Supreme Court: Manufacturers, Not Sellers, Liable for Rubber Cess

The Supreme Court clarified that the liability to pay rubber cess under the Rubber Act rests with manufacturers of rubber products and not with those engaged in selling raw rubber. The Court emphasized that the rubber cess should not be included in the sales tax turnover of appellants who do not pay or collect it. Referring to precedent, the Court ruled in favor of the appellants, setting aside the High Court's judgment and establishing that only manufacturers of rubber products are liable for the rubber cess.

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Issues:
1. Inclusion of rubber cess in sales tax turnover.

Analysis:
The Supreme Court addressed the issue of whether the rubber cess, payable under the Rubber Act, should be treated as part of the sales tax turnover of the appellants who operate rubber plantations. The assessing officer had included the rubber cess in the sales tax turnover, leading to a dispute. The appellants argued that since they were not liable to pay the rubber cess under the Rubber Act, it should not be included in their sales tax turnover. The High Court had dismissed the revision petitions of the appellants, upholding the inclusion of the rubber cess in the turnover.

In its analysis, the Supreme Court referred to the case of M/s. Jullunder Rubber Goods Manufacturers' Association vs. Union of India & Anr. 1969 (2) SCC 644, which established that only manufacturers of rubber products are liable to pay the rubber cess under the Rubber Act. The Court emphasized that the liability to pay the rubber cess arises at the manufacturing stage and not earlier. Since the appellants were not paying or collecting the rubber cess, it could not be included in their sales turnover, even on a notional basis. The Court concluded that the rubber cess was not exigible to the appellants and allowed the appeals, setting aside the judgment of the High Court.

Therefore, the Supreme Court clarified that the liability to pay rubber cess under the Rubber Act rests with manufacturers of rubber products and not with those engaged in selling raw rubber. The Court's decision highlighted the distinction between the taxable event of manufacturing and the sale of goods, ensuring that only those directly liable for the rubber cess are held accountable for its payment.

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