SARAMMA JOY Vs. STATE OF KERALA

JUDGEMENT

(1.) THESE six tax revision cases raise a common question as to whether empty bottles are packing materials in order to avail the benefit of concessional rate of tax as provided under S. 5 (7) of the Kerala General Sales tax Act, 1963 as it stood at the relevant time.

(2.) THE assessment years concerned are 1983-84,1984-85,1985-86,1986-87,1987-88 and 1989-90. THE assessee in the first five cases is one Smt. Saramma Joy, New Trades, Thukalassery, Thiruvalla. THE assessee in the last mentioned case is M/ s. Thomason Bottle, Muthoor, thiruvalla. Both of them are dealers in empty bottles, they are assesses on the files of the Sales Tax Officer I, Thiruvalla. THE assessee purchased empty bottles from various sources and sold them to various industrial units for use as containers of finished products manufactured by them inside the State for sale. THEy obtained declaration in Form 18 from the purchasing dealers as contemplated under S. 5 (7) of the Act. THEy collected and remitted tax only at the concessional rate on their turnover of sale of empty bottles to the industrial units. THE assessment of Smt. Saramma Joy for the year 1983-84 was originally completed granting the benefit of concessional rate as provided under S. 5 (7) of the Act accepting Form 18 declaration submitted by her. Subsequently, the said assessment was reopened under S. 19 of the Act alleging that the empty bottles are not industrial raw materials or packing materials, but they are only containers as per Explanation given under Ss. 5 (5) and 5 (b) of the Act. According to the assessing authority empty bottles are nothing but glassware containers taxable at 10% under the I Schedule to the Kerala General sales Tax Act and therefore the concessional rate of tax allowed in the original order of assessment is a mistake apparent on the face of the records. Similarly, for the assessment years 1984-85 to 1987-88 and in the case of M/s. Thomason Bottle for the assessment year 1989-90, the assessing authority took the same view. Notwithstanding the valid objections raised by the petitioners, the assessing authority completed the assessment for all the years treating it as glassware containers taxable at 10%.

(3.) LEARNED counsel for the petitioners further pointed out that the legislature substituted the I Schedule to the Act by the Kerala finance Act, 1992 published in Kerala Gazette Ex. 896 dated 29. 7. 1992 with effect from 1. 4. 92 and in that Schedule item No. 91 is 'packing cases' and 'packing materials' including cork, cork sheet, gunny bags, snooks, tea chests, waste paper, wooden boxes, wooden shavings, wooden crates, wooden cable, drum or other materials notified by Government in this behalf. Explanation to item no. 91 also says planks, panels and batterns when assembled will form tea chest or packing case will come under packing cases for the purpose of this entry. He also referred to Notification SRO 375/92 issued by the Government under S. 16 of the Act, wherein the Government after referring to SRQ 241 of 1991 and 284 of 1992, in the public interest notified, inter alia, that bottles made of glass or other materials, are packing materials for the purpose of Entry 91 of the I schedule to the said Act. According to him, Entry 91 coupled with the notification though it is prospective in operation clearly manifests that the legislative intention is to treat empty bottles also as packing materials. LEARNED counsel accordingly submitted that the appellate Tribunal and the authorities committed a very serious error in holding that empty bottles sold by the petitioner cannot be treated as packing materials for the purpose of concessional rate of tax under S. 5 (7) of the Act, LEARNED Special Government pleader appearing for the State, on the other hand, submitted that empty bottles can never be treated as 'packing materials', for the expression'packing materials' clearly shows that it is meant only for packing solid articles and when so understood, bottles which are used as containers of liquids can never be understood as a packing material. According to him, glass bottles are only containers of liquids and that neither in common parlance nor in commercial sense, they can be classified as "packing materials*. It is submitted that glass bottles available in various types and measurements are mainly used to keep different item is of liquid foods, medicines, liquors, etc. They are only containers of liquids and can never be considered as packing materials. The learned Special Government Pleader (Taxes) further submitted that legislature itself has treated 'containers' 'packing materials' differently is evident from various sub-sections of S. 5 itself. The Sales Tax appellate Tribunal according to him was perfectly justified in holding that 'empty bottles' are not packing materials.