C P JOSE Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE two writ petitions raise the question regarding the liability to entry tax on the import of "day-old-chicks" from the nearby States under section 3 of the Kerala Tax on Entry of Goods into Local Areas Act, 1994 (for short "the Act" ). The petitioners in both these cases are stated to be the owners of poultry farms in the State for rearing chicks. They are also registered dealers both under the Kerala General Sales Tax Act, 1963 and under the Central Sales Tax Act, 1956 (hereinafter referred to as "the KGST Act" and "the CST Act") respectively. According to the petitioners, they are not liable to pay entry tax on the import of "day-old-chicks" from the nearby States for the purpose of rearing them in their farms since their sales of chicken so reared and its meat are exempted from sales tax by virtue of the Notification S. R. O. No. 1090 of 1999 as amended by S. R. O. No. 7 of 2002. Their grievance is that in spite of the above legal position the check-post authorities in the State are consistently detaining the day-old chicks brought from the neighbouring States on the premise that the same is liable to entry tax as a matter of course and that they are insisting for payment of entry tax for onward transportation of chicks.

(2.) THE petitioners, for the purpose of establishing that there is no liability under the KGST Act to pay tax on the turnover of sale of chicken and its meat, is relying on the Notification S. R. O. No. 1090 of 1999 as amended by S. R. O. No. 7 of 2002. It is stated that under the aforesaid notifications poultry farmers within the State are exempted from payment of sales tax on the turnover of sale of poultry reared by them in their own farms within the State whether hatched by them or not but run on land owned by them and the meat obtained therefrom. THE Notification S. R. O. No. 7 of 2002, entry No. 14 (ii) also states "own farm does not include farm run on land taken on lease, mortgage, licence or any other arrangement". According to the petitioners they fall under the said clause and therefore there is no liability or payability to any tax under the KGST Act in respect of their sale of live chicken though the commodity is taxable under the residuary entry contained in the First Schedule to the KGST Act. THEy also relied on the decision of a division Bench of this Court in Emmvee Solar Systems Pvt. Ltd. v. Sales Tax Inspector (2003) 3 KHCACJ 15 and stated that where there is no liability under the KGST Act itself on account of the exemptions under the notifications there is no loss of revenue caused to the State of Kerala in the subject transaction and resultantly there can be no liability to entry tax also.

(3.) I have considered the rival submissions. The petitioners in both these cases did not challenge any proceedings of the authorities under the Act. They have only sought for a declaration that the day-old chicks bought and brought by the petitioners from outside the State into the State are not exigible to entry tax under the Kerala Tax on Entry of Goods into Local Areas Act, 1994 and for a writ of prohibition restraining the respondents from collecting entry tax on "day-old chicks" brought into the State of Kerala by the petitioners from outside the State for rearing in their own farms, without compelling them for payment of entry tax and also to refrain from detaining the consignment at the check-posts.