Strict compliance governs sales tax compounding and exemption claims where statutory forms and proof requirements were unmet.

Fiscal concessions under the Kerala General Sales Tax Act required strict compliance with the prescribed statutory conditions. Compounding benefit was unavailable where the dealer failed to file the application in the prescribed form within the required procedure and time, so payment could not be treated as compounded tax. Second sale exemption on granite chips, jelly and metals failed because proof that the goods had already suffered tax was not produced as required by the Rules. Exemption for crushed metals was also denied because the goods were produced by mechanical crushing, contrary to the condition in entry 33 of the Third Schedule. The claims for compounding and exemption were therefore rejected.

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Issues: (i) Whether denial of compounding facility under section 7(1)(b) of the Kerala General Sales Tax Act, 1963 was justified for non-compliance with the prescribed application procedure under rule 30(1) of the Kerala General Sales Tax Rules, 1963. (ii) Whether second sale exemption on granite chips, jelly and metals was rightly disallowed for want of proof of tax sufferance as required by rule 32(13) of the Kerala General Sales Tax Rules, 1963. (iii) Whether exemption under entry 33 of the Third Schedule to the Kerala General Sales Tax Act, 1963 was available for crushed metals produced by mechanical crushing.

Issue (i): Whether denial of compounding facility under section 7(1)(b) of the Kerala General Sales Tax Act, 1963 was justified for non-compliance with the prescribed application procedure under rule 30(1) of the Kerala General Sales Tax Rules, 1963.

Analysis: The benefit of compounding was held to be available only when the dealer follows the statutory mode and time limit prescribed for filing the application. The application had not been submitted in Form No. 21 and the record showed only informal letters claiming the facility. Since the statutory procedure was not complied with, the payment made could not be treated as payment at compounded rate.

Conclusion: The denial of compounding facility was upheld.

Issue (ii): Whether second sale exemption on granite chips, jelly and metals was rightly disallowed for want of proof of tax sufferance as required by rule 32(13) of the Kerala General Sales Tax Rules, 1963.

Analysis: The exemption on second sale required proof that the goods had already suffered tax, ordinarily through the relevant bill or cash memorandum. The Tribunal found that such proof was not produced, and that finding was sufficient to reject the claim. The question whether the claim could succeed on any broader footing was not gone into, since the evidentiary requirement itself was not satisfied.

Conclusion: The disallowance of second sale exemption was upheld.

Issue (iii): Whether exemption under entry 33 of the Third Schedule to the Kerala General Sales Tax Act, 1963 was available for crushed metals produced by mechanical crushing.

Analysis: The exemption was confined to crushed metals produced otherwise than by mechanised crushing. On the facts, the crushing activity was by mechanical process, and the claim was therefore inconsistent with the statutory condition for exemption.

Conclusion: The claim for exemption under entry 33 of the Third Schedule was rejected.

Final Conclusion: The revision cases failed in substance, and the order sustaining denial of compounding and exemption claims stood affirmed, with the amount already remitted towards compounding to be adjusted against tax and only the balance recoverable with interest.

Ratio Decidendi: Fiscal concessions such as compounding and exemption must be claimed and proved in strict compliance with the statutory procedure and conditions prescribed by the Act and Rules.

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