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 1ST APRIL 2009 / 11TH CHAITHRA 1931 ST.Rev..No. 72 of 2009() ------------------------ TA.349/2005 of COMMR.KERALA AGR.IT & STAT,TVM. .................... REVISION PETITIONER/APPELLANT/ASSESSEE ---------------------------------------------------------- HANDICRAFT DEVELOPMENT CORPORATION OF KERALA LTD,S.M.S.M.COMPOUND, P.B.NO.171, PUTHENCHANTHAI, THIRUVANANTHAPURAM-695001 REP; BY ITS AUTHORISED SIGNATORY SRI.K.J.GEORGE. BY ADV. SRI.S.ANIL KUMAR (TRIVANDRUM) SRI.K.S.HARIHARAN NAIR RESPONDENT(S): RESPONDENT/REVENUE --------------------------------- STATE OF KERALA,REPRESENTED BY THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM-695033. BY G.P. SRI. V.K. SHAMSUDEEN THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 01/04/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C .N. RAMACHANDRAN NAIR & K. SURENDRA MOHAN, JJ. -------------------------------------------- S.T. Rev. No. 72 OF 2009 -------------------------------------------- Dated this the 1st day of April, 2009 JUDGMENT Ramachandran Nair,J. Heard counsel for the revision petitioner and the Government Pleader. Petitioner is a Corporation under the control of Government of Kerala engaged in procurement and sale of handicrafts products, handloom goods, etc. The only dispute pertains to disallowance of exemption claimed on turnover of Rs. 69,68,044.85 which according to the petitioner represents sale of handicrafts goods during exhibition. Notification SRO 1729/93 among other things provided exemption on the sale of handicrafts goods made by the Corporation, if such goods are produced within the State. The condition for exemption is that handicrafts goods sold by the Corporation should be produced within the State. According to the petitioner, goods are produced by artisans in Kerala and since most of of them are not registered dealers, such goods are procured through bought notes issued by the Corporation. If 2 the turnover represents handicrafts goods produced in Kerala, then of course petitioner is entitled to exemption. However, there is nothing wrong in the department calling for proof of production of goods within the State. In fact there is practical difficulty for the Corporation to furnish proof of production of goods within the State. We are of the view that if goods are locally procured necessarily it has to be assumed that goods are produced within the State because such huge trade quantity cannot be brought from outside the State without sales tax documents. Even though Government Pleader submitted that exemption is only on handicrafts goods produced by the Corporation, such contention is unacceptable because exemption is on sales turnover and there is no condition that the goods should have been produced by the Corporation itself. In fact the main purpose of the Corporation engaging in the marketing of handicrafts products is to promote the artisans who do not have marketing net work. Therefore handicrafts goods produced within the State and sold by the Corporation after purchase from artisans or co-operative societies or such organisation will entitle for exemption. We feel if the assessing officer has tallied inter-State purchases, stock transfers received from outside the State 3 with the total sales he would have easily found out whether turnover of sales in respect of which exemption is claimed represent goods locally purchased. If goods sold are admittedly handicrafts goods and if those are not brought from outside the State then petitioner is entitled to exemption as the only inference possible is that such goods are produced within the State. Since these matters have not been examined by any of the authorities we set aside the orders of the Tribunal and that of the assessing officer on this issue and remand the matter to the assessing officer to verify the accounts once again and grant exemption on sales of so much of handicrafts goods locally purchased. ST revision is disposed of as above. Since the matter is already 12 years old, we direct the assessing officer to revise the assessment within two months from the date of receipt of a copy of this judgment. (C.N.RAMACHANDRAN NAIR) Judge. (K. SURENDRA MOHAN) Judge. kk 4