IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE B.P.RAY TUESDAY, THE 29TH MARCH 2011 / 8TH CHAITHRA 1933 ST.Rev..No. 42 of 2011() ----------------------------------- TA. NO.211/2009 OF KERALA AGRL. INCOME TAX AND SALES TAX APPELLATE TRIBUNAL, ERNAKULAM .................... REVISION PETITIONER/RESPONDENT/REVENUE ----------------------------------------------------------------------- STATE OF KERALA, REP. BY DEPUTY COMMISSIONER (LAW) COMMERCIAL TAXES, ERNAKULAM. BY GOVT. PLEADER MR.MOHAMMED RAFEEQ. RESPONDENT/APPELLANT/ASSESSEE --------------------------------------------------------- M/S.EVM AUTOMOBILES, S.A. ROAD, VYTTILA- 682 019. BY THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON 29/03/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: rs C.N.RAMACHANDRAN NAIR & BHABANI PRASAD RAY, JJ. .................................................................... S.T. Rev. No.42 of 2011 .................................................................... Dated this the 29th day of March, 2011. JUDGMENT Ramachandran Nair, J. This belated revision petition is filed against order of the Sales Tax Appellate Tribunal remanding the case back to the Assessing Officer for decision on merits after verifying the whole documents. The issue raised is whether the dealer which sold automobiles to Naval Canteen is rightly declined concessional rate of tax by the Assessing Officer. Admittedly Government Notification SRO No.1091/99 grants concessional rate of tax on all items sold to Defence and Naval Canteens. In other words, concessional rate is available for sale of automobiles to the Naval Canteen. Canteen is not the beneficiary of the tax concession and it is the Defence personnel who enjoy the benefit at the time of purchase of the item from the Canteen. Most of the consumer articles are purchased and stocked by the Naval and other Defence Canteens and the tax benefit is passed on to the Defence personnel at the time of sale by the Naval Canteen. However, S.T.Rev. 42/2011 2 automobiles namely, motorcycles and cars are not normal consumer articles which can be purchased and stocked by the Canteen. The Canteen has to necessarily purchase only on getting orders from the Defence personnel concerned. It appears the Canteen collects the value from the Defence personnel, places order with the dealer for supply and the vehicles are registered in the names of the beneficiaries namely, purchasers and they take the Insurance Policy in their name. Since purchases were not directly made by the Canteen and Canteen only arranged such purchases for the Defence personnel concerned, sales tax exemption was declined and this court confirmed it vide judgment reported in KULATHUNKAL MOTORS VS. SALES TAX OFFICERS & ORS. reported in (2007) 10 VST 195 Ker. It is seen that this court has declined the benefit by relying on the provisions of the Motor Vehicles Act and Rules under which registration was obtained by the Defence personnel concerned and not by the Canteen Manager. The issue herein cropped up in the assessment of the respondent wherein concessional rate is disallowed on same grounds. However, the Tribunal remanded the case to the Officer to find out whether the purchase orders are placed by the Canteen and whether the payments are also made by them and if so, to grant concessional rate against S.T.Rev. 42/2011 3 which State has filed revision. We do not find any justification to interfere with the Tribunal's order because Tribunal has only ensured that concessional rate is available to the Canteen, if they have purchased the articles or automobiles for sale to the Defence personnel. We, therefore, dismiss the S.T. Revision case. 2. What we notice is that the issue of sales tax concession on purchase of automobiles namely, motorbikes and cars through the Naval or other Defence Canteen is a matter of recurring controversy in the State. We feel it is high time the Commissioner of Commercial Taxes should issue Circular regarding the procedure to be followed by Naval Canteens for availing concessions. We have already expressed the view that automobiles are not like other consumer articles that could be purchased and stocked by the Naval or other Defence Canteens. So long as beneficiaries of Notification are the Defence personnel, we feel the co-ordination of Canteen is sufficient to grant concessional rates on sale to Defence officers. In fact, choice of the vehicle should be left to the Defence personnel and once he makes the choice, he should be allowed to place the order with the dealer through the Canteen and the Canteen could be allowed to place the order for the Defence personnel and payment also can be routed through the S.T.Rev. 42/2011 4 Canteen. However, it would be absurd for the Sales Tax Department to demand first registration of the motor vehicle in the name of the Canteen Manager and a subsequent sale by him to the Defence personnel concerned. We direct the Commissioner to issue a Circular so that the benefit of concessional rate of tax granted by the Government for purchase of automobiles reaches the Defence personnel without the dealer being implicated in a tax case. A realistic procedure should be evolved by him and circulate the instructions among Officers for compliance whereunder the invoice, RC Book and Insurance Policy should be permitted to be in the name of the Defence person purchasing the vehicle, no matter declaration can be insisted to be issued by the Canteen. Government Pleader will forward copy of this judgment to the Commissioner of Commercial Taxes for compliance. C.N.RAMACHANDRAN NAIR Judge BHABANI PRASAD RAY Judge pms