River sand exemption turns on in-state consumption when used in manufacturing concrete poles

The exemption under Notification S.R.O. No. 1090 of 1999 applied to turnover from sale of river sand within the State where the sand was consumed in Kerala. Use of the sand in manufacturing concrete poles amounted to consumption in the State, and the fact that tax was proposed under section 5A of the Kerala General Sales Tax Act, 1963 did not by itself defeat the notification. The assessee was therefore entitled to the exemption, and the levy on the disputed issue could not be sustained.

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Issues: Whether the exemption under Notification S.R.O. No. 1090 of 1999 for turnover of sale of river sand within the State applied where the sand was purchased from unregistered dealers and used in the manufacture of concrete poles, and whether such use amounted to consumption within the State for the purposes of the notification.

Analysis: The notification granted exemption to any dealer in respect of turnover of sale of river sand within the State, subject to the condition that the sand is for consumption within the State. The liability under section 5A of the Kerala General Sales Tax Act, 1963 did not exclude the benefit of the notification merely because tax was proposed to be levied on the purchaser rather than the seller. The expression "consumes such goods in the manufacture of other goods for sale or otherwise" in section 5A(1)(a) showed that use of sand in manufacture is consumption in manufacture. Since the sand was used within the State in manufacturing concrete poles, the statutory condition of consumption within the State was satisfied.

Conclusion: The petitioner was entitled to the exemption, and the levy under section 5A could not be sustained on this issue.

Final Conclusion: The revisions succeeded, the assessment was quashed on the disputed issue, and the assessee obtained the benefit of the notification.

Ratio Decidendi: Use of river sand in the manufacture of goods within the State constitutes consumption within the State for the purpose of an exemption notification requiring such consumption.

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