M/S Padinjarekara Agencies Limited vs State Of Kerala

6. Assessee herein claimed the benefit of exemption provided in the Government Notification SRO No. 1003/91 which was subsequently replaced by Government Notification SRO No. 1727/93. Under Government Notification SRO 1003/91, the conditions for availing exemptions were that rubber should be used for manufacture of "goods" and that tax was leviable on the products manufactured by such rubber.

9. The above Government Notification SRO No. 1003/91 was superseded by Government Notification SRO No. 1727/93, which came into effect w.e.f. 1.1.1994. Here, the AO once again did not allow the claim of exemption on the ground that field latex and centrifuged latex were one and the same commodity falling under Entry 110 of the First Schedule to the KGST Act. The AO relied on circular No. 16/98 dated 28.5.1998. This time, in appeal, the first appellate authority held that, field latex is not a rubber product and, therefore, the assessee was not entitled to exemption vide Notification SRO NO. 1727/93. (see page 98 of the Paper Book in Civil Appeal Nos. 5700-5712/07).

13. In our view, the High Court has failed to consider the question of law, which arose for determination before it in Sales Tax Revision Nos. 177- 189/07. As stated above, in this case, we are concerned with interpretation of various Exemption Notifications. We are not concerned with interpretation of circular No. 16/98 dated 28.5.1998. We do not wish to express our views at this stage on the interpretation of the Exemption Notification(s). Suffice it to state that, in this case, we are not concerned with classification. In this case, we are concerned with the words and expressions used in the Notification(s). This point has been missed by the High Court in its impugned judgment. It is no doubt true that, the AO is bound by the directions issued by the Commissioner even with regard to the terms used in the exemption Notification(s). However, as held in our earlier judgment in the case of Kurian Abraham Pvt. Ltd. (supra), circulars/orders issued by the Commissioner are not binding on the assessee. Therefore, de hors the directives given by the Commissioner, it is open to the assessee to claim the benefit of exemption/concession on the basis of various exemption Notification(s) issued by the Government from time to time. We express no opinion on the interpretation of those Notification(s). Suffice it to state that, the assessee was not bound by the orders/directions issued by the Commissioner to the AO, therefore, on the scope and effect of each of the above exemption Notifications, the matter needs to be remitted to the AO for fresh decision in accordance with law. In other words, if the assessee satisfies the terms and conditions mentioned in the Exemption Notification, the assessee would be entitled to the benefit thereunder notwithstanding the circular issued by the Board/Commissioner. This is on the principle mentioned hereinabove that such Circular does not bind the assessee if the assessee demonstrates that it fulfils the conditions mentioned in the Exemption Notification.

14. For the reasons given hereinabove, we set aside the impugned judgments of the High Court in Sales Tax Revision Nos. 177-189/07, 192/2007, 117/07 and 126-138/07 and remit the matters to the AO for de novo consideration in accordance with law. AO will look into the contentions of the assessee uninfluenced by the observations of the High Court and decide the claim for exemption on the basis of the words used in the Exemption Notification(s) and the terms and conditions mentioned therein.

15. Accordingly, the civil appeals filed by the assessee are allowed with no order as to costs.