STATE OF KERALA Vs. COCHIN SHIPYARD LTD

JUDGEMENT

(1.) This Tax Revision Case arises out of the order passed by the Sales tax Appellate Tribunal, Additional Bench, Ernakulam in T.A. No 651 of 1992. The assessee is a public sector undertaking, Cochin Shipyard Limited, engaged in the design, construction and supply of ocean going vessels. The company is registered as a dealer under the Kerala General Sales Tax Act, 1963. For the assessment year 1981-82 the assessee declared a total and taxable turnover of Rs. 41,95,586.36 which consists mainly of sale of waste materials like steel scrap and other scrap items and used as unserviceable articles. On examination of the books of accounts it was noticed by the assessing authority that the assessee had paid water charges amounting to Rs. 3,92,111.53 during 1981-82, the water was consumed by the assessee otherwise than by way of sale and that the return filed by the assessee had not shown the amount under taxable item though the same is liable to tax under Section 5A of the Act.

(2.) Aggrieved by the order of the assessing authority, assessee took up the matter in appeal before the Deputy Commissioner (Appeals). Appeal was dismissed. Assessee then took up the matter in appeal before the Tribunal. The appeal was partly allowed by the Tribunal. Tribunal based on the decision of this Court in Deputy Commissioner of Sales Tax v. Thomas Stephen & Co. Ltd. 1987 (1) KLT 161 : (1987) 66 S.T.C. 34) took the view that the water consumed in the manufacture of goods did not go into the making of the end product, but it was used for auxiliary purposes like washing vessel etc. and there was no transfer or disposal of the goods as known to law. Following the decision in Thomas Stephen's case, supra (1987) 66 STC 34 the Tribunal held that the water charges amounting to Rs. 3,92,112/- paid by the assessee is not exigible to tax under Section 5A of the Act. Assessing authority was therefore directed to exclude the amount from levy of tax under Section 5A of the Act. Aggrieved by the same State has come up in this revision.

(3.) Sri Georgekutty Mathew, learned Government Pleader submitted that the order of the Tribunal cannot be sustained since the decision in Thomas Stephen's case has subsequently been overruled by the apex court in Deputy Commissioner of Sales Tax v. Thomas Stephen & Co. Ltd. 1988 (1) KLT 568 : (1988) 69 STC 320. Further the learned Government Pleader submitted that going by the decision in Assistant Commissioner (Intelligence) v. Nandanam Construction Company (1999) 7 KTR 651 even if water is used not for manufacturing process it is exigible to purchase tax under Section5A of the Act.