FIBRE FOAM P LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) THE matter arises both under the Kerala General Sales Tax Act, 1963 (for short, "the KGST Act) and under the Central Sales Tax Act, 1956 (for short, "the CST Act" ). THE same assessee under the said two enactments is the petitioner in both these cases. THE assessment year concerned is 1991-92. THE only question involved in both these revisions is as to whether the assessee is entitled to exemption from payment of sales tax under S. R. O. No. 432 of 1991 on the turnover of the goods manufactured and sold by the petitioner. THE assessee is engaged in the manufacture of rubberised coir mattresses, pillows, cushions, bath mats, packing material, etc. , in the name and style of Fibre Foam (P.) Limited at Baliapattarn, Cannanore. In the assessment for the year 1991-92 both under the KGST Act and under the CST Act assessee claimed exemption in respect of the sales turnover of rubberised coir products manufactured by it for the period from January 1, 1992 to March 31, 2002 under the Notification, S. R. O. No. 432/91. THE assessing authority on the basis of a certificate dated February 23, 1997 issued by M/s. Intercontinental Marketing Corporation, Ernakulam, the sole selling agents of the petitioner, in which they have certified that they sold fibre foam products for Rs. 96,62,091 and remitted the tax due thereon, Rs. 5,23,820 before the Assistant Commissioner (Assessment), Sales Tax Office, Special Circle II, Ernakulam, held that the products manufactured by the assessee is fibre foam which is specifically excluded from the benefits of the Notification S. R. O. No. 432/91. This was confirmed by the two appellate authorities including the Tribunal in the appeals filed by the assessee.

(2.) SRI. Rajesh Nambiar, learned counsel appearing for the petitioner submits that the commodity dealt with by the petitioner is nothing but rubberised coir products and that by virtue of the Notification S. R. O. No. 432/91, the sale of the said product is exempted from tax from April 1, 1991. The counsel further submitted that the assessee had collected tax at the rate applicable to rubberised coir products under entry 162 of the First Schedule to the KGST Act, as it stood at the relevant time for the period from April 1, 1991 to December 31, 1991 and remitted the same to the Department. The Counsel submitted that it is only for the purpose of showing that the tax was collected and remitted by the agents that the assessee had produced the certificate issued by their sole selling agents. The counsel also submitted that though the assessing authority had rejected the claim based on the Notification, S. R. O. No. 432/1991, he had assessed the turnover of the products of the assessee only at the rate applicable to rubberised coir products under Entry 162 of the First Schedule at 4 per cent. The counsel further pointed out that the purchase of rubber latex effected by the assessee was granted exemption under S. R. O. No. 585/80, which is available only for the purchase of raw materials used in the manufacture of rubberised products by small-scale rubber industrial units. The counsel also submitted that the certificate issued by their sole selling agents relied on by the authorities only says that they had sold the products of the assessee, whose name is fibre foam. The counsel accordingly submitted that the authorities and the Tribunal were not justified in denying exemption under the Notification, S. R. O. No. 432/91 to the petitioner.

(3.) ACCORDING to us, none of the authorities, including the Tribunal had addressed the question in the proper perspective. The assessing authority and the two appellate authorities, instead of searching for evidences in the form of correspondence, etc. , should have verified the very product of the assessee with respect to which the exemption was claimed either by directing the assessee to produce the product before the assessing authority or before the appellate authorities. The appellate authorities could have even directed the assessing authority to conduct an inspection of the said product by visiting the petitioner's premises and find out as to what exactly was the product of the petitioner. On an inspection of the product of the petitioner, it could have been very well ascertained as to what is the major component of the product. In other words, whether the product is made substantially of fibre and the use of rubber was only nominal or incidental. It is without resorting to the primary material, namely, the very product itself, all those authorities have considered the question as to whether the product of the petitioner is fibre foam. We make it clear that even if the petitioner's product will fall under the general category of "rubberised coir products", entry 162 of the First Schedule to the Act, if it is found that the product of the petitioner is fibre foam, then the exemption under the Notification, S. R. O. No. 432/91 cannot be granted to fibre foam. Since none of these authorities have addressed this question in the proper perspective, we set aside the orders of the assessing authority and the two appellate authorities on this issue and direct the assessing officer to pass fresh orders in accordance with law and in the light of the observations made in this judgment. The petitioner is entitled to produce all materials in support of his contention that the product is not fibre foam which is specifically excluded under the notification.