Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes) vs Kerala Industrial Works

K.S. Paripoornan, J.—The Revenue is the petitioner herein. The respondent is an assessee under the Kerala General Sales Tax Act. The assessment year with which we are concerned is 1978-79. The assessee/respondent purchased soft wood and manufactured splints and veneers. It also manufactured packing wood-wool, out of the said soft wood. A sales turnover of Rs. 1,13,194.50 was disclosed regarding the sale turnover of wood-wool. The assessing authority estimated the purchase turnover of soft wood purchased for the manufacture of wood-wool at Rs. 66,597.25. On this, he levied purchase tax u/s 5A of the Kerala General Sales Tax Act. The assessee relied on the Notification S. R. O. No. 148/72 and contended that tax u/s 5A of the Act is not exigible in the instant case. This was negatived by the assessing authority and confirmed by the Deputy Commissioner (Appeals). In second appeal, the Appellate Tribunal held that the assessee was primarily a manufacturer of splints and veneers and the user of the left overs for manufacture of wood-wool will not disqualify him for the exemption u/s 5A of the Act. So, the purchase tax levied, relating to the turnover of wood-wool, amounting to Rs. 56,597.25, was deleted. The Revenue has come up in revision.

We heard counsel for the Revenue, Mr. Divakaran Pillai, as also counsel for the assessee/respondent, Mr. Ramakrishnan. The entire controversy centres round the scope of Notification S.R.O. No. 148/72. S.R.O. No. 148/72 is as follows :

S.R.O. No. 148/72... hereby make an exemption in respect of the tax payable u/s 5A of the said Act on the purchase of soft wood by the manufacturers of splints and veneers within the State, provided that the splints and veneers manufactured by them are liable to tax at their hands either under the said Act or under the Central Sales Tax Act, 1956 (Central Act 74 of 1956).

All that is required for getting exemption u/s 5A of the Kerala General Sales Tax Act on the purchase of soft wood by the manufacturers of splints and veneers is that the splints and veneers manufactured by them should be liable to tax, either under the Kerala General Sales Tax Act or under the Central Sales Tax Act. It is not disputed that the splints and veneers were liable to tax at the hands of the assessee under the Kerala General Sales Tax Act or under the Central Sales Tax Act. The plea of the Revenue is that the entirety of purchase should be utilised for the manufacture of splints and veneers. There is no warrant for stating so. On a plain reading of S. R. O. No. 148/72, we are of the view that, on the facts of this case, the soft wood purchased by the manufacturers (assessee in this case) are entitled to exemption u/s 5A of the Kerala General Sales Tax Act, as per S. R. O. No. 148/72, even though a portion of the soft wood (left over) was used for wood-wool. The Appellate Tribunal was justified in taking the said view. There is no error of law in the said decision.

We see no reason to interfere with the decision of the Appellate Tribunal. The tax revision case is without merit. It is dismissed. No costs