IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 26TH MAY 2008 / 5TH JYAISHTA 1930 S.T.Rev.No.148 of 2005 ----------------------------------------------- T.A.NO.342/2000 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, KOTTAYAM DATED 18TH JULY, 2003. (ASSESSMENT YEAR 1995-96) .................... REVISION PETITIONER: RESPONDENT/REVENUE:- ------------------------------------------------------------------------ STATE OF KERALA, REPRESENTED BY JOINT COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. RESPONDENT: APPELLANT/ASSESSEE:- ----------------------------------------------------------- M/S.MIDAS MARKETING & MANAGEMENT SERVICES, RUBBER WOODS DEALER, KOTTAYAM. BY ADV. SRI.JOSEPH MARKOSE (SR.) SRI.MITHUN MARKOS SRI.TERRY V.JAMES THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 26/05/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & T.R.RAMACHANDRAN NAIR, J. ------------------------------------------ S.T.Rev.148 of 2005 ------------------------------------------ Dated, this the 26th day of May, 2008 ORDER H.L.Dattu, C.J. The Revenue is before us in this Tax Revision Case being aggrieved by the orders passed by the Sales Tax Appellate Tribunal in T.A.No.342 of 2000 dated 18th July, 2003. 2. The Revenue has framed the following question of law for our consideration and decision. The same is as under: “Whether on the facts and in the circumstances of the case, the Tribunal is justified in finding that the assessee is entitled to the benefit of reduced rate of 3% of tax in respect of interstate sales not covered by 'C' declaration forms.” 3. The respondent is a dealer registered both under the provisions of the Kerala General Sales Tax Act, 1963 ('KGST Act' for short) and the Central Sales Tax Act, 1956 ('CST Act' for short). The assessing authority while completing the assessment under the provisions of the CST Act for the assessment year 1995-96 had levied 10% on the sales turnover of rubber goods sold in the State without C declaration forms, though the assessee had contended that the goods sold by the petitioner's SSI unit is liable to be taxed only at 4% even without C forms and in view of the notification issued by the State Government in No.124/88 dated 31.8.1988 , the rubber goods sold by the assessee requires to be taxed only at the rate of 3%. S.T.Rev.No.148 of 2005 2 4. Aggrieved by the order of assessment passed by the assessing authority, the assessee had filed appeal before the first appellate authority in STA No.219 of 2000. The first appellate authority has dismissed the appeal by its order dated 2.9.2000. 5. The assessee being aggrieved by the order so passed by the first appellate authority had carried the matter in appeal before the Tribunal in T.A.No.342 of 2000. The Tribunal has allowed the appeal and directed the assessing authority to levy reduced rate of tax at 3% in view of the notification issued by the State Government in No.124/88 dated 31.8.1988. That is how the Revenue is before us in this revision petition. 6. We have already referred to the question of law framed by the Revenue for our consideration and decision. 7. The question of law framed by the Revenue, in our opinion, is no more debatable in view of a decision rendered by this Court on an identical situation in the case of P.N.Sadasivan v. State of Kerala (S.T.Rev.No.300 of 2003 dated 2nd August, 2007). In the said decision a Division Bench of this Court after detailed consideration of the notification in No.124/88 dated 31.8.1988, at paragraphs 12, 13 and 14 has observed as under: “12. The preamble clearly indicates that it was to encourage the setting up of rubber industries in the State. It is in the nature of incentive granted to the new entrepreneurs to establish more and more industries using rubber as raw materials in the State. Yet another important aspect that can be inferred from the said Government Order is to grant relief from the tax effect to the new entrepreneurs for starting a S.T.Rev.No.148 of 2005 3 rubber industry. The Government Order provides certain concessions, exemptions and incentives to the new rubber industries such as rubber used in the new industries will be exempted from levy of purchase tax; the industries would also be entitled for subsidy from the State Government and lastly, for the finished rubber goods produced from the factories in Kerala and their sales effected, sales tax would be reduced to 3%. 13. The question now that falls for our consideration is whether the notification/orders issued by the State Government is in the nature of a general exemption or a notification attached with a specific condition. What is a general notification and what is a notification under specified circumstances is explained by the Apex Court in the case of Commissioner of Sales Tax, Jammu and Kashmir and Others Vs. Pine Chemicals Ltd. And Others [ (1995) 96 STC 355). In the said decision the Court has made the following observations. “Exemption from Central sales tax under section 8 (2-A) of the Central Sales Tax Act, 1956, of the sale or purchase of goods is available only where the sale or purchase of such goods is exempt “generally” under the State sales tax law. The court must give due regard and attach due meaning to the expression “generally” in section 8 (2-A) which expression has been defined in the Explanation thereto. Section 8 (2-A) requires specifically that such exemption must be a general exemption and not an exemption operative in specified circumstances or under specified conditions. General exemption means that the goods are totally exempt from tax. Where the exemption from taxation is conferred by conditions or in certain circumstances there is no exemption from tax generally.” S.T.Rev.No.148 of 2005 4 14. The aforesaid decision of the Apex Court was noticed in a subsequent decision by the Apex Court in the case of State of Uttar Pradesh and Another Vs. Hindustan Safety Glass Works (P.) Ltd. [ (1996) 101 STC 529). That was a case where the State Government had issued a notification to certain industries which manufacture goods in the State for a period of three years from the date of publication of the notification. The assessee therein had claimed exemption from payment of tax under the CST Act on the ground that the State has exempted sales of a specified goods for a particular period. The assessing authority had rejected the claim. However, the High Court had accepted the stand of the assessee. The Apex Court after referring to the earlier decision including the decision in Commissioner of Sales Tax, Jammu and Kashmir and Others Vs. Pine Chemicals Ltd. And Others [ (1995) 96 STC 355), was pleased to state as under. “In the instant case, the exemption has not been granted to the goods generally. Specified goods (mirrors and toughened glass) produced by a specified company have been exempted from payment of sales tax for a specified period of time. It is not the case of the assessee that mirrors and toughened glass have been generally exempted from payment of tax. Therefore, in view of the ratio laid down in the aforesaid case of Commissioner of Sales Tax V. Pine Chemicals Ltd. (1995) 96 STC 355 (SC) : (1995) 1 SCC 58, it must be held that the assessee will not be entitled to get benefit of section 8 (2A) of the Central Sales Tax Act in the facts of this case.” 8. In view of what has been observed by the Division Bench of this Court in the aforesaid decision, in our opinion, the question of law framed by the S.T.Rev.No.148 of 2005 5 Revenue requires to be answered in favour of the Revenue and against the assessee. Accordingly we do so. In view of the above, the revision petition is allowed. The order passed by the Tribunal in so far as the aforesaid issue is concerned, is set aside. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (T.R.RAMACHANDRAN NAIR) JUDGE vns