MOLY ELDHOSE Vs. ADDITIONAL SALES TAX OFFICER

JUDGEMENT

(1.) Petitioner is the Proprietrix of a Small Scale Industrial Unit engaged in manufacture of Rubber Bands. The unit is recognized and financed by Kerala Khadi and Village Industries Board. The petitioner is a registered dealer under the provisions of the Kerala General Sales Tax Act and the Central Sales Tax Act. The assessment in dispute pertains to the year 2002-2003. The petitioner is challenging validity of Ext. P6 notification SRO No. 958/02, dt. 21/11/2002 and Ext. P7 revised assessment of CST for the year 2002-03.

(2.) , The petitioner's unit was exempted from payment of tax on inter - state sale as per SRO No. 1731/93. As per Sl. No. 3 in schedule IV of the above said notification Khadi and Village Industrial units recognized by the Kerala Khadi and Village Industries Board were given tax exemption for the period during which they remain as village industry from payment of tax on the products manufactured by such units within the State. Accordingly the petitioner claimed exemption on turnover of inter - state sale to the tune of Rs.13,98,197/- for the year 2002-03 and the assessing authority completed the assessment granting the exemption claimed, as per Ext. P2. The petitioner was also exempted from payment of tax due under the Kerala General Sales Tax Act, as per SRO No. 291/2000 and 292/2000. Ext. P3 is the assessment under the KGST Act.

(3.) In the year 2005, the petitioner was issued with Ext. P4 notice proposing reopening and revision of Ext. P2 assessment under R.6(8) of the Central Sales Tax Act (Kerala Rules) 1957, alleging that the petitioner was obliged to submit Form C declarations from 01/06/2002 onwards for availing concession, in view of the provisions in Finance Bill, 2002, and she was entitled only for payment of tax at the concessional rate of 2%. Since she failed to submit Form C declarations the assessment need be revised fixing tax liability at 10% on the entire inter - state sale. The petitioner objected the proposal through Ext. P5 contending that the subsequent notification issued in this regard, SRO No. 958/02 is dt. 21/11/2002, is arbitrary, illegal and void. Further it is contended that the said notification was published only on 22/11/02 and no retrospective effect can be given to the same from 01/06/2002 onwards. Since the petitioner had not collected any tax or procured any Form C during the relevant period in view of the total exemption available, the demand for payment of tax with retrospective effect is illegal, is the contention. But ignoring the objections the 1st respondent finalised assessment under Ext. P7, treating the entire inter -state sale turnover as taxable at 10% along with fixing liability to pay interest with effect from 01/05/2003 onwards.