MEKHALA TRADERS Vs. ASSISTANT COMMISSIONER

JUDGEMENT

(1.) THE petitioner is a dealer in plywood, hardboard, etc. It is an assessee on the files of the first respondent. THE petitioner has filed this O. P. for a declaration that the point of last sale in the State in relation to goods falling under Fifth Schedule to the Kerala General Sales Tax Act, 1963 is not liable to be taxed under the Notification S. R. O. No. 1401/92 published in G. O. (P) No. 176/92/td dated October 27, 1992. THE petitioner has also sought for quashing exhibit P2 assessment order and all consequential proceedings.

(2.) THE assessment of the petitioner for the year 1992-93 under the Kerala General Sales Tax Act was completed by the first respondent by order dated January 28, 1994 (exhibit PI) and it is stated that it has paid the tax and surcharge demanded. Exhibit P2 is the revised assessment order dated March 15, 1997 under section 19 of the Act, passed by the first respondent after three years from the date of the original assessment on the ground that the turnover relating to certain goods escaped assessment of turnover tax to the tune of Rs. 22,078. It is stated that the said order was passed disregarding the objection filed by the petitioner. THE dispute in this case is regarding the exigibility to turnover tax. Originally turnover tax was payable only by second sellers not liable to tax. It was later made payable also by dealers whose total turnover exceeded Rs. 50,00,000 at all points of sale or purchase of goods coming under the First and Fifth Schedules. THE Government then decided to restrict the levy of turnover tax on the taxable turnover of sales on the first sale point of goods received on branch transfer only. For the said purpose the Government issued Notification S. R. O. No. 1401/92 in G. O. (P) No. 176/92/td dated October 27, 1992. This notification was understood by the dealers as well as the assessing authorities to the effect that the turnover tax was leviable only on the sales of goods received on branch transfer or consignment from outside the State, and that all other taxable sales are exempt from levy of turnover tax. THE notification restricted the levy of turnover tax to goods brought and sold from outside the State only, which aspect has been made clear in the explanatory note of the notification. Though the notification is dated October 27, 1992 it has been given retrospective effect from April 1, 1992 as per Notification S. R. O. No. 365/93 issued in G. O. (Ms) No. 38/93/td dated March 9, 1993.

(3.) LEARNED counsel appearing for the petitioner submitted that the Notification S. R. O. No. 1401/92 read with the explanatory note makes it clear that all categories of taxable goods except goods received on consignment or branch transfer are exempt from turnover tax. LEARNED counsel submitted that though initially the turnover tax is leviable at all points of sale or purchase of goods coming under the First and Fifth Schedules to the Kerala General Sales Tax Act, the Government have decided to restrict the levy of turnover tax on taxable turnover of sale of goods received on branch transfer only. LEARNED counsel submitted that while construing the notification, the rule of reasonable construction must be applied, as pointed out by the Supreme Court in the case of Good year India [1990] 76 STC 71; [1991] 188 ITR 402. LEARNED counsel further submitted that this Court in Associated Cement's case [1996] 101 STC 28 held that even the category of branch transfer retained as taxable by the notification has been held to be non-taxable. He further submitted that it is a well-recognised principle that tax laws should be interpreted strictly and when there is confusion, the interpretation should go in favour of the assessee. He submitted that the first respondent was not justified in passing exhibit P2 reassessment order levying turnover tax.