALAKKAD. BY ADV. SRI.HARISANKAR V. MENON SMT.MEERA V.MENON RESPONDENT/RESPONDENT: --------------- STATE OF KERALA. BY G.P. SRI.MOHAMMED RAFIQ THIS OTHER TAX REVISION (VAT) HAVING COME UP FOR ADMISSION ON 09/02/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & P.S. GOPINATHAN, JJ. -------------------------------------------- O. T. Rev. No. 11 OF 2009 -------------------------------------------- Dated this the 9th day of February, 2010 JUDGMENT Ramachandran Nair, J. The question raised in this Revision case filed by the petitioner is whether the Tribunal was justified in declining sales tax exemption on the manufacture and sale of hand-made soap powder by the petitioner. Petitioner is a Khadi Industry set up in the year 2000. According to the petitioner, soap cakes and soap powder were hand-made until 2006-07 when the petitioner went for automation which involved purchase and installation of machinery for making soap in a mechanised manner. Admittedly, sub entry (2) of Entry 55 of the First Schedule to the KVAT Act provides for exemption on the sale of product of Khadi Industries, namely, hand made soap. Petitioner's case is that soap takes in soap powder as well and as long as it is made with hand, it qualifies for exemption under the entry above mentioned in the First Schedule. Even though first appellate authority agreed with the contention of the petitioner, the Tribunal took the stand that only soap cakes are covered 2 by the exemption under the Schedule entry. It is against this order of the Tribunal that the petitioner has filed this revision. We have heard counsel appearing for the petitioner and Government Pleader for the respondent. 2. Counsel for the petitioner has relied on Annexure B letter issued by the Khadi Board which covers soap powder as well within the scope of exemption. So much so, the Tribunal's finding that exemption applies to soap cake alone is incorrect. Since soap powder was also covered within the scope of exemption for Khadi units, we feel if petitioner was making soap powder with hand that is by employing labour and not by mechanical process, then petitioner is entitled to exemption. We do not find any detailed finding by any of the authorities pertaining to subsequent mechanisation which was carried out by the petitioner on 10.1.2007. Petitioner has a case that after mechanisation they have retrenched some of the workers previously engaged by them in the industry. In the circumstances, we allow the revision by setting aside the order of the Tribunal and that of the first appellate authority and remand the matter to the assessing officer for verification of the factual position about the product 3 manufactured and the persons engaged in manufacturing, packing, etc., activities. In fact petitioner himself has a case that subsequently the unit was modernised with advanced machinery and making soap by hand was discontinued. The Officer can call for details of machinery purchased, used in the business subsequently which go to prove the petitioner's case that manufacture before automation was through human agency which qualifies for exemption. S.T. Rev. is disposed of as above with direction to the assessing officer to conduct enquiry and collect details from the petitioner regarding purchase of machinery, employment and retrenchment of employees to prove petitioner's case. (C.N.RAMACHANDRAN NAIR) Judge. (P.S. GOPINATHAN) Judge. kk