SNOFIELD FOODS PVT. LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) THE assessee, a manufacturer and dealer in ice -creams, is the revision petitioner herein. For the assessment year 2003 -04, the assessment was completed by the Fast Track Team under Section 17D of the Kerala General Sales Tax Act, 1963 (hereinafter referred to as "the Act"). Having failed before the appellate Tribunal, the assessee is before this Court challenging the levy of 16% tax on the sale of deep freezers, effected by it in the assessment year; which was purchased by it from SSI Units eligible for exemption. On a reading of the order of the Tribunal, what we understand is that the assessee had been purchasing the deep freezers from SSI Units eligible for exemption and after leasing out the same for its business; sells the same. Obviously the sale effected then should be of second -hand freezers. The assessee had been collecting 4% tax on its sale, which the fast track team/assessing authority found to be not in order since, according to it, the product comes under the 5th Schedule of the Act, exigible to multi -point levy. The assessee's purchase having not suffered tax, the fast track team found that the levy of tax is @ 16%. The Tribunal found the same to be in accordance with law. The assessee's counsel would urge that once the sale of the SSI Unit, the first sale; was exempted, the levy occurs and there cannot be any shifting of the levy for the reason that there was exemption on the first point of sale.

(2.) WE have heard the learned counsel for the assessee and the learned Government Pleader. The assessee contends for the position that the first point of sale having been exempted, the liability of the assessee would only be for the point of second sale and the second point of levy being the point of last sale is exigible only @ 4% as per the Fifth Schedule to the Act. It is also the submission of the assessee that the assessee purchased goods from exempted dealers and leased out the same to its franchisees; which lease rent is exigible at the rate of 4%. This satisfies both points of levy on the goods as per the Fifth Schedule. As a still another alternative contention the learned counsel for the assessee would invite our attention to the provisos under sub -clause (v) of sub -section (1) of Section 5 of the Act. What is applicable is the 4th proviso, according to the counsel, which has two limbs; the first limb levying tax @ 12% for the subsequent sale and the second limb @ 16% when the sale is to a registered dealer not for sale or any other person. If at all the assessee is held to be coming under the 4th proviso, then the assessee would fall under the first limb of the proviso, wherein tax is leviable @ 12% for the subsequent sale. The learned counsel also relies on the decision of the Supreme Court in Peekay Re -rolling Mills (P) Ltd. v. Assistant Commissioner and another [ : (2007) 4 SCC 30] to contend that there can be no shifting of levy by reason only of exemption, since the Hon'ble Supreme Court has categorically held that exemption does not negate a levy of tax altogether and the liability to tax remains unaffected, though the payability is extinguished.

(3.) IN the back drop of the contentions, we are of the opinion that the question of law is to be reframed as hereunder :