IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 27TH MAY 2009 / 6TH JYAISHTA 1931 ST.Rev..No. 391 of 2008() ------------------------- TA.28/2007 of S.T.A.T.ADDL.BENCH,ERNAKULAM .................... APPELLANT ----------------------------- THE KERALA STATE CO-OPERATIVE MARKETING FEDERATION LTD., ERNAKULAM. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT(S): RESPONDENT ------------------------- STATE OF KERALA. BY G.P. SRI. MOHAMMED RAFIQ THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 27/05/2009, ALONG WITH STRV NO. 65 TO 71 OF 2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & C. K. ABDUL REHIM, JJ. -------------------------------------------- S. T. Rev. Nos.391 OF 2008 & 65, 66, 67, 68, 69,70, 71 OF 2009 -------------------------------------------- Dated this the 27th day of May, 2009 C.R. JUDGMENT Ramachandran Nair,J. Even though Government Pleader opposed the condonation of long delay, we are inclined to condone the delay for the reason that delay is caused on account of pendency of rectification applications filed by the petitioner before the Tribunal. In fact revisions filed against the orders rejecting the rectification applications are dismissed by us as not maintainable. In the circumstances we condone the delay in filing the revisions. 2. The revision cases pertain to sales tax assessments of the petitioner completed for the assessment years 1990-91 to 1993-94 and for the year 1998-99. Revisions are filed against the orders of the Tribunal dismissing assessee's appeals and allowing departmental appeals. The sole question arising for consideration is whether the Tribunal was justified in declining the benefit of concessional rate of 2 tax to the petitioner on the purchase of copra and on sale of coconut oil and oil cake produced out of the said copra within the State under notifications for relevant years, namely, SROs. 781 of 1989, 437/91, 376/92, and 1727 and 1728 of 1993. 3. Petitioner is a marketing Federation in the Co-operative sector under the control of the Government of Kerala. Even though it has no oil mill of it's own, Federation entered into agreement with oil mill owners for crushing copra purchased by the Federation in their mills on contract basis. On going through the contract between the Federation and oil mill owners, copy of which is produced in the Revisions, we notice that under the contract, the Federation has taken the oil mills on an exclusive basis for crushing their own copra. In other words, even the mill owners are not entitled to crush their copra during the period of contract, the mill had with the Federation. Clauses 5 and 17 of the agreement go to show that Federation has even authority to maintain security staff, and supervise the operations in the mill. The question is whether the contract of crushing of copra purchased by the Federation within the State and sale of products namely coconut oil and oil cake produced out of the copra purchased by the Federation will entitle them for the benefit of above referred notifications. Since the notifications 3 are pari materia the same we extract hereunder SRO 781 of 1989 for ready reference: "Coconut Copra, Coconut oil and Coconut oil Cake SRO No. 781/89. In exercise of the powners conferred by Section 10 of the Kerala General Sales Tax Act, 1963 (15/1963) and in supersession of the notification No. G.O.MS 169/69/Rev. dated the 1st April, 1969 published as SRO 137/69 in the Kerala Gazette Extraordinary No. 88 dated the 1st April, 1969 and G.O. (MS) 140/74/TD dated the 21st November, 1974 published as SRO No. 854/74 in the Kerala Gazette Extraordinary No. 739 dated the 21st November, 1974 and item (iii) of notification III GO (MS) No. 55/79/TD dated the 31st March, 1979 published as SRO No. 388/79 in the Kerala Gazette Extraordinary No. 248 dated the 31st March, 1979, the Government of Kerala having considered it necessary in the public interest so to do, hereby make the following reduction in the rate in respect of tax payable for coconut, copra, coconut oil and coconut oil cake. (i) The tax payable by an oil miller under the said Act in respect of his purchases of coconut or copra which is used by him for production of coconut oil and cake on his mill within the State for sale and tax is levied on the coconut oil and coconut oil cake produced out of such coconuts or copra either under this Act or under the Central Sales Tax Act, (Central Act 74 of 1956) shall be reduced from 4% to 2% and in the circumstances when tax is not levied on the coconut oil and coconut oil cake produced out of such copra under this Act or under the Central Sales Tax Act, 1956, be reduced from 4% to 3%. (ii) The tax payable under the said Act by an oil miller in the State on the sale of coconut oil and coconut oil cake 4 produced in his mill in the State to any dealer for sale by such dealer in the course of inter-State trade or commerce including transfer to any other place of business or to an agent or to a principal situated outside the State or to manufacturer of soap within the State when tax is levied under this Act on the coconut or copra out of which the coconut oil and coconut oil cake are produced be reduced from 5% to 1% subject to the condition that the Explanation to the entries coconut oil and coconut oil cake in the First Schedule to the Act shall not apply to such sales and the oil miller shall produce before the assessing authority a declaration obtained from the purchasing dealer in the form hitherto appended. ..................................................................." 4. The question to be considered is whether Federation is entitled to the benefit of above notification. In the beginning itself, counsel for the petitioner submitted that another organisation under the control of the Central Government, namely, NAFED, also did contract crushing under arrangement with mills and the very same Appellate Tribunal upheld the concessional rate of tax on the purchase of copra and sale of products under the very same notification. However Government Pleader submitted that they are contemplating filing revisions challenging the orders of the Tribunal. It is to be noted that the Tribunal issued orders in those cases more than 5 years ago and it is anybody's imagination what fate the revision cases will meet in this 5 Court if at all State chooses to file revisions with delay of over 5 years. In any case, we feel matter requires to be decided on merits in this case because Tribunal's decision is against the Federation which has filed these revision cases. 5. Petitioner has relied on the Division Bench decision of this Court in PALAKKAD OIL MILL's case, 65 STC 169 and contended that oil miller as used in the notification does not require ownership of the oil mill for claiming the benefit of the notification. On going through the judgment we find that this Court took the view that what is relevant is not ownership but control of the mill in regard to it's operations. Besides the finding in the judgment, we are of the view that the purpose of the notification was to encourage local production of oil from copra and sale of the products within the State. In fact concessional rate of tax is provided on purchase of copra as well as on local and inter-State sale of oil and oil cake produced out of such copra. In the normal course, an oil mill purchases copra, crushes the same and sells the product in their own account. It is in this context that the notification gives exemption with reference to oil mill and their turnover. However, we do not think Government intended to disallow exemption if the purpose of notification is otherwise satisfied. Going 6 by the notification we are of the view that the purpose of the notification was to encourage crushing of copra within the State which involves purchase of copra from farmers within the State, thereby helping the farmers in the marketing of their product and at the same time promotion of sale of products is achieved by granting concessional rate of tax on local and inter-State sale of oil and oil cake. These objects are satisfied in the Federation's operations in as much as they purchased copra within the State, got crushing of copra done in the oil mills locally within the State and oil and oil cake are admittedly sold locally and inter-State and on which concessional rate of tax is paid under the notification. We are therefore of the view that operation of the Federation is intended to be covered by the notifications. Oil mills undertook crushing work for the Federation because they did not have copra to crush in their own account. In other words, but for the business provided by the Federation, mills would have remained idle. Therefore even if the notification is intended to promote oil mills in the State, there again we feel the object is achieved in the contract crushing provided by the Federation to the mills whereunder the mills were paid charges for every quintal of copra crushed within the State. Since copra was purchased by the Federation on their own account, crushed 7 in the mills within the State under their supervision and since the finished products, oil and oil cake are sold within the State we hold that the operation of the petitioner is covered by the notification above referred. Since the subsequent notifications applicable for later years are similarly worded the benefit under those notifications is available to the petitioner also. Revisions are therefore allowed reversing the order of the Tribunal with direction to the Assessing Officer to grant concessional rate of tax to the petitioner under the notifications on the local purchase of copra and on the sale of oil and oil cake obtained in contract-crushing in Kerala. (C.N.RAMACHANDRAN NAIR) Judge. (C. K. ABDUL REHIM) Judge. kk 8