COMBINED FOODS PVT. LTD. Vs. STATE OF KERALA

JUDGEMENT

(1.) The main question raised in the connected revisions filed by the assessee is whether they are liable to pay tax under Section 5(3)(ii) of the Kerala General Sales Tax Act, 1963 for the differential tax on purchase of various items used in the manufacture of ice-cream which was stock transferred to outside State for sale in other States. The petitioner is a manufacturer of ice-cream under brand name and for manufacture of ice-cream, the petitioner purchased various raw materials and packing materials by availing of concessional rate under Section 5(3)(i) of the KGST Act. According to the petitioner, prior to the amendment by the Finance Act, 2000 with effect from April 1, 2000, the proviso to Section 5(3)(i) made a condition that the items manufactured or packed with the raw materials or packing materials purchased by availing of concessional rate should be sold within the State or from Kerala as inter-State sale, so that the product suffers sales tax in Kerala either under the KGST Act or under the CST Act. However, from April 1, 2000 the proviso was deleted and consequently even if the item manufactured or packed with raw materials or packing materials purchased by availing of concessional rate is stock transferred outside the State, still the differential tax on raw material or packing material cannot be demanded from the manufacturing unit which availed of the concessional rate under Section 5(3)(i) of the Act. The lower authorities, however, rejected the claim probably because the main Clause talks about sale of the finished products as a condition for eligibility for concessional rate on raw material or packing material. We have heard Counsel appearing for the assessee and the Government Pleader appearing for the respondent.

(2.) The relevant provision after the amendment with effect from April 1, 2000 is extracted hereunder for easy reference:

(3.) The first proviso that was there in Section 5(3)(i) up to March 31, 2000 provided that an industry availing of concessional rate for purchase of raw materials or packing materials should sell the products in Kerala or from Kerala so that tax is paid either under the local Act or under the CST Act for availing of concessional rate on raw material or packing material used for manufacture or packing of such goods. However, the said proviso was deleted and the purpose of deletion as conveyed by the Minister while presenting the Budget on March 14, 2003 is as follows :