IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER TUESDAY, THE 29TH JULY 2008 / 7TH SRAVANA 1930 ST.Rev..No. 245 of 2007 ---------------------------------------- (ORDER DATED 10-01-2007 IN T.A.NO.200 OF 2006 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM) . ................... REVISION PETITIONER/ APPELLANT: --------------------------------------------------- PRIMAL.C.THOMAS, KOKOTH HOUSE, THATHAMPILLY P.O., ALAPPUZHA DISTRICT. (SON AND LEGAL HEIR OF LATE.THOMAS KURIAN, PROPRIETOR, M/S.EI-TE MARINE PRODUCTS, ALAPPUZHA. BY ADV. SRI.V.P.SUKUMAR SRI.JAIRAM.V.MENON RESPONDENT/ RESPONDENT: ------------------------------------------- STATE OF KERALA, REPRESENTED BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 29/07/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------------------ S.T.Rev.No.245 of 2007 --------------------------------------------- Dated, this the 29th day of July, 2008 O R D E R H.L.Dattu, C.J. In this revision petition the petitioner calls in question the orders passed by the Sales Tax Appellate Tribunal, Additional Bench, Kottayam in T.A.No.200 of 2006 dated 10-01-2007. 2. The assessee has framed the following questions of law for our consideration and decision. They are as under: i). DEPB is issued by the Director General of Foreign Trade under the Export-Import Policy 1997-2002. In Chapter 7.14 of the said policy it is provided that for exporters not desirous of going through the licensing route, an optional facility is given under DEPB. The objective of DEPB Scheme is to neutralise the incidence of customs duty on the import content of the product of export. The neutralization shall be provided by way of grant of duty credit against the product of export. Under the Duty Entitlement Pass Book Scheme (DEPB), an exporter may apply for credit at a specified percentage of FOB value of exports, made in freely convertible currency. The credit shall be available against such products of export and at such rate as may be specified by the Director General of Foreign Trade by way of Public Notice issued in this behalf, for import of raw materials, intermediates, components, parts, packing materials etc. The holder of DEPB shall have the option to pay additional customs duty, if any, in cash as S.T.Rev.No. 245/2007 -2- well. It is therefore clear that DEPB is a substitute for cash, or in other words it is just like cash or demand draft. In the said circumstance, is the Tribunal justified in law in holding that transfer value of DEPB is exigible to sales tax? ii). The Tribunal arrived at the conclusion that DEPB certificate is 'goods' on the basis of the decision of this Hon'ble Court in International Creative Foods Case (13 KTR 211). In the decision of this Hon'ble Court reported in 13 KTR 211 it was held that transfer value of DEPB certificate is exigible to sales tax. The said decision was rendered following the decision of the Hon'ble High Court of Delhi in Philco Exports Vs. Sales Tax Officers and Others (124 STC 503). The decision in Philco Exports was rendered relying on the decision in Vikas Sales Corporation (102 STC 106). The Constitution Bench of the Hon'ble Supreme Court in Sunrise Associate's case (145 STC 576) held that the decision in Vikas Sales Corporation is erroneous and hence the very foundation of the decision of this Hon'ble Court reported in 13 KTR 211 stands demolished. The law laid down by the Hon'ble Supreme Court in the decision reported in 145 STC 576 was put to the notice of the Tribunal. Is the Tribunal still justified in relying on the decision of this Hon'ble Court reported in 13 KTR 211 without adverting to the law declared by the Apex Court in the Sunrise Associate's case (145 STC 576)? iii). The Tribunal in Annexure-III order held that since the Hon'ble Supreme Court in the decision reported in 145 STC 576 overruled its earlier decisions prospectively and the judgment is dated 28-04-2006 the same is not applicable to the assessee's case for the assessment years 2000-2001 to 2003-2004. The doctrine of prospective overruling as elaborated by the Hon'ble Supreme Court in Somaiya Organics' case (9KTR 560) was put to the notice of the Tribunal. Is the S.T.Rev.No. 245/2007 -3- Tribunal justified in law in holding that the decision of the Hon'ble Supreme Court reported in 145 STC 576 is not applicable to the assessee's case for the assessment years 2000-01 to 2003-2004 without even speaking about the doctrine of prospective overruling as explained by the Hon'ble Supreme Court in the decision reported in 9 KTR 560? 3. The issue that would arise for our consideration and decision in this tax revision petition is whether the transfer value of DEPB can be subjected to tax under the provisions of the Kerala General Sales Tax Act? 4. The issue is no more debatable, in view of the dicta laid down by the Apex Court in the case of M/s.Yasha Overseas & Others Vs. Commissioner of Sales Tax & Others (Civil Appeal No.2155/2000 and connected matters) disposed of on 6-5-2008. In the said decision, the Supreme Court has stated as under: “DEPB has an intrinsic value that makes it a market commodity. Therefore, DEPB, like REP licence qualifies as 'goods' within the meaning of the Sales Tax laws of Delhi, Kerala and Mumbai and its sale is exigible to tax.” 5. In view of the law declared by the Apex Court, in our opinion, the questions of law framed by the assessee requires to be S.T.Rev.No. 245/2007 -4- answered against the assessee and in favour of the Revenue. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS