COVEMA WOOD PLAST Vs. STATE OF KERALA

JUDGEMENT

(1.) The petitioner has filed this writ petition challenging Exts. P11, P12 and P15 proceedings of the respondents holding that goods transported by the petitioner were liable to be assessed to sales tax under the Central Sales Tax Act, 1956. The short facts of the case are the following.

(2.) The petitioner is an industrial unit set up within the Cochin Special Economic Zone ('CSEZ' for short). The same is a company incorporated under the Companies Act, 1956. It had set up the industrial unit in the CSEZ in the year 2001 for the manufacture and export of PVC Free Foam Sheets. Ext.P1 is a copy of the permission granted to the petitioner to set up the manufacturing unit on 29.5.2001. A copy of the green card issued to the petitioner is Ext.P2. For the purpose of their manufacturing process, the petitioner imported the necessary machinery, without paying any Customs Duty. This is for the reason that, the Special Economic Zone is treated as foreign territory under the Export-Import Policy. Ext.P3 is a copy of the bond that the petitioner had executed with the Customs Department. As per Ext.P3, the petitioner was permitted to retain the goods within the Special Economic Zone under bond with the Customs Department, without being cleared for home consumption. Accordingly, the goods were retained under bond with the Customs Department. However, the petitioner could not commence production.

(3.) In the above circumstances, as per Ext.P5 agreement dated 23.1.2004 the petitioner agreed to give the machinery on lease to the sixth respondent, another export oriented unit located in a similar Special Economic Zone in Rajasthan. For the purpose of transporting the machinery to Rajasthan, the petitioner submitted Ext.P6 application for permission to the fifth respondent. Ext.P7 is the sanction dated 24.5.2004 granted by the fifth respondent. The petitioner also obtained Ext.P8 concurrence from the Superintendent of Central Excise Udaipur. Thereafter, the machinery was transported to the sixth respondent on the strength of Bills of Entry for warehousing. However, when the goods reached the Walayar Check Post, they were detained by the third respondent on 15.6.2004, alleging that the goods were taxable under the Central Sales Tax Act (CST Act for short). The petitioner was thereafter issued with notices under Sec. 29A(2) of the Kerala General Sales Tax Act, 1963 ('KGST' Act for short). The said notices are Ext.P11. Ext.P11 notices were followed up with Ext.P12 alleging that Sales Tax under the CST Act was payable in respect of the goods.