MADRAS RUBBER FACTORY LTD Vs. STATE OF KERALA

JUDGEMENT

(1.) These are connected cases. The sole question that arises for consideration in these cases is whether the cess payable and paid by the manufacturers, under the Rubber Act, 1947 and the Rules, will form part of their purchase turnover, under the Kerala General Sales Tax Act. In a common order, dated 20-11-1986, in T.A. No. 601 to 603 and 838 of 1986, which is the subject matter of T.R.C. No. 35,36 & 37, the Appellate Tribunal held that it is so. In an earlier order, in T.A. No. 102 of 1978 dated 5-10-1982, which is the subject matter of T.R.C. No. 101 of 1983, the Appellate Tribunal held that it is not so. T.R.C. No. 35 to 37 of 1987 are revisions filed by the assessee. Writ Appeal No. 681 of 1986 is filed against the judgment of a learned Single Judge, in O.P. No. 5767 of 1986-J dated 11-8-1986, holding that the cess paid is part of the purchase turnover. In O.P. No. 1344 of 1987, the petitioner manufacturer assails the notices issued by the assessing authority proposing to include the cess in the purchase turnover of the rubber for the year 1982-83, 1983-84 and 1984-85, evidenced by Exts. P1 to P3 orders. The O.P. is filed to quash the said notices. Arguments were advanced in the main cases, (T.R.C. No. 35 to 37 of 1987). It was agreed that the decision in the said cases will govern the other cases also.

(2.) The common revision petitioner assessee is engaged in the manufacture of rubber products. It purchases rubber from various estates in Kerala. Under Schedule I, Entry 71 of the K.G.S.T. Act, 1963, as it stood during the relevant assessment years, rubber was taxable at the point of last purchase in the State by a dealer who is liable to tax under S.5 of the Act. Under S.12 of the Rubber Act, 1947 read with the Rubber Rules, the revision petitioner assessee had paid cess to the Rubber Board. In effecting the assessments, amongst other things, the cess so paid by the assessee (revision petitioner) was included as part of its purchase turnover and brought to tax. It was confirmed in appeal by the Deputy Commissioner (Appeals), on the basis of the decision of this Court in T.R.C. No. 96 to 99 of 1983 and connected cases (Dy. Commissioner of Sales tax v. Bata India Ltd. ( 1986 KLT 833 ). In further appeals by the assessee, the Sales Tax Appellate Tribunal affirmed the decision of the authorities below and sustained the addition of cess, paid by the assessee to the Rubber Board, as part of its purchase turnover. Aggrieved by the aforesaid decision of the Sales tax Appellate Tribunal, so rendered by its common order dated 20-11-1986, the assessee has come up in revisions. It is common ground that under the Rubber Act, 1947 and the Rules, the cess was payable and paid by the assessee company direct to the Rubber Board. The question is, whether cess so payable and paid by the assessee will form part of its purchase turnover It has been held to be so by a Division Bench of this Court in Deputy Commissioner of Sales tax v. Bata India Ltd. (1986 KLT 833 = 62 STC 436).

(3.) When the above three revisions were initially heard by a Division Bench, consisting of their Lordships T. Kochu Thommen & K.P. Radhakrishna Menon, JJ. the Bench felt that there is an apparent conflict between the decision in Bata India Ltd. case (1986 KLT 833 = 62 STC 436) and the subsequent decision of this Court in Madras Rubber Factory v. Rubber Board ( 1986 KLT 935 ). After referring to the rival contentions of the parties, and the decisions of the Supreme Court and of this Court and the relevant rules, the Bench felt that there is much force in the submission of the petitioner's counsel, that the decision of this Court in Bata India Ltd. case (1986 KLT 833 : 62 STC 436) requires reconsideration. It was also stated that there is force in the submission that the conclusion reached by this Court in Bata India Ltd. case (1986 KLT 833 : 62 STC 436) is inconsistent with the view expressed on the point by this Court in the subsequent decision reported in Madras Rubber Factory v. Rubber Board (1986 KLT 935). Accordingly, the Bench referred the matter to a Full Bench in terms of S.4 of the Kerala High Court Act, by its order dated 5-3-1987. Accordingly, these three revisions have come up before this Full Bench.