Full Judgment Text
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CASE NO.:
Appeal (civil) 5418-5420 of 1997
PETITIONER:
STATE OF KERALA
Vs.
RESPONDENT:
M/S. VATTUKALAM CHEMICALS INDUSTRIES
DATE OF JUDGMENT: 23/08/2001
BENCH:
S.P. Bharucha, Y.K. Sabharwal & Ashok Bhan
JUDGMENT:
WITH
(C.A. No.5665/1998 & C.A. No.5676/1998)
J U D G M E N T
Bharucha, J.
Civil Appeal Nos. 5418-5420 of 1997
We are called upon to interpret a notification (499/90)
issued under the provisions of the Kerala General Sales Tax Act,
1963. The relevant portion thereof reads thus :
.. the Government of Kerala having
considered it necessary in the public interest so
to do hereby make an exemption in respect of
the tax payable under the said Act by new
industrial units under the Small Scale
Industries and by such of the existing industrial
units which effect diversification, expansion,
modernisation on the turnover of sale of goods
manufactured and sold by such units and on the
turnover of goods taxable at the point of last
purchase in the State and used by such units in
the manufacture of goods intended for sale
within the State or interstate .
The Kerala Sales Tax Appellate Tribunal opined that the
notification contemplates exemption only on the turnover of
goods taxable at the point of last purchase in the State and used by
such units in the manufacture of goods within the State. It is an
undisputed fact that the copper scrap is not goods taxable at the
point of last purchase in the State. .. What has been
given exemption in SRO 499/9 is the turnover of goods taxable at
the point of last purchase in the State. The goods taxable at the
point of last purchase are specifically enumerated in the last
schedule of the Kerala General Sales Tax Act, such as Pepper, Dry
Ginger, Arecanut, Rubber, etc. The turnover under Section 5A is
not mentioned in this notification. It is a well settled law that the
primary object of a Sales Tax statute is to fetch the tax and giving
exemption is only a concession of the Government, and so, the
exemption notification has to be strictly interpreted.
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The High Court of Kerala, in the judgment and order under
appeal, has taken no notice of the words of the notification that
make it applicable to the turnover of goods taxable at the point of
last purchase in the State.
The respondent-assessee purchased copper scrap for use in
the manufacture of copper sulphate. It is an admitted position
that copper scrap is not taxable at the point of last purchase in the
State. On the plain words of the notification, the exemption given
thereby is, therefore, not available to copper scrap and, therefore,
to the particular copper scrap purchased by the assessee.
The argument of learned counsel for the assessee is that the
assessee had purchased the particular copper scrap from
unregistered dealers so that, insofar as the particular copper scrap
was concerned, it became taxable at the point of last purchase in
the State and, therefore, the particular copper scrap was entitled
to the exemption given by the notification. The argument is
misplaced. The notification applies to goods of the description
that are taxable at the point of last purchase in the State under the
Act. The particular copper scrap is not goods of a description
which are taxable under the Act at the point of last purchase in
the State. The particular copper scrap is, therefore, not entitled to
the benefit of the exemption under the notification. The question
is not whether the particular copper scrap which the respondent
purchased became, by reason of circumstances, taxable at the
point of last purchase in the State but whether copper scrap as a
description of goods is taxable under the Act at the point of last
purchase in the State. Since it is not, the benefit of the notification
does not extend to the particular copper scrap purchased by the
respondent.
Learned counsel for the assessee sought to rely upon the
objects of the notification in aid of the interpretation that he
sought to place upon it. The language of the notification being
crystal clear, no external aid to its construction is required.
The appeals are allowed. The judgment and order under
appeal is set aside. The order of the Tribunal is restored. The
respondent-assessee shall pay to the appellant the costs of the
appeals.
C.A. No. 5665 of 1998 & C.A. No. 5676 of 1998
The orders of the High Court of Kerala that are impugned
in these appeals follow the judgment and order of that High Court
in the case of Vattukalam Chemical Industries, which judgment
and order we have just set aside. Accordingly, these appeals are
allowed and the orders under challenge are set aside.
..J.
(S.P. Bharucha)
..J.
(Y.K. Sabharwal)
..J.
(Ashok Bhan)
August 23, 2001