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 FRIDAY, THE 20TH JUNE 2008 / 30TH JYAISHTA 1930 S.T.Rev..No. 308 of 2006 ---------------------------------- ORDER DATED 14.10.2005 IN TA.274/2005 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONA .BENCH, PALAKKAD .................... PETITIONER/PETITIONER ------------------------------------- K.P.ANTO, PROPRIETOR, K.G.P.BONE PRODUCTS, CHITTOOR, PALAKKAD. BY ADV. SRI.HARIHARAN NAIR SRI.MANU MOHAN RESPONDENT/RESPONDENT: ------------------------------------------- STATE OF KERALA. BY SR. GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 20/06/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- S.T.Rev.No.308 of 2006 ------------------------------------------ Dated, this the 20th 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). (2) In this revision petition we are concerned with the assessment year 1999-2000. (3) The revision petition is filed by the dealer, being aggrieved by the orders passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Palakkad in T.A.No.274 of 2005 dated 14th October, 2005. By the impugned order, the Tribunal has confirmed the findings and conclusions reached by the first appellate authority. (4) The assessee is a bone meal manufacturer. He also effects the sale of crushed bone. He has obtained the sales tax exemption certificate from the General Manager, District Industries Centre, Palakkad dated 24.5.2000. The exemption from payment of sales tax is only for the sale of bone meal for the period from 27.6.1998 to 26.6.2005. In the exemption certificate it is specifically made clear that the petitioner is not entitled for exemption on the S.T.Rev.No.138 of 2006 2 sale of crushed bone. (5) The assessee had filed his annual returns for the assessment year 1999-2000 and in that had claimed exemption from payment of sales tax on the sales of bone meal and crushed bone. The assessing authority after rejecting the returns so filed and after issuing a pre-assessment notice, had completed the best judgment assessment and while exempting the sales of bone meal from the levy of tax under the KGST Act, has only levied tax on the sales of crushed bone. (6) Aggrieved by the orders so passed, the assessee had filed first appeal before the Appellate Assistant Commissioner, Commercial Taxes, Palakkad in STA No.236 of 2004. The first appellate authority after clearly analyzing the product which is sold by the petitioner during the relevant assessment year has come to the conclusion that the assessee is entitled for exemption on the sale of bone meal in view of the exemption certificate issued by the General Manager, District Industries Centre, Palakkad dated 24.5.2000. The first appellate authority has observed in its order that there is essential distinction between bone meal and crushed bone and therefore, the assessee is not entitled for exemption on the sale of crushed bone. In the words of the first appellate authority: “I have examined the arguments and 'perused' connected records. Admittedly the appellant is a S.T.Rev.No.138 of 2006 3 manufacturer of bone meal and granite metal. The tax due was compounded in respect of granite sale. However the exemption claimed for the sale of bone meal was not accepted. As per the exemption certificate the appellant is eligible only for the sale of bone meal manufactured by them. But the situation in this case is quite contrary to this version. Because the appellant had sold steamed unsized bone meal which is crushed bone and not a manufactured product and therefore not eligible for any tax exemption. The transport of these goods across the check post can be identified only after proper physical verification. This may not be possible when there is a heavy rush in the check post. Usually the relevant documents pertaining to the transport is verified and allowed the transport. However the description given in the documents clearly stipulates that the goods transported is only crush bones and not bone meal as contended by the appellant. It is only steamed unsized bone meal which is not a manufactured product. Bone meal is a powder granuled form of the bone. Whereas the steamed unsized bone are nothing but crushed bones, which is not a manufactured product and this issue is answered accordingly.” (7) The order passed by the first appellate authority was the subject matter of second appeal before the Kerala Sales Tax Appellate Tribunal, Additional Bench, Palakkad at the instance of the assessee. The Tribunal S.T.Rev.No.138 of 2006 4 has disposed the appeal by its order dated 14.10.2005 in TA No.274 of 2005 and in that has confirmed the orders passed by the assessing authority as well as the first appellate authority. (8) It is the correctness or otherwise of the order which is called in question by the assessee before us in this tax revision case. (9) The following questions are raised by the assessee for our consideration and decision. They are as under: “1. Whether the findings of the Sales Tax Authorities that the steamed unsize bone meal is not eligible for exemption as the same is not bone meal is correct. 2. Whether the petitioner is entitled for exemption in view of Annexure-C order of the Government.” (10) Before we advert to the contentions canvassed by the learned counsel appearing for the assessee, it would be useful to refer to the exemption certificate issued by the General Manager, District Industries Centre, Palakkad dated 24.5.2000. The exemption certificate produced by the assessee before us would clearly demonstrate that the exemption that is granted to the assessee is only on the sale of bone meal during the period from 27.6.1998 to 26.6.2005. It can also be noticed from the said certificate that the exemption was only up to 360 Tonnes. In clause 7 of the said certificate it is clearly made known to the petitioner that he is not S.T.Rev.No.138 of 2006 5 entitled for exemption from payment of sales tax on crushed bone. Clause 7 of the exemption certificate reads as under: “7. The crushed bone will not come under the purview of manufacture and is not eligible for exemption.” (11) The fact finding authorities have come to the conclusion that the petitioner is not only a dealer of bone meal but also a dealer of crushed bone and in so far as bone meal is concerned, the assessee can claim exemption from payment of sales tax in view of the certificate issued by the competent authority. Since the certificate issued by the competent authority clearly takes out crushed bone from the purview of exemption, the assessing authority as well as the first appellate authority are justified in denying the claim made by the assessee. (12) Sri.Hariharan Nair, learned counsel appearing for the assessee brings to our notice the dictionary meaning of the expression 'bone meal' to say that bone meal would include crushed bone also. Though the argument of the learned counsel looks attractive at the first blush, on a deeper consideration it has no merit whatsoever in view of the certificate issued by the General Manager, District Industries Centre, Palakkad. The said authority has made a clear distinction between bone meal and crushed bone while granting the exemption and it has been restricted only on the sale of bone meal and not on the sale of crushed bone. In that view of S.T.Rev.No.138 of 2006 6 the matter we cannot take any exception to the orders passed by the assessing authority as well as the appellate Tribunal. (13) In view of the above discussion, the question of law framed by the assessee requires to be answered against the assessee and in favour of the Revenue. Accordingly, we reject the revision petition. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns/dk