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 ST.Rev..No. 327 of 2003 ------------------------------------------- (ORDER DATED 28-5-2002 IN TA.110/1996 OF KERALA SALES TAX APPELLATE TRIBUNAL, ADDITIONAL BENCH-II, ERNAKULAM.) .................... PETITIONER: PETITIONER: -------------------------------------- SEA ROSE MARINE PVT. LTD., THOPUMPADY, KOCHI, REP. BY ITS DIRECTOR, MR.RAJESH ALEX. BY ADV. SRI.A.KUMAR RESPONDENT: RESPONDENT: ------------------------------------------- STATE OF KERALA, REPRESENTED BY FINANCE SECRETARY, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. BY SENIOR GOVERNMENT PLEADER SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 3-7-2008 ALONG WITH STRV NO. 358 OF 2003 THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------------------ S.T.Rev.Nos. 327 of 2003 & 358 of 2003 --------------------------------------------- Dated, this the 3rd day of July, 2008 O R D E R H.L.Dattu, C.J. The subject matter of these revision petitions is whether the sale of REP licence is exigible to tax under the Kerala General Sales Tax Act? All the authorities under the Act including the Tribunal has answered the question against the assessee and in favour of the Revenue. In our view, the view taken by the Tribunal appears to be correct in view of what has been stated by the Constitution Bench of the Apex Court in the case of M/s.Yasha Overseas & Others Vs. Commissioner of Sales Tax & Others (Civil Appeal No.2155 of 2000 and connected matters) disposed of on 6-5-2008. In the said decision, at paragraphs 40, 41, 42 and 43 the Apex Court has stated as under: 40. We are afraid, we find the submission unacceptable. We are unable to see DEPB either as a deb or as a beneficial interest in movable property not in possession of the claimant. To us it is plain that DEPB like REP licence has its own intrinsic value and the purchaser, on payment of consideration, buy something for its value. The DEPB credit is thus clearly 'goods' within the meaning of sales tax laws and its sale clearly exigible to tax. S.T.Rev.Nos.327,358/03 -2- 41. We may observe here, if DEPB (or for that matter REP license!) has to be compared with a lottery ticket, it can only be compared with a lottery ticket that has won the prize. The prize-winning lottery ticket ceases to be a mere piece of paper having no value itself. It acquires inherent value and becomes itself a thing of value. Imagine a situation where prize winning lottery tickets are freely available for sale (As a matter of fact, clandestine sale of the prize winning lottery ticket for conversion of black money into white is not completely unknown!). In buying the prize winning lottery ticket the purchaser would pay consideration for the value that the piece of paper has acquired and in that situation we fail to see how that ticket can be described as anything else but 'goods'. 42. If any more analogies are to be given one might compare DEPB with prepaid meal tickets or prepaid petrol coupons or accumulated flying miles. A meal ticket, a petrol coupon or flying miles credit has its own intrinsic value. If permitted free transferability those would soon become market commodities and would be sold and bought for their value as 'goods'. 43. In light of the discussions made above, the two questions framed at the beginning of the judgment are to be answered as follows: The Constitution Bench decision in Sunrise does not alter the position in regard to levy of tax on sale of REP licence and on that issue the three-Judge Bench decision in Vikas continues to hold the field. DEPB has an intrinsic value that makes it a market commodity. Therefore, DEPB, like REP licence qualifies as 'goods' within the meaning of the Sales Tax laws of Delhi, Kerala and Mumbai and its sale is exigible to tax. 2. In view of the law declared by the Apex Court, in our S.T.Rev.Nos.327,358/03 -3- opinion, the questions of law framed by the assessee requires to be answered against the assessee and in favour of the Revenue. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE MS