IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 25TH MARCH 2009 / 4TH CHAITHRA 1931 ST.Rev..No. 120 of 2008() ------------------------- TA.345/2006 of S.T.A.T., ADDL.BENCH-II, ERNAKULAM .................... REVISIION PETITIONERS ----------------------------------------- STATE OF KERALA, REP. BY JOINT COMMISSIONER (LAW) IN-CHARGE, COMMERCIAL TAXES, ERNAKULAM BY GOVERNMENT PLEADER SRI. V.K. SHAMSUDEEN RESPONDENT(S): --------------- M/S.SAMTECH RUBBER INDUSTRIES KODANADU, PERUMBAVOOR. ADV. SRI.K.RAMANATHAN THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 25/03/2009 ALONG WITH STRV 127/08 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & K. SURENDRA MOHAN, JJ. -------------------------------------------- S.T. Rev. Nos. 120 & 127 OF 2008 -------------------------------------------- Dated this the 25th day of March, 2009 JUDGMENT Ramachandran Nair,J. The question raised in the connected Revision Petitions filed by the State pertain to the rate of tax applicable to inter-State sale of tread rubber by the respondent-assessee which is a SSI unit. SSI units were granted concessional rate of tax payable under the KGST Act as well as under the CST Act by separate notifications issued under Section 10 of the local Act and under Section 8(5) of the CST Act respectively. Rate of tax on inter-State sales under notification SRO 1731 of 1993 was 4%. However by another notification SRO 958/2002 requirement of C Form was made compulsory for SSI units to claim concessional rate on inter-State sales. Admittedly the respondent-assessee did not produce C forms for inter-State sales even though they claimed concessional rate at 4% on inter-State sales. In the absence of C forms, the assessing officer levied tax on the product at the scheduled rate which is 12% and 2 along with it additional sales tax. Since first appeal did not succeed, the respondent-assessee challenged the orders before the Tribunal. The Tribunal relying on their earlier decision held that the respondent is liable to pay tax only at 10% under Section 8(2)(b) of the CST Act on the ground that it was a SSI unit which is entitled to concessional rate of 8% on local sales of tread rubber under notification issued under Section 10 of the Act. This notification, SRO 1091 of 1999 provides for concessional rate on tread rubber only when SSI units make local sales in the State. The objection raised by the State against the order of the Tribunal is absolutely tenable because in the absence of C forms Section 8(2)(b) provides for levy of tax on the inter-State sale of goods at 10% or such higher rate applicable for the goods under the local Act. The rate of tax applicable " to the sale or purchase of such goods inside the appropriate State" referred to in Section 8(2)(b) cannot be the rate applicable to specified dealers under the notification. In other words, in order to apply the rate under the local Act for the goods, notification reducing rate of tax at 10% or below should be the general rate applicable to all dealers. Therefore concessional rate granted to 3 specified category of dealers cannot be treated as rate generally applicable to goods under the local Act. Since concessional rate of tax at 8% on tread rubber is available only to SSI units, it is not a rate applicable for tread rubber under the Schedule to the Act. Therefore the applicable rate for tread rubber during the years 2002-03 and 2003- 04 being 12% under the First schedule, the Tribunal was not justified in treating the rate of tax for the item as 8% based on notification issued under the local Act. We therefore allow the Sales tax Revisions by reversing the order of the tribunal and restoring the assessment at higher rate. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk 4