2021 (8) TMI 132 - HC - VAT and Sales Tax

Court affirms sales tax exemption for poultry farmer based on farm operation within the State

STATE OF KERALA Versus M/s. SELVAM BROILERS (P) LTD.

The Court upheld the Tribunal's decision to grant exemption to a poultry farmer from sales tax for the assessment year 2000-01. The Court ruled that ... Exemption from payment of sales tax - poultry farm on leased land - exemption was rejected on the ground that the assessee was not the owner of the land where the farm was conducted - HELD THAT:- This Court had taken note of the decisions in RAMALINGAM NADAR SONS VERSUS STATE OF KERALA [1993 (4) TMI 282 - KERALA HIGH COURT] holding that though Section 10(1) of the Act gives power to the Government to grant exemption or reduction in rate of tax either prospectively or retrospectively, Section 10(3) did not expressly confer the power for retrospectively cancelling or varying a notification already issued. In the said decision, this Court had categorically held, after referring to the notifications which have been extracted by us above, that, owning a land and owning a farm are too entirely different concepts and that without owning any land, one can own and run a farm. The issue raised in this revision is squarely covered by the legal principle laid down in SELVAM BROILERS (P) LTD. VERSUS ASSISTANT COMMISSIONER (ASSMT.) AND OTHERS [2002 (5) TMI 831 - KERALA HIGH COURT]. If SRO.No.7/2002 cannot have any retrospective operation as declared by this Court in the afore-cited decision, it is not open for the State to contend that with effect from 01.04.2000, exemption for poultry farmers is available only if they own the land on which they conduct the farm within the State of Kerala. Such a contention is wholly unacceptable and has no merit at all. There are no perversity in the order of the Sales Tax Appellate Tribunal in granting exemption to the assessee by view of SRO.No.1090/99 as amended by SRO.No.291/2000 and SRO.No.877/2000 for the year 2000-01 - revision dismissed. Issues:Claim of exemption by a poultry farmer based on ownership of farm vs. ownership of land for sales tax, interpretation of exemption notification, retrospective operation of amendments to the notification.Analysis:1. The case involved a dispute regarding a poultry farmer's claim for exemption from sales tax based on the ownership of the farm. The Revenue contended that to claim exemption, the farm must be owned by the farmer and situated within the State. The farmer argued that owning the farm, not the land, should suffice for exemption. The Tribunal granted the exemption, leading to the State's revision under the Kerala General Sales Tax Act.2. The assessing authority rejected the exemption claim, stating that the farmer was not the owner of the land where the farm was conducted. However, the Tribunal found the farmer entitled to the exemption under the relevant notification for the assessment year 2000-01.3. The crucial issue was whether owning the land was a prerequisite for claiming exemption or merely owning the farm within the State. The farmer operated poultry farms on leased lands within Kerala. The exemption was granted to poultry farmers in Kerala to encourage the industry under Section 10 of the Act.4. The State relied on an amendment to the exemption notification, requiring poultry farmers to own the land where the farm was conducted. However, the Court referred to a previous decision stating that owning a farm and owning the land are distinct concepts, and owning the land was not a condition for claiming exemption.5. The Court highlighted that the amendment could not have retrospective operation, as per previous judgments. Therefore, the State's argument that owning the land was necessary for exemption post-amendment was deemed unacceptable. The Tribunal's decision to grant exemption to the farmer for the year 2000-01 was upheld.6. Ultimately, the Court dismissed the revision, finding no error in the Tribunal's decision to grant exemption to the farmer based on owning and operating the farm within the State, as per the relevant notifications.This detailed analysis of the judgment highlights the key legal issues, interpretations of the exemption notification, and the Court's decision regarding the poultry farmer's claim for exemption from sales tax.