IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST Rev No. 24 of 2005()
1. STATE OF KERALA REP. BY
... Petitioner
Vs
1. M/S.INSTYLE DIRECTOR AND DISTRIBUTION,
... Respondent
For Petitioner :GOVERNMENT PLEADER
For Respondent :SRI.JOSE JOSEPH
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice K.T.SANKARAN
Dated :17/03/2008
O R D E R
H.L.Dattu,C.J. & K.T.Sankaran,J.
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S.T.Rev.No.24 of 2005
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Dated, this the 17th day of March, 2008
ORDER
H.L.Dattu,C.J.
This revision petition is filed against the orders passed by the
Kerala Sales Tax Appellate Tribunal, Principal Bench, Thiruvananthapuram in
T.A.No.169 of 2001 dated 12.07.2001.
2. The revision petitioner is the State Government. The State calls
in question the correctness or otherwise of the orders passed by the Tribunal in
T.A.No.169 of 2001. By the impugned order, the Tribunal has held that the
flexible flooring materials would come under Entry 101 of the first schedule to the
Kerala General Sales Tax Act, 1963 (“Act” for short) and, accordingly, had
directed the assessing authority to levy tax at the rate of 10%.
3. The assessment year in question is 1996-97. The assessing
authority, after going through the records, has found that the assessee is a
dealer in flexible flooring materials. Accordingly, has brought to tax the sale of
flexible flooring materials under Entry 75 of the Act and has levied tax at 15%.
4. Aggrieved by the said order of the assessing authority, the
assessee had carried the matter in appeal before the Appellate Assistant
Commissioner of Commercial Taxes, Thiruvananthapuram in S.T.A.No.644 of
2000. The first appellate authority, after examining the sample of the item dealt
with by the assessee that was produced before him, has come to the conclusion
that the assessee is a dealer in flexible flooring material and, therefore, the rate
of tax that requires to be levied is only at the rate of 15%. Accordingly, has
sustained the orders passed by the assessing authority.
S.T.Rev.No.24 of 2005 – 2 –
5. Aggrieved by these two orders, the assessee had carried the
matter in appeal before the Tribunal in T.A.No.169 of 2001. The Tribunal, applying
the decision of this Court in M.R.Somasundaran Nair v. State of Kerala [(1999) 7
KTR 55] and also the decision of the Tribunal in T.A.Nos.356 and 357 of 2000 dated
28.03.2001, has held that the flexible flooring materials are nothing but PVC sheets
and rexine sheets and, therefore, the disputed item come under Entry 101 of the
Act. Accordingly, has directed the assessing authority to issue appropriate demand
notice by modifying the rate of tax from 15% to 10%. Aggrieved by the orders so
passed by the Tribunal, the State is before us in this revision petition.
6. The State has framed the following questions of law for our
consideration and decision. They are as under:
1) Whether in the circumstances and on the facts of the case
the decision of the Tribunal that PVC sheets and Rexin Sheets will
not fall under Entry 75 of the First Schedule of the KGST Act is
against law, as there is a specific entry in respect of flexible flooring
materials.
2) Is not the Tribunal erred in relying on decision reported in
(1999) 7 KTR 55 (Somasundran Nair vs. State of Kerala) as in that
case, the item in question was plastic storage Tanks and article
made of plastic, which has got no connection with the facts of the
present case”.
7. The assessing authority and the first appellate authority, after
going through the books of accounts and also examining the item that is dealt with
by the assessee, have come to the conclusion that the assessee is a dealer in
flexible flooring materials. This is a finding of fact and the same cannot be disputed
even by the assessee.
S.T.Rev.No.24 of 2005 – 3 –
8. If we go by the item dealt with by the assesseee, then it can only
come under Entry 75 of the Act, which reads as under:
“75. Linoleum and Flexible flooring materials – Rate of tax 15%”.
9. The Tribunal, relying upon the observations made by this Court in
M.R.Somasundaran Nair’s case (supra), has come to the conclusion that the item
dealt with by the assessee would come under Entry 101 of the Act, which deals with
“plastic and articles of plastics including PVC pipes, etc.”.
10. In M.R.Somasundran Nair’s case, the question before a Division
Bench of this Court was whether plastic storage tanks would fall under Entry 145 or
under Entry 217 of the first schedule to the Act. Admittedly, in the said decision the
item “flexible flooring materials” did not fall for consideration.
11. Entry 75 of the First Schedule to the Act specifically deals with
“Linoleum and Flexible flooring materials”. Entry 101 of the First Schedule to the
Act speaks of “plastics and articles of plastics including PVC pipes, etc.”.
12. As we have already stated, the assessing authority as well as the
first appellate authority after going through the records maintained by the dealer and
after examining the item that is dealt with by the dealer, have positively come to the
conclusion that the respondent herein is an assessee dealing in item “flexible
flooring materials”. If that be so, the assessing authority and the first appellate
authority were justified in holding that the sale of flexible flooring materials requires
to be taxed only under Entry 75 of the first schedule to the Act. The Tribunal without
keeping in view the relevant Entries under the Act and misapplying the ratio
decidendi of the decision of this Court in M.R.Somasundaran Nair’s case, has come
to the conclusion that “flexible flooring materials” is PVC sheets or rexine sheets.
S.T.Rev.No.24 of 2005 – 4 –
The finding of the Tribunal, in our opinion, is contrary to the factual situation pleaded
by the parties before the assessing authority and the first appellate authority.
Therefore, the order passed by the Tribunal cannot be sustained by us.
13. Accordingly, the order passed by the Tribunal requires to be set
aside and the questions of law raised by the Revenue requires to be answered in
positive and against the assessee.
Ordered accordingly.
H.L.Dattu
Chief Justice
K.T.Sankaran
vku/- Judge