IN THE HIGH COURT OF KERALA AT ERNAKULAM
TRC No. 120 of 2003()
1. STATE OF KERALA, REPRESENTED BY
... Petitioner
Vs
1. M/S.PUNJAB AROMATICS, A.G.ROAD, CALICUT.
... Respondent
For Petitioner :SENIOR GOVT.PLEADER
For Respondent :SRI.PREMJIT NAGENDRAN
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice K.T.SANKARAN
Dated :05/09/2007
O R D E R
H.L.Dattu,C.J. & K.T.Sankaran,J.
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T.R.C.No.120 of 2003
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Dated, this the 5th day of September, 2007
ORDER
H.L.Dattu,C.J.
Revenue being aggrieved by the orders passed by the Kerala
Sales Tax Appellate Tribunal, Additional Bench, Kozhikode in T.A.No.357 of
2000 dated 28th August, 2001 is before us in this Tax Revision Case.
(2) The Revenue has framed the following questions of law for
our consideration and decision. They are as under:
“(a) Were not the Tribunal and the First Appellate Authority
in error in holding that the assessee is not liable to pay
purchase tax under Section 5A of the KGST Act taking the
view that red oil and sandalwood oil made out of it are one and
the same commodity?
(b) Were not the Tribunal and the First Appellate Authority
in error in not considering the fact red oil and sandalwood oil
have separate distinct identities as far as common parlance
theory or commercial parlance theory are concerned?
(c) In the facts and circumstances of the case, were not the
Tribunal and the First Appellate Authority in error in not
comprehending the correct concept of manufacture with
reference to the factual situation in this case?”
(3) Both sides would submit that the questions of law raised in
this Tax Revision Case are no more res integra in view of what has been
declared by this Court in the case of State of Kerala v. Universal Enterprises
T.R.C.No.120 of 2003
– 2 –
[2007 (3) KLT SN 3 (Case No.2)]. In the said decision, this Court has stated as
under:
“Once the goods purchased by the dealer are used and cease to
be available in that form for sale or purchase again to attract tax,
the liability for purchase tax is attracted. By the 1989
Amendment, S.5A was amended to bring within the scope of
purchase tax, items purchased from registered dealers without
payment of tax for “use”. Liability is attracted when goods
purchased are consumed in the manufacture of other goods for
sale. Since assessees have purchased raw material, namely,
red oil and have consumed the same in the manufacture of
sandalwood oil sold by them as final product, liability is attracted
on the purchase turnover of red oil under S.5A(1)(a) of the Act.
The object of the section is to rope in liability when the item
purchased has not been subjected to any tax until it’s purchase
and the item ceases to exist after it’s use by purchasing dealer”.
In view of the law declared by this Court, the questions of law
framed by the Revenue requires to be answered in favour of the Revenue and
against the assessee. Accordingly, the Tax Revision Case is allowed.
Ordered accordingly.
H.L.Dattu
Chief Justice
K.T.Sankaran
Judge
vku/-