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 MONDAY, THE 9TH JUNE 2008 / 19TH JYAISHTA 1930 ST.Rev..No. 255 of 2005 -------------------------------- ORDER DATED 10.12.2004 IN TA.179/2004 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-II, ERNAKULAM .................... REVISION PETITIONER/APPELLANT/ASSESSEE -------------------------------------------------------------------- M/S.ELKAREEM INTERNATIONAL, KUNHALU HOUSE, T.D.ROAD, KOCHI 682 011. BY ADV. SRI.PREMJIT NAGENDRAN RESPONDENT/RESPONDENT/REVENUE --------------------------------------------------------- STATE OF KERALA. BY SR.GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 09/06/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------ S.T.Rev.No.255 of 2005 ------------------------------------------ Dated, this the 9th day of June, 2008 ORDER H.L.Dattu, C.J. The assessee is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 (the 'KGST Act' for short) and the Central Sales Tax Act, 1956 ('the CST Act' for short). This revision petition pertains to the assessment year 1999-2000. The Tribunal by its order dated 10th December, 2004 in T.A.No.179 of 2004 has rejected the appeal. That is how the assessee is before us in this revision petition. 2. The assessee has raised the following questions of law for our consideration and decision. They are as under: “a) Whether the decision of this court reported in 10 KTR 245 requires reconsideration more so in light of the fact that the Honourable Supreme Court has referred the appeals filed against the said decision to a constitutional bench? b) Whether the finding of the tribunal that DEPB licences are goods as defined in Section 2 clause (xii) of the Kerala General Sales Tax Act is legally correct and sustainable?” 3. The question of law framed by the assessee, in our opinion, is no more debatable in view of the law declared by the apex Court in the case of M/s.Yasha Overseas & Others v. Commissioner of Sales Tax & Others (Civil Appeal No.2155 of 2000 and other connected matters disposed of on 6.5.2008). In the said judgment the apex Court at paragraphs 29 and 43 has specifically observed as under: “29. At this stage we feel obliged to put in a caveat in regard to the observations made in Sunrise about marketability being a feature of distinction between 'goods' proper and actionable claims. What was said in Vikas, as we understand S.T.Rev.No.255 of 2005 2 it, was that the innate value of REP licence and its free transferability made it into a market commodity. The illustrations given in paragraphs 39 and 40 of the decision in Sunrise, namely, (i) a right on the fulfillment of certain conditions to call for delivery of goods mentioned in a contract, (ii) negotiable instruments, (iii) right to recover insurance money, (iv) a partner's right to sue for an account of a dissolved partnership, (v) the right to claim the benefit of a contract not coupled with any liability, (vi) a claim for arrears of rent and (vii) a right to the credit in a provident fund account are all indeed transferable for consideration but none of these is a market commodity. The holder of any of the above rights or claims may or may not be able to find a ready buyer at a given time; conversely a prospective buyer may not find any of the above rights or claims available for purchase by going to the market at any time. Contrary to this, REP licenses had always a market, that is to say, there were people willing to sell and others willing to buy REP licenses at all times. Its innate value coupled with free transferability made REP licences into a market commodity and it was that aspect of the matter that Vikas referred to for holding that REP licences could not be classified as actionable claims. Those were goods properly so-called having innate value and a ready market. The position becomes further clear by the completely contrasting findings in Sunrise (in regard to lottery tickets) and in Vikas (in regard to REP licences). In Sunrise after giving illustrations of transferable actionable claims (paragraphs 39 and 40) paragraph 41 begins as: “A lottery ticket has no value itself. It is a mere piece of paper” On the contrary, in Vikas paragraph 29 begins as follows: “The above provisions do establish that REP licences have their own value. They are bought and sold as such”. We thus have not the slightest doubt in our mind that the decision in Sunrise in no way affects the position insofar as REP licences are concerned and the legal position in regard to their sale is concluded by the decision in Vikas”. xxx xxx “43. In light of the discussions made above, the two questions framed at the beginning of the judgment are to be answered as follows: S.T.Rev.No.255 of 2005 3 The Constitution Bench decision in Sunrise does not alter the position in regard to levy of tax on sale of REP licence and on that issue the three-Judge Bench decision in Vikas continues to hold the field. 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”. 4. In view of the law declared by the apex Court, in our opinion, the question of law framed by the assessee requires to be answered against the assessee and in favour of the Revenue. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns