Concessional sales tax for industrial inputs requires actual statutory use by the purchaser, not merely Form 18 declarations.

Concessional tax under section 5(3) of the Kerala General Sales Tax Act applied only where industrial raw materials were actually sold to an industrial unit for use in producing finished products inside the State for sale. In a works contract for electro-powder coating, the assessee merely used epoxy powder in executing the contract and did not itself use the goods in its own manufacturing process. A deemed sale under the works contract provisions and production of Form 18 declarations were insufficient by themselves to establish entitlement to the concession. The Revenue's position was therefore sustained and the concessional rate was denied on these facts.

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Issues: Whether the assessee, engaged in electro-powder coating under a works contract, was entitled to concessional rate of tax under section 5(3) of the Kerala General Sales Tax Act, 1963 on the strength of Form 18 declarations.

Analysis: Section 5(3) granted concessional tax only where industrial raw materials, component parts, containers or packing materials were sold to industrial units for use in the production of finished products inside the State for sale. The provision required actual use of the goods by the purchasing industrial unit for the statutory purpose. Even though a transfer of property in goods involved in a works contract is deemed to be a sale under the Act, the assessee's activity was only electro-painting cabinets supplied by customers. The assessee did not itself carry on manufacturing, and the epoxy powder was used by the assessee in executing the works contract rather than being used by the purchaser in its own production process. Mere production of Form 18 declarations did not, by itself, establish entitlement to the concessional rate.

Conclusion: The assessee was not entitled to concessional rate under section 5(3) on these facts, and the denial of the benefit was upheld.

Final Conclusion: The common judgment sustained the Revenue's stand on the substantive tax issue, dismissed the assessee's revisions, and allowed the State's revision.

Ratio Decidendi: Concessional sales tax under section 5(3) is available only when the purchasing industrial unit actually uses the goods as statutorily required for production of finished products, and a mere deemed sale in a works contract or mere production of Form 18 does not suffice.

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