IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT:- THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE K.M.JOSEPH WEDNESDAY, THE 2ND JANUARY 2008 / 12TH POUSHA 1929 S.T.Rev.No.512 of 2004 ----------------------------------------------- T.A.NO.252/2002 OF THE KERALA SALES TAX APPELLATE TRIBUNAL, THIRUVANANTHAPURAM (ORDER DATED 29TH JUNE, 2002) (ASSESSMENT YEAR 1988-89) .................... REVISION PETITIONER/RESPONDENT/REVENUE:- ------------------------------------------------------------------------ STATE OF KERALA, REPRESENTED BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. RESPONDENT/APPELLANT/ASSESSEE:- ---------------------------------------------------------- A.YOUNUS KUNJU, YOUNUS CASHEW INDUSTRIES, VADAKEVILA, KOLLAM. BY ADV. SRI.ARIKKAT VIJAYAN MENON SRI.HARISANKAR V. MENON. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 02/01/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:- H.L.DATTU, C.J. & K.M.JOSEPH, J. ------------------------------------------ S.T.Rev.No.512 of 2004 ------------------------------------------ Dated, this the 2nd day of January, 2008 ORDER H.L.Dattu, C.J. The Revenue being aggrieved by the orders passed by the Kerala Sales Tax Appellate Tribunal, Thiruvananthapuram in T.A.No.252 of 2002 dated 29th June, 2002 is before us in this sales tax revision. (2) The assessee 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). (3) The assessing authority had completed the assessments under the provisions of the CST Act for the assessment year 1988-89 by its order dated 23.2.1998. In the said assessment order, the assessing authority had rejected the exemption claimed by the assessee on its consignment sales by producing 'F' Forms, solely on the ground that the 'F' Forms so produced by the assessee are issued by bogus dealers using fictitious registration numbers. (4) Aggrieved by the said assessment order, the assessee had carried the matter in second appeal before the Tribunal in T.A.No.370 of 1999 . The Tribunal after holding that the assessing authority without proper verification and enquiry could not have come to the conclusion that 'F' Form declarations produced by the assessee are bogus as issued by fictitious dealers and, therefore, had directed the assessing authority to allow the claim of exemption made by the assessee. (5) After such remand, the assessing authority has passed yet another order dated 25.7.2001 and has allowed the claim only in respect of the turnover S.T.Rev.No.512 of 2004 2 of consignment sales which are supported by 'F' Form declarations. Aggrieved by the said order of the assessing authority, the assessee was before the first appellate authority, who by its order dated 18.3.2002 had rejected the assessee's appeal. The assessee had carried the matter by way of second appeal before the Tribunal in T.A.No.252 of 2002. The Tribunal has allowed the assessee's appeal and has further directed the assessing authority to grant the entire claim of the assessee on consignment sales. Aggrieved by the said direction issued by the Tribunal, the Revenue is before us in this sales tax revision. (6) 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 directing the Assessing Authority to allow the exemption claimed by the assessee in respect of stock transferred to outside the State and held as closing stock thee for which no 'F' Form was filed.” (7) Sri.Mohammed Rafiq, learned senior Government Pleader appearing for the Revenue, would submit that the Tribunal was not justified in directing the assessing authority to allow the claim of exemption even on the consignment sales which are not supported by 'F' Forms and, therefore, requests this Court to set aside that portion of the order passed by the Tribunal. (8) Per contra, Sri.Hari Sankar V.Menon, learned counsel appearing for the assessee sought to justify the impugned order. (9) In the earlier round of litigation, the Tribunal at paragraph 3 of its order had stated as under: S.T.Rev.No.512 of 2004 3 “Therefore, 'F' Form rejected by the assessing authority is not proper and not in accordance with law. To prove that certain dealers at Delhi are using fictitious registration numbers no materials are collected by the assessing authority. No report is collected to prove that the said 'F' forms are invalidated by the assessing authority by any proceedings. Therefore, we are of the view that the appellant has proved the claim of exemption as per 6A(1) of the C.S.T. Act and Rule 12 by production of F forms and the assessing authority has not proved by proper enquiry as per Proviso 2 of Section 6(A) of the C.S.T. Act that the entries in the 'F' forms are incorrect and the claim of exemption to the consignment sales disallowed are wrong. We, therefore, direct the assessing authority to allow the claim of exemption.” (10) A reading of the aforesaid paragraph would only indicate that the Tribunal had directed the assessing authority to allow the claim of the assessee in respect of the consignment sales which are supported by 'F' Form declarations. However, in the last sentence of that paragraph, the Tribunal had directed the assessing authority to allow the claim of exemption. The order passed by the Tribunal, if it is read in toto, it only means that the Tribunal had directed the assessing authority to allow the claim of exemption on the consignment sales which are supported by 'F' Form declarations and not on the claims made by the assessee without the support of any 'F' Form declaration. The Tribunal by the impugned order has carried away by the last sentence in paragraph 3 of the order to hold that the assessee is eligible and entitled for exemption even on the consignment sales which are not supported by 'F' Form declarations. This conclusion of the Tribunal, in our opinion, is contrary to the observations and directions issued by them while disposing of T.A.No.370 of S.T.Rev.No.512 of 2004 4 1999 dated 10th November, 2000. Therefore, the revision petition field by the State requires to be allowed and the order passed by the Tribunal requires to be set aside. (11) Accordingly we pass the following: ORDER i) Sales tax revision is allowed. ii) The direction issued by the Tribunal to allow the claim of the assessee for exemption even on the consignment sales which are not supported by 'F' Form declarations is set aside. iii) Accordingly we answer the question of law framed by the Revenue in the affirmative and against the assessee. iv) However, liberty is reserved to the assessee, if he so desires, to produce the 'F' Form declarations within two months from today before the assessing authority in support of his claim for exemption for the assessment year 1988-89. If such declaration forms are produced by the assessee, the assessing authority shall take note of those forms and redo the assessment. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (K.M.JOSEPH) JUDGE vns