Special rebate under VAT law denied where goods were not sent outside the State without tax effect, despite claimed manufacture.

Special rebate under Section 12 of the Kerala Value Added Tax Act, 2003 was unavailable because the statutory proviso required tax-paid goods, use in manufacture, and dispatch outside the State without tax effect in the inter-State transaction. Although the assessee sent the treated rubber wood to its own unit at Chennai, that did not satisfy the statutory condition for rebate. The Court held that whether manufacture had actually been carried out was immaterial to this entitlement question, and the allowance of special rebate was set aside in favour of the Revenue.

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Issues: Whether the assessee was entitled to special rebate under Section 12 of the Kerala Value Added Tax Act, 2003 on tax paid on rubber wood purchased, treated and sent to its own unit outside the State without tax effect.

Analysis: The claim for special rebate depended on the proviso to Section 12, which required that the goods be tax-paid, used in manufacture, and sent outside the State without tax effect in the inter-State transaction. The assessee had sent the treated goods to its own unit at Chennai, but the Court held that this did not satisfy the statutory requirement. Whether the assessee had carried out manufacture was held to be immaterial for this entitlement question.

Conclusion: The assessee was not entitled to special rebate under Section 12 of the Kerala Value Added Tax Act, 2003, and the issue was decided in favour of the Revenue.

Final Conclusion: The revisions succeeded to the extent that the allowance of special rebate was set aside.

Ratio Decidendi: Special rebate under Section 12 is unavailable where the statutory condition of goods being sent outside the State without tax effect is not satisfied.

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