KEVI HARDWARE Vs. STATE OF KERALA

JUDGEMENT

(1.) IS the action of the respondent-assessing authority, in levying tax on the sale of 'dolomite' under Entry 42 instead of Entry 50 in the First Schedule of the Kerala General Sales Tax Act, 1963 legal and valid? this is the short question that arises for consideration in this case. A few facts may be noticed.

(2.) THE petitioners are registered as dealers under the kerala General Sales Tax Act. THE assessments for the years 1992-93,1993-94 and 1994-95 had been finalized. THE competent authority had levied tax on the sale of 'dolomite' at the rate of 2. 5% as prescribed under Entry 50. THE assessments were arbitrarily reopened. THE assessing authority proposed to levy sales tax under Entry 42 of the First Schedule. THE proposal was based on the decision of a Bench of this Court in M/s. Marbles India v. State of Kerala, (1996) 4 KTR 445. A copy of the notice issued to the petitioner No. 1 has been produced as ext. P2. Ultimately, the assessments were finalised for the years 1992-93,1993-94 and 1994-95 on the basis that the sales were covered under entry 42. THE tax was levied at the rate of 12. 5% for the years 1992-93 and 1993-94. For the year 1994-95, the rate of tax was fixed at 10%. Aggrieved by the order passed by the assessing authority, petitioner No. 1 had filed an appeal. It was, inter alia, pointed out that the sales had been effected to dealers in fertilizers. THE tax had been collected at the rate of 2. 5% only. THE decision of the Court in M/s. Marbles India had no relevance. THE appellate authority considered the matter. It noticed that "the assessing authority has no case that the appellant had used dolomite powder for the manufacture of mosaic tiles so as to attract the rate of tax applicable to mosaic chips and mosaic powder. " It had presumed that the powder sold by the appellant was used for manufacturing mosaic tiles for flooring purpose. This presumption was raised on the basis that the assessee was dealing in building materials. THE appellate authority further noticed that the assessee had produced "certain sale bills for verification which shows that sale of dolomite powder is mainly effected to a fertilizer dealer, namely, M/s. Organic fertilizers and the rate of tax charged is 2. 5% only". Thus, the appellate authority allowed the appeals in respect of the three assessment years and remanded the case to the assessing authority for fresh disposal.

(3.) THE matter was posted before a Division Bench of this court. It noticed that there was a conflict of view in the two Division Bench judgments of this Court in M/s. Marbles India v. State of Kerala, (1996) 4 KTR 445 and Southern Veneers & Wood Works Ltd. v. State of Kerala, (1997) 5 KTR 437. Thus, the matter was referred to a Full Bench.