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 THURSDAY, THE 3RD JULY 2008 / 12TH ASHADHA 1930 T.R.C.No. 93 of 2001 -------------------------------- ORDER DATED 28.7.2000 IN TA.113/1996 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH, THIRUVANANTHAPURAM .................... REVISION PETITIONER/APPELLANT/RESPONDENT/REVENUE: ---------------------------------------------------------------------------------------- STATE OF KERALA, REPRESENTED BY DEPUTY COMMISSIONER (LAW) COMMERCIAL TAXES, ERNAKULAM. BY SR. GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ RESPONDENT/RESPONDENT/APPELLANT/ASSESSEE: ---------------------------------------------------------------------------- B.JAYAPRAKASH, M/S.TRUTH ENTERPRISES, KILIKOLLOOR. BY ADV. SRI.R.ANILKUMAR THIS TAX REVISION CASE HAVING BEEN FINALLY HEARD ON 03/07/2008, ALONG WITH TRC NO.158 OF 2001, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- T.R.C.Nos.93 & 158 of 2001 ------------------------------------------ Dated this the 3rd day of July, 2008 ORDER H.L.Dattu, C.J. Since the assessee is common and since the legal issues are also identical, these tax revision cases are clubbed, heard and disposed of by this common order. 2. The Revenue is before us, inter alia, calling in question the correctness or otherwise of the orders passed by the Kerala Sales Tax Appellate Tribunal, Additional Bench, Thiruvananthapuram in T.A.Nos.113 of 1996 and 114 of 1998 dated 28th July, 2000. 3. The question for consideration is whether the sale of steel tubes would fall under Entry 45 of the First Schedule to the Kerala General Sales Tax act, 1963 ('the Act' for short). 4. The assessee is a dealer, engaged in the business of sale of steel tubes. For the assessment years 1984-85 and 1985-86, while filing his annual returns had claimed the rate of tax payable at 6%, on the ground, that the commodity in question would fall under Entry 45 of the First Schedule to the Act. The assessing authority is of the view that what is sold by the petitioner is part of a furniture and therefore, exigible to tax at the rate of 12% under Entry 145 of the First Schedule to the Act. T.R.C.Nos.93 & 158 of 2001 2 5. Entry 45 of the First Schedule to the Act reads as under: ------------------------------------------------------------------- (1) (2) (3) (4) ------------------------------------------------------------------- “45. Iron and steel articles, At the point of not mentioned elsewhere first sale in the in this Schedule or the State by a dealer Second Schedule who is liable to tax under section 5 6 ------------------------------------------------------------------- 6. Entry 145 of the First Schedule to the Act reads as under: ---------------------------------------------------------------------- (1) (2) (3) (4) ---------------------------------------------------------------------- 145. Safes, almirahs and At the point of first sale furniture (or parts in the State by a dealer thereof) made of who is liable to tax iron or steel under section 5 12 ---------------------------------------------------------------------- 7. The assessing authority while completing the assessments for the assessment years in question has specifically noticed in the orders of assessment, that, the assessee is a dealer in steel tube frames and effects sale to a dealer who manufactures steel furniture. 8. In the appeal filed by the assessee, the orders of assessment passed by the assessing authority is modified by the Appellate Assistant Commissioner. Aggrieved by the said order, the Revenue has filed appeal before the Tribunal and the Tribunal has rejected the Revenue's T.R.C.Nos.93 & 158 of 2001 3 appeal. 9. The Revenue being aggrieved by the orders passed by the Tribunal for the aforesaid assessment years is before us in these tax revision cases. 10. The Revenue has framed the following questions of law for our consideration and decision. They are as under: “a) Were not the First Appellate Authority as well as the Tribunal in error in holding that Sofa frames are to be classified as Iron articles for the purpose of taxation? b) Is not that conclusion contrary to law in the light of the amended Entry 145 of the Ist Schedule to the KGST Act?” 11. Entry 45 of the First Schedule to the Act speaks of iron and steel articles not mentioned elsewhere in the first schedule or the second schedule. The assessee, as noticed by the assessing authority, effects sale of steel tube frames for the purpose of manufacture of steel furniture. According to the assessee, the commodity in question is a steel article and therefore requires to be taxed under Entry 45 of the First Schedule to the Act. However, the assessing authority is of the opinion that, the steel frames since it is used for the manufacture of furniture, they form part of a furniture and therefore requires to be classified under Entry T.R.C.Nos.93 & 158 of 2001 4 145 of the First Schedule to the Act. 12. The assessing authority while holding that the commodity in question should be classified under Entry 145 of the First Schedule to the Act has kept in view the user test theory. The apex Court in the case of Mukesh Kumar Aggarwal & Co. v. State of Madhya Pradesh and others, (1988) 68 STC 324 has considered the user test theory and observed as under: “The nature of goods cannot be determined by the test of the use to which they are capable of being put. The user test is logical but inconclusive. The particular use to which an article can be applied in the hands of a special consumer is not determinative of the nature of the goods. In a taxing statute, words which are not technical expressions or words of art, but are words of every day use, must be understood and given a meaning, not in their technical or scientific sense, but in a sense as understood in common parlance. The particular terms used by the legislature in the denomination of articles are to be understood according to the common commercial understanding of those terms used and not in their scientific and technical sense.” 13. As we have already noticed, the assessing authority has T.R.C.Nos.93 & 158 of 2001 5 kept in his view the end user of the steel tubes in order to come to the conclusion that sale of steel tubes made by the assessee requires to be classified under Entry 145 of the First Schedule to the Act. This, in our view, cannot be justified in view of what has been stated by us in our earlier paragraph of the order. Therefore, the Tribunal was justified in rejecting the Revenue's appeal and upholding the orders passed by the first appellate authority who had classified the commodity in question as a steel article which would fall under Entry 45 of the First Schedule to the Act and the rate of tax only at 6%. 14. In view of the above, these tax revision cases filed by the Revenue require to be rejected and accordingly they are rejected and the questions of law framed by the Revenue require to be answered in negative and in favour of the assessee. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns