1990 (2) TMI 294 - HC - VAT and Sales Tax

Summary

Issues Involved:

1. Denial of concessional tax rate under Section 5(3) of the Kerala General Sales Tax Act.
2. Compliance with the proviso to Section 5(3) and its implications.
3. Interpretation of "component part" under Section 5(3).
4. Relevance of previous judicial decisions.
5. Tribunal's adherence to legal precedents.
6. Knowledge and application of the decision in Paul Lazar v. State of Kerala.
7. Justification for denial of concessional tax rate.

Detailed Analysis:

1. Denial of Concessional Tax Rate under Section 5(3):

The petitioner was denied the concessional rate of tax at 1% on the sales turnover of super enamelled copper wires for the assessment years 1981-82 to 1985-86. The assessing officer, Deputy Commissioner, and Sales Tax Appellate Tribunal all held that super enamelled copper wire is not a component part of electrical goods but an accessory, thus not eligible for the concessional rate under Section 5(3).

2. Compliance with the Proviso to Section 5(3) and Its Implications:

The petitioner argued that having complied with the proviso to Section 5(3) by obtaining form No. 18 declarations from purchasers, the Revenue should not ignore these declarations and penalize the petitioner by charging a higher tax rate. The Tribunal, however, upheld the denial of the concessional rate, emphasizing that the super enamelled copper wire is not a component part of electrical goods as required by the statute.

3. Interpretation of "Component Part" under Section 5(3):

The core issue was whether super enamelled copper wire qualifies as a "component part" under Section 5(3). The Tribunal and lower authorities relied on the decision in Paul Lazar v. State of Kerala, which defines a component part as an article that forms an identifiable constituent of a finished product and is visually identifiable and separable by a mechanical process. They concluded that super enamelled copper wire does not meet this definition.

4. Relevance of Previous Judicial Decisions:

The petitioner cited several decisions to support their claim, including:
- Radhakrishna Chetty & Bros. v. Assistant Commissioner of Sales Tax (1974) 34 STC 370 (Ker)
- Deputy Commissioner of Sales Tax v. Bharat Refineries Limited (1978) 42 STC 225 (Ker)
- Deputy Commissioner of Sales Tax v. Burmah Shell Oil Storage and Distributing Company Limited (1981) 48 STC 37 (Ker)

These cases generally held that once the selling dealer complies with the proviso to Section 5(3) by furnishing the required declarations, their liability ceases, and they are entitled to the concessional rate. However, the Tribunal distinguished these cases, noting that they did not address the specific requirement that the goods sold must be capable of being used as component parts.

5. Tribunal's Adherence to Legal Precedents:

The Tribunal's decision was consistent with the precedent set in Paul Lazar v. State of Kerala, which was deemed directly relevant to the case. The Tribunal found no error in the lower authorities' application of this precedent, thus upholding the denial of the concessional rate.

6. Knowledge and Application of the Decision in Paul Lazar v. State of Kerala:

The petitioner questioned whether they could be imputed with the knowledge of the decision in Paul Lazar v. State of Kerala and whether they acted in conscious disregard of it. The Tribunal did not find this argument compelling, as the decision was a well-established legal precedent that the petitioner should have been aware of.

7. Justification for Denial of Concessional Tax Rate:

The Tribunal concluded that the petitioner was not eligible for the concessional tax rate because super enamelled copper wire does not qualify as a component part under Section 5(3). The Tribunal found that the questions of law raised by the petitioner did not arise out of the Tribunal's order and were not argued before the lower authorities.

Conclusion:

The tax revision cases were dismissed, and the Tribunal's decision to deny the concessional rate of tax was upheld. The Tribunal held that the petitioner failed to demonstrate that super enamelled copper wire is a component part of electrical goods, as required by Section 5(3) of the Kerala General Sales Tax Act. The petitioner's compliance with the proviso to Section 5(3) by furnishing form No. 18 declarations was not sufficient to entitle them to the concessional rate.