9911796707
TMI Blog1988 (2) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... units established after the notification aforesaid and they are entitled to the benefits of the notification. Their claims for the benefits of sub-section (3) of section 5 Were referred by the respective Sales Tax Officers and the Deputy Commissioner (Sales Tax) to the Board of Revenue for clarification as can be seen from exhibits P1, P3 to P5 and P7. The Board of Revenue has taken the view that small-scale industrial units entitled to exemption from sales tax under the Notification SRO No. 968/80 are not entitled to the benefits of the lower rate of tax as provided for in section 5(3) of the Act. Exhibit P9 dated 1st January, 1988 (produced along with C.M.P. No. 1609 of 1988) is a communication from the Deputy Commissioner, Agricultural I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of its powers under section 10 of the Act. As per the notification an exemption is made in respect of tax payable under the Kerala General Sales Tax Act on the turnover of the sale of goods produced and sold by new industrial units for a period of five years from the date of commencement of sale of such goods by the said units. The first proviso to the notification requires the unit concerned to produce the proceedings of the General Manager, District Industries Centre, declaring the eligibility of the unit for exemption from sales tax. The second proviso to the notification is extracted below: "Provided further that the cumulative sales tax concession granted to a unit at any point of time within this period shall not exceed 90 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable turnover. It is well-settled that if a taxing statute is capable of two interpretations, the one in favour of the assessee is to be preferred. The benefit of a lower rate of tax under section 5(3) on industrial raw materials, component parts or packing materials sold to industrial units for use in the production of finished products for sale inside the State or for the packing of such finished products will not be available where the sale of such finished products "is not liable to tax" either under the Kerala General Sales Tax Act or under the Central Sales Tax Act or when finished products are exported out of the territory of India. The question for consideration is whether the sale of finished products referred to in the first pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial), Sales Tax [1964] 15 STC 487 held: "Tax becomes payable when liability to pay tax arises, and liability to pay tax arises by the happening of the taxable event. The taxable event under the U.P. Sales Tax Act is the sale of goods or their supply or distribution by way of sale. It is not necessary to wait until the assessment has been completed in order to be able to say that a tax has become payable. There is a distinction between the expressions 'tax payable' and 'tax due'. Tax is due when it becomes a debt owed to the taxing State: it becomes a debt when it has been determined by assessment and quantified, and a notice of demand has been issued intimating the amount of tax and demanding payment." The same view is expressed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have to be included in the gross turnover of the dealer because they are prima facie liable to tax and the only thing which the dealer is entitled to in respect thereof is the deduction from the gross turnover in order to arrive at the net turnover on which the tax can be imposed. In the latter case, the sales or purchases are exempted from taxation altogether." Construing section 7 of the Orissa Sales Tax Act-corresponding to section 10 of the Kerala Act providing for exemptions-the Orissa High Court in William Jacks & Co. Ltd. v. State of Orissa [1965] 16 STC 693 stated at page 698: "Section 7 of the Orissa Sales Tax Act confers on the State Government the power to exempt, either in whole or in part, any class of dealers from pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax' and 'tax shall be payable', for, a manufacturer may be liable for payment of tax but on account of exemption, tax is not payable by him. We have already given reasons that 'liable to pay tax' does not mean that tax is payable by the dealer/manufacturer under the Act. From a dealer/manufacturer tax may not be payable because of exemption under the Act, none the less it cannot be said that he is not liable to pay tax under the Act." It is clear from the above authorities that the taxable event is the sale or purchase of goods and the sale of the finished products referred to in the first proviso to section 5(3) does not cease to be liable to tax for the reason of the partial exemption provided for in the Notification SRO No. 968/80. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
