LAWS(KER)-1998-11-36

SILICAL METALLURGIC LIMITED Vs. STATE OF KERALA

Decided On November 24, 1998
SILICAL METALLURGIC LIMITED Appellant
V/S
STATE OF KERALA Respondents

JUDGEMENT

(1.) PETITIONER is a company incorporated under the Companies Act and is a dealer under the Kerala General Sales Tax Act, 1963 manufacturing ferro silicon. PETITIONER seeks for a declaration to declare that the respondents are not entitled to collect and levy any tax in terms of section 3 of the Kerala Tax on Entry of Goods into Local Areas Act, 1994. PETITIONER seeks for a further declaration that the petitioner is entitled to exemption from payment of any entry tax on the iron and steel. They have also prayed for the issue of a writ of certiorari to quash exhibit P6 assessment order, exhibit P7 demand notice, and exhibit P8 order of penalty.

(2.) PETITIONER has effected purchases of MS scrap from outside the State for Rs. 68,04,797 for the year 1997-98. PETITIONER has not filed any return as required under rule 4 (1) of the Kerala Tax on Entry of Goods into Local Areas Rules, 1994 (for short, "the Rules" ). Section 3 of the Kerala Tax on Entry of Goods into Local Areas Act, 1994 (hereinafter referred to as "the Act") provides for levy of tax. As per this provision, there shall be levy and collection of tax on the entry of any goods into any local area for consumption, use or sale therein. The tax shall be at such rate or rates as may be fixed by the Government. But that rate shall not exceed the rates specified for the goods in the First Schedule to the KGST Act. Section 2 (ee) defines "goods" as the goods mentioned in the Schedule. Item 9 of the Schedule to the Act is iron and steel. S. R. O. No. 589 of 1996 is a notification issued under section 3, notifying the rate of tax to the items mentioned thereunder to be levied and collected on entry of those goods into any local area in the State of Kerala. Item 9 is "iron and steel" and the rate of tax is 4 per cent. Section 7 obliges every person to pay tax and to furnish the return. Section 15 provides for a penalty against any person who fails to comply with any of the provisions of the Act. The said provision enables the officer to impose on him, in addition to any tax Payable, a sum by way of penalty not exceeding twice the amount of tax. Section 12 deals with the exemption, as follows : " Subject to such conditions as they may impose, the Government may, if it is necessary so to do in the public interest, by notification, exempt any specified class of importers from payment of the whole or part of the tax payable under this Act. " In exercise of the power conferred by section 12, the Government granted exemption in respect of tax payable under section 3 of the Act by the importers in respect of iron and steel imported by them for use as raw material in the manufacture of other goods, in S. R. O. No. 263/98 by Notification G. O. (P) No. 44/98/td dated March 19, 1998 in Kerala Gazette, Extraordinary No. 484 dated March 23, 1998. The exemption is subject to the condition that the goods in respect of which exemption is claimed is purchased inter-State by issuing "c" form and manufactured product thereof is liable to sales tax either under the KGST Act or under the Central Sales Tax Act.

(3.) ON the face of it, such a contention cannot be accepted. First of all Schedule 1 of the KGST Act, item 83 describes as follows : " 83. Metal scraps other than those specified in the Second Schedule. " Therefore, it is specifically stated in the First Schedule, and the contention that the same is coming under item 68 is not correct. Secondly, the tax under this Act shall be at such rate as may be fixed by the Government. As per the Notification in S. R. O. No. 586/96, the rate of tax for iron and steel fixed is 4 per cent. The petitioner cannot say that the scrap iron is not iron and steel, since the exemption is referable only to iron and steel, as per S. R. O. No. 263/98. The latter part of section only says that the rate of tax shall not exceed the rate specified in the First Schedule. In the First Schedule, the rate is 8 per cent and in the notification it is only 4 per cent. So, it has not exceeded the rate specified in the First Schedule.