CHEM TEAK CO Vs. STATE OF KERALA

JUDGEMENT

(1.) The question that arises for consideration in these cases is as to whether any manufacturing process is involved in the conversion of raw rubber wood into treated rubber wood so as to be entitled to exemption from payment of sales tax under S.R.O. No. 1729 of 1993 dated 3-11-1993 issued by the Government under Sec. 10 of the Kerala General Sales Tax Act, 1963. Since the petitioner in both these cases is one and the same and since the issue involved is also substantially the same, for convenience the parties and the exhibits are referred to in the judgment as stated in O.P.15979 of 1998.

(2.) The petitioner is a partnership firm engaged in the manufacture of chemically treated kiln seasoned sawn to size rubber wood. It is a small scale industrial unit registered with the Industries Department. It started commercial production of treated rubber wood on 29-5-1995. It is an assessee to sales tax under the Kerala General Sales Tax Act on the files of the Addl. Sales Tax Officer-II, 3rd Circle, Agricultural Incometax and Sales Tax Department, Thiruvananthapuram. The petitioner submitted applications for sales tax exemption on 6-12-1995 and for investment subsidy on 12-12-1995. According to the petitioner, the Industries Department granted investment subsidy, but rejected the application for sales tax exemption. Petitioner s application for sales tax exemption was rejected by the District Level Committee for sales tax exemption stating that the activity of processing of rubber wood is not a manufacturing activity as clarified by the Government in their communication dated 16.8. 1996(Ext.P3) and that the commodity, i.e. timber still retains its original identity. The petitioner s appeal before the State Level Committee for sales tax exemption was also rejected for the same reason as per the Minutes dated 30-3-1998.(Ext.P5). The petitioner has filed O.P.No.15979 of 1998 seeking to quash the orders at Exts.P2,P3, P5 and the assessment orders at Exts.P10 and P11. In O.P.No. 20644 of 1999 the petitioner seeks to quash Exts.P4 and P5 assessment orders and Ext.P6 revenue recovery notice produced therein.

(3.) As already noted, the petitioner is engaged in the manufacture of chesmically treated kiln seasoned sawn to size rubber wood. The manufacturing process stated in Ext.P4 appeal memorandum submitted to the State Level Committee reads as follows: