IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN MONDAY, THE 27TH SEPTEMBER 2010 / 5TH ASWINA 1932 ST.Rev..No. 109 of 2009() ------------------------- REVISION PETITIONER: -------------------- STATE OF KERALA, REPRESENTED BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY GOVERNMENT PLEADER SRI. MOHAMMED RAFEEQ RESPONDENT(S): --------------- 1. SRI. K. PARAMESWARAN, MEDI HEALTH, POONKUNNAM, THRISSUR (DIED) ADDL. 2. MRS. RETHI, WIFE OF K. PARAMESWARAN, AARPEEVILLA, GREEN GARDEN, KOTTAPPURAM ROAD, PUNKUNNAM, THRISSUR. ADDL. 3. SMT. ASWATHI, D/O. K. PARAMESWARAN, AARPEEVILLA, GREEN GARDEN, KOTTAPPURAM ROAD, PUNKUNNAM, THIRSSUR. ADDL. R2 AND R3 ARE IMPLEADED AS PER ORDER ON I.A. 66/2010 DATED 27.9.10 BY ADV. SRI.P.N.DAMODARAN NAMBOODIRI THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 27/09/2010, ALONG WITH STRV. NO.111/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR, & K. SURENDRA MOHAN, JJ. -------------------------------------------- S.T. Rev. Nos. 109 & 111 of 2009 -------------------------------------------- Dated this the 27th day of September, 2010 JUDGMENT Ramachandran Nair, J. The question raised in these Revision Cases is whether the Tribunal was justified in holding that the first respondent, who is no more, is not liable to pay tax under Section 5(2) of the KGST Act on the items sold under brand name. The case of the department is that packing materials were supplied by the first respondent and the manufacturer only packed the items in the packing materials supplied by the first respondent. The claim of respondents 2 and 3, legal heirs of first respondent, is second sale exemption. Admittedly, the goods involved is herbal ointment packed under the brand name "Rubacha Herbal Ointment". Respondents' case is that the manufacturer itself packed the commodity with the brand name and sale by them itself is under brand name and so much so second sale exemption was rightly claimed. The contention of the Government Pleader is that supplier did not have minimum turnover that attracts tax and so much so tax is STRev. 109 & 111/2009 2 payable under Section 5(1) by the respondents as their turnover was admittedly above the non-taxable limit. Besides this, department's contention is that respondents have purchased packing materials, namely, bottles and supplied the same to the manufacturer for packing and supply to the respondents. According to the Government Pleader packing materials supplied containing name of the product itself indicates that respondents have the right to sell the goods in the brand name and so much so, they are liable to pay tax under Section 5(2) of the Act. 2. After hearing both sides and after going through the Tribunal's order we feel the Tribunal has committed a grave error in granting exemption on second sales because if the supplier had turnover below the non-taxable limit, respondents having turnover above the non- taxable limit, are liable to pay tax under Section 5(1) of the Act, irrespective of whether brand name is applicable or not. In this case, assessment under Section 5(2) has no relevance because turnover having exceeded non-taxable limit, respondents are liable to pay tax under Section 5(1) itself. Even though assessment under Section 5(2) could be sustained only if respondents are exclusive holder of the brand STRev. 109 & 111/2009 3 name, we do not think any enquiry is called for because respondents admittedly sold the goods at above 100% gross profit and since the manufacturer did not have minimum turnover subject to tax, respondent is liable to be assessed under Section 5(1) itself. We therefore allow these Revisions by reversing the order of the Tribunal and that of the first appellate authority and by restoring the assessment. However, considering the fact that respondents 2 and 3 are only legal heirs of the deceased assessee, there will be direction to the department not to levy interest either under Section 23(3) or under Section23(3A) if the arrears of tax for these two years, are paid within a period of one month from the date of receipt of a copy of this judgment. Respondents 2 and 3 will produce a copy of this judgment before the assessing officer and make payment as above to avoid interest. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk STRev. 109 & 111/2009 4