T K M HUSSAIN Vs. STATE OF KERALA

JUDGEMENT

(1.) The petitioners are engaged in the manufacture of splints and veneers. They have registered themselves as dealers under the provisions of the Kerala General Sales Tax Act, 1963 and also the Central Sales Tax Act, 1956. Their small-scale manufacturing units are recognised by the Kerala Khadi and Village Industries Board. According to them, since their products, viz., splints and veneers are exempted from payment of Kerala Value Added Tax Act, 2003 (for short, "the KVAT Act"), they are entitled to total exemption from payment of tax under the Central Sales Tax Act, 1956 (for short, "the CST Act") in view of Section 8(2)(c) of the Act. Therefore they are before this court for the following reliefs:

(2.) Learned Counsel appearing for the petitioners/appellants would submit that the items which they are dealing would fall under Sub-clause (13) of entry 55 of the First Schedule to the KVAT Act and the commodity falling under that entry is totally exempt from payment of tax under the KVAT Act and therefore they are entitled to take benefit under Section 8(2)(c) of the CST Act. However, according to the learned Counsel, in view of the circular instruction issued by the Commissioner of Commercial Taxes in No. 17/ 2006 dated April 19, 2006, they would not be in a position to put forth their views before the assessing authority, since, the assessing authority is bound by the clarifications/circular instructions issued by the Commissioner of Commercial Taxes.

(3.) Shri Ashokan, learned Special Government Pleader (Taxes) submits that entry 55 of the First Schedule to the KVAT Act is a conditional exemption granted by the Legislature to the products notified by the Khadi and Village Industries Commission at the sale point by the manufacturing units recognised by the Kerala Khadi and Village Industries Board. Since it is a conditional exemption, the assessee cannot take benefit under Section 8(2)(c) of the CST Act.