IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER WEDNESDAY, THE 30TH JULY 2008 / 8TH SRAVANA 1930 ST.Rev..No. 330 of 2006 -------------------------------- TA.277/2004 OF S.T.A.TRIBUNAL,ADDL.BENCH,KOZHIKODE. .................... PETITIONER/APPELLANT: ------------------------------------- R.MOHANDAS, PROPRIETOR, M/S.SHANTHI STONE CRUSHER, CHAVASSERY, KANNUR DISTRICT. BY ADV. SRI.V.P.SUKUMAR SRI.KURYAN THOMAS RESPONDENT/RESPONDENT: ---------------------------------------- STATE OF KERALA, REP. BY THE CHIEF SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. BY GOVERNMENT PLEADER (SR) SRI.MUHAMMED RAFIQ. THIS SALES TAX REVISION HAVING BEEN FINALLY HEARD ON 30/07/2008, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: H.L. DATTU, C.J. & A.K. BASHEER, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - S.T.Rev. No. 330 of 2006 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 30th day of July, 2008 Order H.L. Dattu, C. J: Petitioner is a dealer engaged in the production and sale of granite metal from his own metal crushing unit. Petitioner is registered as a dealer under the provisions of Kerala General Sales Tax Act, 1963 ( KGST Act for short). 2. In this revision petition we are concerned with the assessment year 1994-95. 3. The petitioner belatedly had filed an application under Section 7 of the KGST Act, inter alia, requesting the assessing authority to permit him to pay tax at the compounded rate as provided in Section 7(1)(b) of the KGST Act. 4. It so happens that the assessee's business premises had been inspected by the Inspecting Authority and it had found that the machine used by the assessee was measuring 16” x 10”. 5. The assessing authority has rejected the application filed by the petitioner for payment of the tax under the Act at the compounded rate, firstly on the ground that the machine that is used by the petitioner does not conform to the size of the machines enumerated under Section 7(1)(b) of the KGST Act S.T.Rev. No.330/2006 2 and secondly, the application is filed belatedly. 6. The assessee had filed its annual return before the assessing authority for the assessment year 1994-95. Since the assesseee did not have the permission from the assessing authority for paying the tax at the compounded rate, the assessing authority has proceeded to complete the assessment under Section 5 of the Act. Aggrieved by the said assessment order, the assessee had unsuccessfully filed appeals before the First Appellate Authority as well as before the Tribunal. The Tribunal while rejecting the assessee's appeal at paragraph 4 has stated as under: “4. We have considered the contentions raised by both sides. As per Section 7(a)(b) metal crushed machines of size 36” x 9”, 16” x 9” and 12” x 9” are permitted to pay tax at compounded rate. The records reveal that the appellant was using machine with measurement 16” x 10”. Therefore we are of the view that the appellant is not eligible for payment of tax at compounded rate. Therefore the order of the authority below is found in order and so the appeal stands dismissed. 7. The assessee has framed the following questions of law for our consideration and decision. They are as under: (i) As can be seen from Sec.7(1) (b) of the KGST S.T.Rev. No.330/2006 3 Act the metal crushing machines are of only three sizes, viz., 36” X 9”, 16” X 9” and 12” X 9”. In the case of all types of machines the width is same, i.e., 9”, and the difference is only in length. In the case of petitioner's crusher, the assessing authority recorded the measurement as 16” X 10” as against the correct measurement of 16” X 9”. In Annexure III appeal filed before the Tribunal the petitioner took the contention that there are only three types of crushing machines available in the market and they are 12” X 9”, 16” X 9” and 36” X 9” and there is no machine of the size 16” X 10”. It was submitted that the machine installed by the petitioner was of the size 16” X 9” and not 16” X 10”. The petitioner contended that in the absence of enquiry with experts on the particular important aspect, the order of the Appellate Assistant Commissioner is illegal. Is the Tribunal justified in law in completely ignoring the said contention of the petitioner? ii. The scheme of payment of tax at compounded rate on metal crushing units was introduced for the first time from 1994-95. Upto 29.7.1995 the measurement of the machines was specifically fixed at 12” X 9”, 16” X 9” and 36” X 9”. As per the Kerala Finance Act, 1995 S.T.Rev. No.330/2006 4 brought into force w.e.f. 1.4.1995 the Entries were amended into centimeters and the measurements were mentioned as (i) not exceeding 30.48 CM x 22.48 CM (ii) not exceeding 40.64 CM x 22.86 CM and (iii) exceeding 40.64 CM X 22.86 cm. Therefore the scheme of the Act provided that if the machine is not of one description, it can be assessed at compounded rate applicable to machine of the next higher size. Applying the above principle if the petitioner's machine was not assessable at the rate applicable to machine of size 16” x 9”, it ought to have been assessed at the rate applicable to the machine of next higher size. In this view of the matter, is the Tribunal justified in law in holding that the petitioner is not at all entitled to the benefit of payment of tax U/s.7 of the KGST Act on the basis of the wrong measurement of 16” x 10” adopted in the orders passed by the lower authorities? 8. Sri.V.P.Sukumar, learned senior counsel appearing for the assesee contends that, the assessing authority was not justified in completing the assessment in the petitioner's case for the assessment year 1994-95 under Section 5(1) of the Act.According to the learned counsel, the assessing authority ought to have permitted the petitioner to pay the tax at the compounded rate S.T.Rev. No.330/2006 5 under Section 7(1)(b) of the KGST Act and should have completed the assessments only as envisaged under Section 7 of the Act. 9. Learned counsel would further submit, that, the First Appellate Authority and the Tribunal, without properly appreciating the facts pleaded by the petitioner, has mechanically rejected the assessee's appeal. These are the only contentions canvassed by the learned senior counsel Sri.V.P.Sukumar at the time of hearing the revision petition. 10. Two aspects of the matter requires to be considered by us in this revision petition. Firstly , without there being any permission from the competent authority under the Act to pay tax at the compounded rate, can the Assessee claim for payment of tax at the compounded rate at the time of assessment? Secondly, whether the Tribunal was justified in rejecting the assessee's Second Appeal? 11. Section 7 of the Act provides for payment of tax at the compounded rates. Section 7(1)(b) of the Act is relevant for the purpose of the Act. Therefore it is extracted and it reads as under: “7(1)(b) any mechanical crushing unit producing granite metals may, at its option, instead of paying tax in accordance with the provisions of that sub section, pay tax at the following rates, namely:-- (i) for each crushing machine of size not Rs.15,000 exceeding 30.48 cm x 22.86 cm. - per annum S.T.Rev. No.330/2006 6 (ii) for each crushing machine of size exceeding 30.48 cm x 22.86 cm. but Rs.30,000 not exceeding 40.64 cm x 22.86 cm. per annum (iii) for each crushing machine of size Rs.60,000 exceeding 40.64 cm. x 22.86 cm. per annum” 12. Rule 30 of the Rules provides the procedure for making an application before the assessing authority for permission to pay tax at the compounded rate. Sub-rule(1) is as under: “30(1). Every dealer who is eligible to pay tax at compounded rate under section 7 of the Act and who desires to exercise the options provided for under the said section may apply to the assessing authority concerned for permission to pay tax at the rates specified therein in Form 21 on or before the first day of May of the year to which the option relates:” 13. The aforesaid rule would indicate that a dealer who is eligible to pay tax at the compounded rate under section 7 of the Act and who desires to exercise the options provided for under the section, may apply to the assessing authority for permission to pay the tax at the compounded rate by filing Form 21 on or before the 1st day of May of the year to which the option relates. 14. The proviso appended to the rule gives discretion to the concerned assessing authority to entertain the application, though filed belatedly by the S.T.Rev. No.330/2006 7 applicant, for good and sufficient reasons. 15. Sub-rule (2) of Rule 30 of the Rules mandates the concerned assessing authority to deal and decide the application filed by a dealer who is exigible to pay tax or who desires to pay tax at the compounded rate under section 7 of the Act. 16. Immediately after receipt of the application filed under sub-rule(1) of Rule 30 of the Rules, the concerned assessing authority shall conduct necessary enquiries and pass an order either granting or rejecting the request made in the application for permission to pay the tax at the compounded rate. After passing such an order, the assessing authority is expected to serve the said order on the assessee by issuing a notice of demand in Form 22. 17. The other sub-rules are not relevant for the purpose of disposal of this revision petition. 18. Section 7(1)(b) of the Act, as we have already noticed, permits certain dealers to pay tax at the compounded rate. This provision is made applicable to a dealer who is having a metal crushing unit for production of the granite metal. The framers of the legislation have provided specifications of the machine, in the sense, size of the machine and the tax payable under the Act. They have categorised three types of machines having different sizes. The machines which measures 36 x 9, 16 x 9 and 12 x 9 are the only machines which are envisaged under Section 7(1)(b) of the KGST Act. S.T.Rev. No.330/2006 8 19. In the instant case, it so happens at the time of consideration of the application filed by the petitioner, an inspection had been conducted by the Intelligence Officer of the Intelligent Wing of the Department and he had noticed that the size of the machine that the petitioner was using was measuring 16 x 10. This finding of fact is accepted by all the authorities under the Act, including the Tribunal. 20. If the petitioner was using the machine measuring 16 x 10, he would not fit into Section 7(1)(b) of the KGST Act. Therefore, in our opinion, the concerned assessing authority was justified in rejecting the application filed by the petitioner for granting permission to pay the tax at the compounded rate. Since the assessee is a dealer under the Act and since he is not permitted to pay tax at the compounded rate, naturally for the sales turnover of the dealer, he has to be assessed under Section 5(1) of the Act. The same thing has been done by the assessing authority, which has been affirmed by the first appellate authority as well as by the Tribunal. The finding of fact by the Tribunal, in our opinion, cannot be said to be perverse. 21. This court can modify/annul the orders passed by the Tribunal only on two grounds, namely, if the Tribunal has erroneously decided the question of law or failed to decide the question of law. It is also now well settled that the perverse finding on facts by the Tribunal is also a question of law and this court can interfere with those findings of the Tribunal, if the same is perverse. In our S.T.Rev. No.330/2006 9 view, none of these ingredients are present in this case. Therefore, we do not propose to interfere with the orders passed by the Tribunal. Accordingly, the Revision Petition requires to be rejected and it is rejected. Ordered accordingly. H.L.DATTU, Chief Justice. A.K. BASHEER, Judge. an/dk.