IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST Rev No. 241 of 2005()
1. KOOLA TIMBER INDUSTRIES, IRINJALAKUDA,
... Petitioner
Vs
1. STATE OF KERALA,
... Respondent
For Petitioner :SRI.E.P.GOVINDAN
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice K.T.SANKARAN
Dated :31/05/2007
O R D E R
H.L.Dattu, C.J. & K.T.Sankaran, J.
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S.T.Rev.No.241 of 2005
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Dated, this the 31st day of May, 2007
ORDERR
H.L.Dattu, C.J.
This revision petition is filed against the order passed by the Kerala Agricultural
Income Tax and Sales Tax Appellate Tribunal, Additional Bench, Palakkad in
T.A.No.505 of 2002 dated 19.3.2003 for the assessment year 1997-98.
2. The question of law that arises for our consideration and decision reads as
under:
“Whether on the facts and in the circumstances of the case the
Appellate Tribunal was justified in holding that the petitioner is not eligible
for the benefit of notification SRO No.1728/93 (as amended by SRO
No.429/95) and has not the Tribunal committed an error in interpreting
the notification SRO No.1728/93 (as amended by SRO No.429/95)”
The issue raised in this revision petition, in our view, is no more debatable in
view of the law declared by this Court in the case of Smt.Mary Emmanuel v. State of
Kerala, (2004) 12 KTR 258. In the said decision the Court has observed as under:
“On a conspectus of item No.8 of the Schedule IV of Notification SRO
1728/93, column No.(2), (3) and the Explanation to it clearly indicates
that the limit of Rs.50 lakhs mentioned in Column No.(2) refers only to
the turnover relating to the goods manufactured by the unit and sold
thereafter. It is not the “total turnover” of the dealer that is contemplated
in columns (2) of items (8) of the Schedule IV of the Notification, but only
the total turnover of the S.S.I. Unit. Of course the purchase turnover of
raw materials for manufacture of the product by the S.S.I. Unit will also
fall within the definition of ‘total turnover’ and ‘turnover’ as defined in
Section 2(xxvi) and 2(xxvii) respectively. This is very clear from the
Explanation to item No.8 of the Schedule to the S.R.O.1728/93 which is
added with effect from 1.4.1995. Under the Explanation, if the turnover of
the unit exceeds the limit of Rs.50 lakhs during the first year, the
turnover exceeding Rs.50 lakhs alone will be subjected to tax at the
higher rate. In other words, in a case where the turnover of the unit
exceeds Rs.50 lakhs, the turnover up to Rs.50 lakhs is entitled to the
concessional rate under the notification and the balance turnover alone
will be subjected to tax at the higher rate. In other words, the turnover of
trading goods (ie the goods not manufactured by the unit) is not included
within item No.8 of the IVth Schedule to the notification. So far as the
trading goods are concerned, there is no question of giving the
concessional rate even if it falls within the limit of Rs.50 lakhs. So far as
the exigibility of tax on the trading goods is concerned, the levy is under
Sec.5(1) read with first or second schedule to the said Act (Paras 4 & 5).
S.T.Rev.No.241/2005 2
The very intention of Legislature is to give concessional rate for the
S.S.I.Unit, whose “total turnover” does not exceed Rs.50 lakhs and
therefore since the total turnover of the S.S.I.Unit is below Rs.50 lakhs, it
is entitled to the concessional rate of 4% under the notification. The
clarification issued by Commissioner of Commercial Taxes regarding the
scope of item No.8 of the IVth Schedule of the notification SRO
No.1728/93 does not appear to represent the correct legal position. The
“total turnover” of the small scale industrial unit includes only the turnover
of raw materials used in relation to the manufacture of the finished
goods by the S.S.I.Unit within the State. For all these reasons, we set
aside the orders of the assessing authority and the Tribunal on the
question of concessional rate under the notification SRO No.1728/93 and
restore the order of the first appellate authority.(Para 7)”.
3. Respectfully following the observations made by a Division Bench of this
Court, the question framed by the assessee requires to be answered in positive.
Accordingly, the following:
Or
der
i) The revision petition is allowed.
ii) The order passed by the Tribunal in T.A.No.505 of 2002 dated 19th March,
2003 is set aside.
Iii) Now it is declared that the petitioner is entitled for the benefit of the
notification SRO No.1728/93 as amended by SRO No.429/95 for the assessment year
1997-98.
Ordered accordingly.
(H.L.Dattu)
Chief Justice
(K.T.Sankaran)
Judge
vns