INDIAN RARE EARTHS LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) This tax revision case arises out of the order passed by the Sales Tax Appellate Tribunal, Thiruvananthapuram. Assessee is a Government of India undertaking. The KGST assessment for the year 1992-93 was completed vide Annexure-A order dated 27-11-1999. Assessing Officer had noticed that the assessee has not included in the turnover all amounts received by way of despatch money. The said fact was noticed when the profit and loss account was verified by the assessing authority. Assessee contended before the assessing authority that the despatch money amounting to Rs. 8,55,664/- is an incentive received during the work of export and since the entire export was exempted from sales tax the despatch money also may be treated as export sale and be exempted from levying tax under the KGST Act. Assessee had pointed out that despatch money is based on the day saved by the shippers due to early loading of cargo. Since the assessee had not substantiated that contention assessing authority assessed sales tax on the said amount as well. Aggrieved by the said order assessee took up the matter before the Deputy Commissioner (Appeals). Appeal was rejected. Matter was then taken up before the Tribunal. Tribunal also concurred with the view of the assessing authority and rejected the appeal. Aggrieved by the same this tax revision case has been preferred.

(2.) The only question to be considered is whether the Tribunal is right in confirming the inclusion of a turnover of Rs. 8,55,664/- being despatch money received by the assessee from the shipping company for early loading and despatching of ship as forming part of the taxable turnover. Assessee has produced Annexure-D agreement entered into between the assessee and the shipping company and Annexure-E agreement entered into between the assessee and the contractors dated 22-12-1992. Clause 21 of Annexure-D is relevant for our purpose which is extracted hereunder for easy reference:

(3.) Under such circumstance we are in agreement with the assessee that the despatch money received by the assessee cannot be subjected to any tax under the KGST Act. We are therefore inclined to allow this revision and set aside the order passed by the authorities below. We hold that the assessing authorities cannot demand tax under the KGST Act on the despatch money received by the assessee.