o tax under the provisions of the Kerala General Sales Tax Act?
4. The issue is no more debatable, in view of the dicta laid down
by the Apex Court in the case of M/s.Yasha Overseas & Others Vs.
Commissioner of Sales Tax & Others (Civil Appeal No.2155/2000 and
connected matters) disposed of on 6-5-2008. In the said decision, the Supreme
Court has stated as under:
"DEPB has an intrinsic value that makes it a market
commodity. Therefore, DEPB, like REP licence qualifies as
'goods' within the meaning of the Sales Tax laws of Delhi, Kerala
and Mumbai and its sale is exigible to tax."
5. In view of the law declared by the Apex Court, in our opinion,
the questions of law framed by the assessee requires to be answered against the
assessee and in favour of the Revenue.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(A.K.BASHEER)
JUDGE
an.
? IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 157 of 2006()
1. M/S. INTERNATIONAL FREEZ FISH EXPORTS,
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY
... Respondent
For Petitioner :SRI.V.P.SUKUMAR
For Respondent :GOVERNMENT PLEADER
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :30/07/2008
O R D E R
H.L.DATTU, C.J. & A.K.BASHEER, J.
------------------------------------------------------
S.T.Rev.No.157 of 2006
---------------------------------------------
Dated, this the 30th day of July, 2008
O R D E R
H.L.Dattu, C.J.
In this revision petition the petitioner calls in question the orders
passed by the Sales Tax Appellate Tribunal, Additional Bench, Kottayam in
T.A.Nos.621 and 622 of 2003 dated 20th of May 2005.
2. The assessee has framed the following questions of law for our
consideration and decision. They are as under:
i) DEPB is issued by the Director General of Foreign Trade
under the Export-Import Policy 1997-2002. In Chapter 7.14 of
the said policy it is provided that for exporters not desirous of
going through the licensing route, an optional facility is given
under DEPB. The objective of DEPB Scheme is to neutralise the
incidence of customs duty on the import content of the product of
export. The neutralization shall be provided by way of grant of
duty credit against the product of export. Under the Duty
Entitlement Pass Book Scheme (DEPB), an exporter may apply for
credit at a specified percentage of FOB value of exports, made in
freely convertible currency. The credit shall be available against
such products of export and at such rate as may be specified by
the Director General of Foreign Trade by way of Public Notice
issued in this behalf, for import of raw materials, intermediates,
components, parts, packing materials etc. The holder of DEPB
shall have the option to pay additional customs duty, if any, in
cash as well. It is therefore clear that DEPB is a substitute for
cash, or in other words it is just like cash or demand draft. In the
said circumstance, is the Tribunal justified in law in holding that
transfer value of DEPB is exigible to sales tax?
ii) The Tribunal arrived at the conclusion that DEPB certificate
is ‘goods’ on the basis of the decision of the Hon’ble Supreme
Court in the case of Vikas Sales Corporation (102 STC 106). In
Vikas Sales Corporation the issue involved was as to whether
transfer value of REP lilcence was exigible to sales tax. In the
said decision the Hon’ble Supreme Court held that the objective
behind issue of REP lilcence was to provide to the registered
exporters facility for importing essential inputs required for the
manufacture of products exported. The licenses thus issued were
freely transferable. Those licenses have an inherent value of their
own and it can be simply sold to another and that person to yet
another. They are treated and dealt with in the commercial world
as merchandise, as goods. It was on the said reasoning that it was
held by the Apex Court that it is goods and its transfer is liable to
tax. In contrast, in the case of DEPB certificate there is no licence
to import goods, but it is simply cash which can be adjusted
against import duty payable and it can be transferred only with
the prior sanction of the issuing authority. Therefore, is the
Tribunal justified in law in holding that the decision in Vikas Sales
Corporation can be applied to decide that DEPB is goods and its
transfer is liable to sales tax under the KGST Act.
(iii) In the decision of this Hon’ble Court in International Creative
Foods Ltd. vs. State of Kerala (13 KTR 211) it was held that
transfer value of DEPB certificate is exigible to sales tax. The
said decision was rendered following the decision of the Hon’ble
High Court of Delhi in Philco Exports v. Sales Tax Officer and
others (124 STC 503). The decision in Philco Exports was
rendered relying on the decision in Vikas Sales Corporation (102
STC 106). Is the law laid down by this Ho’ble Court in the case of
International Creative Foods Ltd. (13 KTR 211) correctly decided
in view of the fact that REP licence and DEPB certificate are
absolutely different in character?
(iv) The Thermo Meter purchased is available with the appellant
even now. The three circumstances envisaged U/s.5A of the KGST
Act are such circumstances as a result of which the goods will not
be available for further use or sale in the State. Therefore, is the
Tribunal justified in law in holding that the Thermo Meter
purchased by the petitioner for permanent use and which is again
capable of being sold will come under the purview of taxation
U/s.5A of the KGST Act?”
3. The issue that would arise for our consideration and decision in
this tax revision petition is whether the transfer value of DEPB can be subjected