IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 233 of 2007()
1. PRIMAL C.THOMAS, KOKOTH HOUSE,
... Petitioner
Vs
1. STATE OF KERALA, REPRESENTED BY THE
... 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.
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S.T.Rev.No.233 of 2007
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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.No.202 of 2006 dated 10-01-2007.
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 this Hon’ble Court in
International Creative Foods Case (13 KTR 211). In the decision
of this Hon’ble Court reported in 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 Vs. Sales Tax Officers and
Others (124 STC 503). The decision in Philco Exports was
rendered relying on the decision in Vikas Sales Corporation (102
STC 106). The Constitution Bench of the Hon’ble Supreme Court
in Sunrise Associate’s case (145 STC 576) held that the decision in
Vikas Sales Corporation is erroneous and hence the very
foundation of the decision of this Hon’ble Court reported in 13
KTR 211 stands demolished. The law laid down by the Hon’ble
Supreme Court in the decision reported in 145 STC 576 was put to
the notice of the Tribunal. Is the Tribunal still justified in relying
on the decision of this Hon’ble Court reported in 13 KTR 211
without adverting to the law declared by the Apex Court in the
Sunrise Associate’s case (145 STC 576)?
iii). The Tribunal in Annexure-III order held that since the
Hon’ble Supreme Court in the decision reported in 145 STC 576
overruled its earlier decisions prospectively and the judgment is
dated 28-04-2006 the same is not applicable to the assessee’s case
for the assessment years 2000-2001 to 2003-2004. The doctrine of
prospective overruling as elaborated by the Hon’ble Supreme
Court in Somaiya Organics’ case (9KTR 560) was put to the notice
of the Tribunal. Is the Tribunal justified in law in holding that the
decision of the Hon’ble Supreme Court reported in 145 STC 576 is
not applicable to the assessee’s case for the assessment years
2000-01 to 2003-2004 without even speaking about the doctrine of
prospective overruling as explained by the Hon’ble Supreme Court
in the decision reported in 9 KTR 560?
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