IN THE HIGH COURT OF KERALA AT ERNAKULAM
ST.Rev..No. 286 of 2007()
1. STATE OF KERALA
... Petitioner
Vs
1. MALABAR REGIONAL CO.OP. MILK
... Respondent
For Petitioner :GOVERNMENT PLEADER
For Respondent :DR.K.B.MUHAMED KUTTY (SR.)
The Hon'ble the Chief Justice MR.H.L.DATTU
The Hon'ble MR. Justice A.K.BASHEER
Dated :25/11/2008
O R D E R
H.L.DATTU, C.J. & A.K.BASHEER, J.
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S.T.Rev.No. 286 of 2007
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Dated, this the 25th day of November, 2008
O R D E R
H.L.Dattu, C.J.
The one and only question that arises for our consideration and
decision is, the rate of tax payable on the sale of ‘sambharam’. The assessee
had claimed reduced rate of tax on the ground, that, sambharam is nothing
but butter milk, as envisaged under Entry 49 of the First Schedule to the
Kerala General Sales Tax Act (“KGST Act” for short). However, the
assessing authority was of the view, that, for the purpose of preparing
sambharam, ginger, chilly, etc. are added to the butter milk, and, therefore,
the identity of the butter milk changes, and, therefore it should be treated as
an item falling under the Residuary clause, and, therefore, the assessing
authority taxed it at 8%. Further, the assessing authority had relied upon the
clarification issued by the Commissioner of Commercial Taxes, in
Clarification No.C3.62774/01/CT/dt.15.2.03.
2. Aggrieved by the said order passed by the assessing
authority, the assessee had carried the matter in appeal before the first
appellate authority. In the first appeal, the assessee’s representative had
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brought to the notice of the first appellate authority, the decision of the
Sales Tax Appellate Tribunal, wherein the Tribunal had held, that, butter
milk and sambharam are one and the same commodity and, therefore,
they would fall under Entry 49 of the First Schedule to the KGST Act.
The first appellate authority has ignored the binding decision of the
Tribunal, and, relying upon the clarification issued by the Commissioner
of Commercial Taxes, has proceeded to confirm the orders passed by the
assessing authority.
3. The correctness or otherwise of the orders passed by the
first appellate authority was questioned by the assessee before the
Tribunal. After detailed consideration of the issue before them and
applying the principles laid down by the Apex Court in the case of
Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes),
Ernakulam Vs. Pio Food Packers {1980 (46) STC 63}, the Tribunal has
granted relief to the assessee. It is the correctness or otherwise of the
orders passed by the Tribunal is the subject matter of this revision
petition.
4. The issue that would arise for our consideration and
decision is, whether by adding of green chilly, ginger etc. to the butter
milk, does the character of the butter milk would change, to fall it under
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the Entry other than Entry 49 of the First Schedule to the KGST Act?
5. Admittedly, the assessee is effecting sales of
sambharam. For the preparation of sambharam, the assessee would
add ginger, chilly and a pinch of salt to the butter milk. Mere addition
of the ginger, chilly and a pinch of salt would not change the commodity
as such. The sambharam continues to be the butter milk, and, therefore,
in our opinion, the Tribunal was fully justified in annulling the orders
passed by the assessing authority which was confirmed by the first
appellate authority, and, further treating that sambharam is an item
which would fall under Entry 49 of the First Schedule to the KGST Act.
6. In that view of the matter, while affirming the orders
passed by the Tribunal, we reject the tax revision petition.
Ordered accordingly.
(H.L.DATTU)
CHIEF JUSTICE
(A.K.BASHEER)
JUDGE
MS