MANJUNATH TYRE RETREADERS Vs. STATE OF KERALA

JUDGEMENT

(1.) These Revision Petitions arise out of a common order passed by the Sales Tax Appellate Tribunal, Addl. Bench, Kozhikode in T.A. Nos. 124 to 129 of 1998 and 171 of 2001. Assessment year relates to 1990-91 to 1996-97. Question involved is regarding the rate of tax applicable to the petitioner unit which carries on the business of retreading tyres. According to the assessee, the work undertaken by the assessee would fall under the residuary Entry 22 of the Fourth Schedule to the KGST Act. Consequently, the rate of tax that is applicable for the year 1990-91 is 5% and for the year 1996-97 is 6%. Assessing officer took the view that Entry 22 of Fourth Schedule is not applicable to tyre retreading works, but exigible to tax under Entry 112 of the First Schedule (now 123) since the transfer of goods is involved in the execution of works contract and for the materials transferred, that is, tread rubber, the rate of tax to be levied is 10%. According to the Assessing Authority works contract would fall under "works contract where the transfer is in the form of goods" and as such rate of tax that is applicable is under first Schedule on the materials transferred. Assessee is aggrieved by the said order and took up the matter in appeal before the Appellate Assistant Commissioner. Appeal was rejected. There was further appeal to the Tribunal. Tribunal also dismissed the appeal against which these Revision Petitions have been filed.

(2.) Sri. N. Muraleedharan Nair, learned Counsel appearing for the revision petitioners submitted that the authorities below have failed to note that the work undertaken by the petitioner is a works contract where the transfer is not in the form of goods but in some other forms and hence the petitioner is liable to be taxed under the IV Schedule to the KGST Act. Counsel submitted the finding of the Tribunal that the IV Schedule deals with the constructions and installations of items is erroneous and incorrect. Counsel also submitted that Item 10 of the IV Schedule is painting and polishing where there is no construction and installation of items involved. Counsel also made reference to the nature of work undertaken by the assessee. Work undertaken by the assessee is purely job works in nature and he is not effecting any sale, but carrying out job work as per the requirement of the customer. Counsel submitted assuming that the work undertaken by the petitioner is not a job work and only a works contract, it is to be brought under the IV Schedule to the KGST Act since transfer of goods involved in the contract is in some other form.

(3.) The Special Government Pleader (Taxes) appearing for the revenue on the other hand tried to support the findings of the authorities below including that of the Tribunal and submitted that the Assessing Authority was justified in imposing tax under Section 5C of the KGST Act holding that the work undertaken by the assessee is works contract where the transfer is in the form of goods and hence the contract comes under the 1st category as such the rate of tax is that is applicable under the 1st Schedule on the materials transferred.