TRENDS POLYMER PVT LTD Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) Petitioner is challenging Ext.P3 issued by the Assessing Officer revising the petitioner's sales tax assessment for the year 2002-03 under Section 19 of the K.G.S.T Act, 1963, bringing to tax the turnover of polythene sheets at the higher rate of 12%, as against the original assessment of the item at 4% treating it as packing material under entry 102 of the first Schedule to the K.G.S.T Act, 1963. Petitioner was engaged in the manufacture and sale of polythene film to those engaged in production, packing and sale of milk, oil etc. The main supply of the product was to the milk supplying organisation "MILMA" after printing their logo and name in the polythene sheets. The polythene sheets are converted into polythene bags in the course of packing milk wherein, the automatic packing machine converts the sheets to cover form and packs the same with specified quantity of the milk therein. The petitioner relying on Ext.P1 clarification of the Commissioner of Commercial Taxes on 05/04/2001 collected and remitted tax at the rate of 4% treating polythene film as packing material "falling under entry 102 of the First Schedule to the K.G.S.T Act". This was accepted by the Assessing Officer and tax was assessed on the turnover of the polythene film at 4%. However, the Government took Ext.P1 clarification issued by the Commissioner as a notification issued under entry 102 of the First Schedule to the K.G.S.T Act and held that Commissioner has no power to declare polythene film as a packing material because, according to the Government, only the Government has the power under the above entry of the Schedule to declare a new material as a packing material. Since the impugned revised assessment issued under Section 19 read with Section 43 of the K.G.S.T Act is based on Government Orders, petitioner has chosen to challenge the same before this Court even after filing statutory appeal before the appellate authority.

(2.) I heard the learned counsel appearing for the petitioner and the learned Government Pleader appearing for the respondents.

(3.) On an application for clarification under Section 59A of the K.G.S.T Act by the Kerala Plastic Manufactures Association, the Commissioner of Commercial Taxes vide Ext.P1 dated 05/04/2001 clarified that polythene film printed with the logo of the purchaser sold by the producer or manufacturer is a packing material falling under entry 102 of the First Schedule to the K.G.S.T Act and the rate of tax is 4%. It is based on this clarification that the assessment was originally completed at the rate of 4% on the turnover of polythene film vide Ext.P2. Even though the Government's order based on which the assessment was revised by the Assessing Officer under Section 19 read with Section 43 of the K.G.S.T Act is not produced in Court, the learned Government Pleader has produced the copy of the communication issued by the Government on 12/09/2006. I have gone through the said communication and I find that the stand of the Government is that the Commissioner has no authority under Section 59A of the K.G.S.T Act to declare any item as packing material and according to the Government, only the Government has authority to declare any item as packing material. It is also stated in the communication by the Government that the polythene film is not covered by notification of the Government and what is covered among the other items notified is only polythene bags which is not the item sold by this petitioner and therefore, the petitioner is liable to pay tax at higher rate applicable i.e., at the rate of 12% as against the original assessment of the item at 4%. Counsel for the petitioner contended that polythene film is a "packing material" which is also covered by entry 102 of the First Schedule to the K.G.S.T Act and therefore, irrespective of the Commissioner's clarification, the petitioner's turnover of polythene film has to be assessed at 4% under entry 102 of the First Schedule to the K.G.S.T Act as initially done. He also contended that the communication issued by the Government declaring Ext.P1 clarification issued by the Commissioner of Commercial Taxes as illegal, is also without jurisdiction. He has referred to the Commissioner's finding in Ext.P1 that notification required from Government side is only on other packing materials which will not come within the meaning of "packing case" and "packing materials" referred to in the above entry to the Schedule. The Government Pleader on the other hand pointed out that the Government has, through notification, notified several items like bottles made of glass, plastic etc. rubber band, cellophane tapes, gunny bags etc. as packing materials and according to him, only such materials notified by the Government under 102 Schedule K.G.S.T Act will be entitled to be assessed at the rate of 4% as provided by the Schedule-entry.