PARISONS FOODS PVT. LTD. Vs. STATE OF KERALA

JUDGEMENT

(1.) The above revisions are concerned with the assessments of 2008-09 and 2009-10. The issue is only with respect to the application of Rule 12A of the Kerala Value Added Tax Rules, 2005 ['KVAT Rules' for brevity].

(2.) The revision petitioner-assessee is a manufacturer of refined Palmolein. The assessee purchases crude oil within the State and also imports the same. The assessee claimed input tax credit insofar as the entire purchases made within the State, though the refined Palmolein manufactured from the crude oil purchased is sold within the State and sent outside the State on consignment basis. There could be no input tax credit claimed for the purchases made, which resulted in the manufactured goods being consigned outside the State, without any liability to tax within the State. Rule 12A in circumstance of inputs being used in relation to taxable and exempted goods requires determination of input tax credit during the return period to be apportioned between taxable or exempted or non-taxable transactions on the basis of the ratio of taxable and exempted turnover during the period. In the relevant assessment years the assessee had a turnover of 20.76% and 28.050% respectively on consignment basis with reference to the total turnover. The determination of input tax credit was made in accordance with Rule 12A, thus declining the percentage of the tax element of purchases relatable to the consignment sales.

(3.) The assessee's contention before the lower authorities and this Court is that the entire imported oil was used only for the purpose of consignment, while the raw material purchased within the State was used for local sales. The assessee claimed that there were two separate storage tanks for the crude and refined oils, i.e., that purchased within the State and imported as also that refined for sale within the State and for consignment. The assessee was also keeping separate books of accounts with stock registers showing the quantities available of the two separate categories. The assessee also claims that for an earlier year, i.e., 2005-06, the Tribunal had found in favour of the assessee and in this particular year on similar facts there was a deviation made by a co-ordinate Bench of the Tribunal. The order of the Tribunal for the assessment year 2005-06 is produced as Annexure-E, which has been affirmed in O.T.Rev.No.8 of 2014 dated 18.06.2018.