H.L. DATTU v. Asst. Commissioner - (2007) 4 SCC & Anr.

H.L. DATTU, C.J. & HARUN-UL-RASHID, J.--------------------------------------------------------------------- S.T. Rev. No. 118 of 2003 ---------------------------------------------------------------------Dated, this the 3rd day of August, 2007ORDERH.L. DATTU, CJ.Petitioner is a small scale industry. It is engaged in re-rolling of iron scrap andingots into iron bars and sections. For the assessment year 1998-99, petitioner haddeclared its total and taxable turnover before the assessing authority.2. While computing the tax liability, the assessing authority had levied tax undersection 5A of the Kerala General Sales Tax Act (the Act, for short). The said order ofthe assessing authority was the subject matter of appeal before the first appellateauthority in S.T.A No.106 of 2000. The appellate authority has rejected the appeal. Thereafter the assessee has filed a second appeal before the Kerala AgriculturalIncome Tax and Sales Tax Appellate Tribunal in T.A.No.675 of 2001.

The Tribunalhas rejected the appeal by its order dated 30th April, 2002. That is how the assessee isbefore us in this revision petition filed under section 41 of the Act.3. The assessee has framed the following questions of law for our considerationand decision. They are as under:

Whether on the facts and circumstances of the case: (i) the Appellate Tribunal was right in holding that levy of purchasetax under section 5A (ia) of the K.G.S.T. Act for 1998-99 was legaland valid in the petitioner's case?(ii) the levy of purchase tax at 4% u/s. 5A on the purchase turnoverof raw materials from other SSI Units enjoying the tax exemption, islegal and in accordance with law?(iii) the order of the Appellate Tribunal is legal, valid andsustainable in law?

4. In our view, as on today the questions of law framed by the assessee are no S.T.Rev. No.118 of 20032more debatable in view of the declaration of law made by the Apex Court in the case of Peekay Re-Rolling Mills (P) Ltd. v.

Asst. Commissioner and another - (2007) 4 SCC 30. In the said decision the Supreme Court has observed as under: “The appellant Company was a registered dealer under the Kerala General Sales Tax Act, 1963 (for short “the State Act”). Itcarried on the business of steel re-rolling mills. The raw material usedby the appellant in the production of bars and rods was steel ingots, which the appellant either manufactured or purchased from othermanufacturers from within or outside the State. Purchase of steelingots effected by the appellant within the State were frommanufacturing units, which were exempt from the payment of sales taxon the sale of such ingots by virtue of an exemption notification SRONo.1729/93 issued under Section 10 of the State Act. The Departmenttook the view that under the said circumstances, the appellant wasliable to pay purchase tax under Section 5-A of the State Act for AYs1994-95 and 1996-97 to 1999-2000.

The appellant then filed writpetitions before the High Court but a Single Judge dismissed the writpetitions as not maintainable. Writ appeals filed by the appellant weredismissed by a Division Bench. Although not upholding the view takenby the Single Judge, the Division Bench rejected the contention of theappellant that in view of Article 286(3) of the Constitution read with Section 15 of the Central Sales Tax Act (for short “the Central Act”), itwas impermissible to levy purchase tax under Section 5-A of the StateAct. It further held that the expression “levy” included collection of taxas well and not mere imposition. It held that in the absence ofcollection of tax, there was no levy and since the goods were exemptedfrom payment of sales tax, the goods could be subjected to levy ofpurchase tax under Section 5-A of the State Act. The appellant thenfiled the present appeals. Before the Supreme Court, the appellant Company contendedthat goods being declared goods under Section 14 of the Central Act, were subject to limits placed by Section 15 thereof.

That therefore, if S.T.Rev. No.118 of 20033iron and steel were subjected to a single-point levy of tax at the firstpoint of sale, then there was no question of a second levy or charge atany subsequent point of sale or purchase. That in view of Section 5(1)read with the Second Schedule of the State Act, the burden of taxcould not be shifted to the purchaser as the State Government hadalready notified that the tax would be at the point of first sale. That the High Court erred in assuming that the word “levied” in Section 15(a) ofthe Central Act was used in the sense of imposed and collected. Thatthe word levy could cover imposition. That non-collection of taximposed would not mean non-levy of tax. On the other hand, the respondent Revenue contended that thepurchase tax under Section 5-A of the State Act was capable of beinglevied only where no sales tax was levied on the taxable goods under Section 5 thereof and thus only a single-point levy or one-stage levytook place i.e. either sales tax or purchase tax and not both.

That inview of the provisions of the State Act, the expression levy wouldinclude collection or payment as well and not mere authorisation oflevy.” 5. In view of the law declared by the Apex Court in Peekay Re-rolling Mills' case, the revision petition filed by the assessee requires to be allowed and the orders passedby the Tribunal in T.A.No.675 of 2001 in so far as the levy of purchase tax is concerned, requires to be set aside and it is set aside. Ordered accordingly. H.L. DATTU, CHIEF JUSTICE. HARUN-UL-RASHID, JUDGE.mt/