Taxability of branded product sales and credit for prior payments under an amnesty scheme were both addressed under Kerala sales tax law.

Sales of products under a brand name were treated as exigible to tax under Section 5(2) of the Kerala General Sales Tax Act, 1963, because the issue was covered by a later Supreme Court ruling and the contrary Tribunal view could not stand. For the amnesty scheme, tax paid by the manufacturer, sums deposited under interim orders, and amounts remitted in penalty proceedings were to be credited while computing liability under Rule 32(13B) of the Kerala General Sales Tax Rules, 1963. The adjustment had to be worked out within the amnesty framework as it stood before expiry, and the amnesty orders were to be modified accordingly.

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Issues: (i) Whether the respondent's sales of products under the brand name were liable to tax under Section 5(2) of the Kerala General Sales Tax Act, 1963; (ii) whether amounts paid by the assessee and the manufacturer could be adjusted while working out liability under the amnesty scheme, including under Rule 32(13B) of the Kerala General Sales Tax Rules, 1963.

Issue (i): Whether the respondent's sales of products under the brand name were liable to tax under Section 5(2) of the Kerala General Sales Tax Act, 1963.

Analysis: The question stood covered by the later Supreme Court decision holding that the sale transaction in such circumstances was exigible. In view of that binding ruling, the Tribunal's view exempting the respondent's sale could not be sustained.

Conclusion: The issue was answered against the assessee and in favour of the Revenue.

Issue (ii): Whether amounts paid by the assessee and the manufacturer could be adjusted while working out liability under the amnesty scheme, including under Rule 32(13B) of the Kerala General Sales Tax Rules, 1963.

Analysis: The Court held that, on proof, the tax paid by the manufacturer, the sums deposited pursuant to interim orders, and the amount remitted in connection with the penalty proceedings had to be given due credit while modifying the amnesty orders. The adjustment was to be worked out within the amnesty framework as it stood before its expiry.

Conclusion: The assessee was entitled to adjustment and modification of the amnesty orders to that extent.

Final Conclusion: The revisions on merits failed for the assessee, but the amnesty orders were directed to be modified to grant lawful credit for eligible payments and deposits, so the matter was disposed of with mixed relief.

Ratio Decidendi: A binding higher-court ruling on the taxability issue must be followed, while amounts lawfully paid by the assessee or on its behalf are to be credited when computing liability under an applicable amnesty scheme.

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