TaxTMI 
TaxTMI 
1993 (4) TMI 281
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....10 of the Act and we are concerned with these notifications in this batch of writ petitions. By the first of these notifications, the Government made an exemption in respect of the turnover tax payable by dealers on the turnover of rubber at all points except the penultimate purchase point namely, the purchase point immediately preceding the last purchase point, excluding the purchase from agriculturists, whose total turnover exceeds rupees fifty lakhs in a year, subject to the condition that any dealer who claimed exemption on such turnover shall produce before the assessing authority concerned a declaration in the form annexed to the notification from the dealer who had paid the turnover tax. This notification was deemed to have come into force with effect from July 1, 1987 and was deemed to have been valid till February 18, 1988. The next Notification S.R.O. No. 716 of 1988 related to the subsequent period from February 19, 1988 and made an exemption in respect of the turnover tax payable on the turnover of rubber, but the exception was shifted from the penultimate purchase point under S.R.O. No. 715 of 1988 to the last purchase point, subject to the same condition of production....
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....July 1, 1987 and shall be deemed to have been valid till February 18, 1988. ANNEXURE Form of declaration to be furnished by a purchasing dealer for claiming exemption from turnover tax at other points. 1.. I/We.......................(here enter the name and full postal address of the purchaser) dealer(s) in goods taxable at the point of purchase in the State, have purchased goods of the description given below from Shri/Messrs.............[here enter the name and full postal address of the seller(s)]. 2.. My/Our turnover for the year is not less than rupees fifty lakhs and I/we have paid turnover tax on the turnover of goods mentioned below. 3.. My/Our registration certificate number is...........(here enter R.C. No.). 4.. I/We am/are registered dealer(s) on the rolls of the sales tax office (here enter the name of the sales tax office) and I/we have filed our return for the month of (here enter the month previous to which the purchase relates) along with proof of payment of turnover tax due for the goods which I/we am/ are liable to pay. Particulars of goods purchased ------------------------------------------------------------------------------------------- Sl. No. and d....
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....y of compliance. Another line of argument was that the condition resulted in the imposition of tax at more than one point which was not the intention behind the notifications. Another extreme contention raised was that since the condition imposed was onerous the Revenue should establish that a particular person sought to be made liable was the penultimate/last purchaser without any liability on the assessee to establish his claim for exemption. 5.. There were also some subsidiary contentions. One was that the retrospectivity given to the notification issued on June 13, 1988 from July 1, 1987 or February 19, 1988, was bad. Parties could not be expected to procure declarations for the past and to that extent the notifications must go. Another line of contention was that all these dealers had produced declarations in form No. 25 appended to the Kerala General Sales Tax Rules, 1963, to show that the purchasers are assessees to tax under the Act. That should serve the purpose for availing the exemption under the notifications as well. 6.. Counsel mainly concentrated their attack on the alleged impracticability of the condition for production of the declaration and based thereon conten....
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....nditional one, conditional on the State being able to pitch upon one in the series of purchases or sales as liable for payment of turnover tax. I shall now deal with these points. 10.. Section 5(2A) is the charging section for turnover tax. That section, as it was enacted in 1987 imposed the levy on all dealers whose turnover exceeded Rs. 25 lakhs to pay tax on the turnover of goods coming in the First or Fifth Schedule to the Act as determined in the manner provided in the section. I have already mentioned that the section was subjected to amendments as an annual feature besides being visited with numerous notifications under section 10, to all of which it is unnecessary to refer except to state that the levy continued to be a general one. The tax is thus a multi-point one leviable at every point in the series of sales or purchases by dealers whose turnover exceeded the minimum prescribed. The burden of this levy and the ultimate burden on the consumer in respect of rubber, pepper, dried ginger and arecanut was sought to be alleviated by the issue of the three notifications in question by exempting all the purchasers except the penultimate/last one from payment of the turnover ta....
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....the ultimate analysis it is only likely that there are one or at best two dealers between the producer and the ultimate exporter-a local dealer who procures the goods from the agriculturists and perhaps another middle man. It is unlikely in this kind of business to have more number of dealers in the line, as petitioners portray things to be. In fact, no specific case was brought to my notice where there is such a long string of dealers or of impossibility to produce the declaration because of the large number of dealers in the line. Though the State has not chosen to file any counter-affidavit setting forth their case, I cannot envisage a situation in the case of goods like rubber and hill produce where there are more than two or at best three transactions of sale between the agriculturist producer and the consumer/exporter. Of these, the purchaser from agriculturists stands exempted in S.R.O. No. 715/88, though not in the others. According to me much of the problem vividly stated before me by counsel for the petitioners are more imaginary than real though I will not rule out individual cases, where such problems may arise. As I mentioned earlier, there will be one sale by the prod....
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....aration is to be relieved against or not. The Supreme Court in Mangalore Chemicals & Fertilizers Limited v. Deputy Commissioner of Commercial Taxes [1991] 83 STC 234 AIR 1992 SC 152, dealt with exemptions subject to conditions as follows: "The consequence which Shri Narasimhamurthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve." The Supreme Court incidentally referred to the observations in the earlier decision in Kedarnath Jute Manufacturing Co. Ltd. v. Commercial Tax Officer [1965] 16 STC 607; AIR 1966 SC 12 which related to a case of an exemption conditional on production of a dec....
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....inistrative convenience and otherwise, none can find fault with them. In a taxing statute, the intention to fetch tax is the dominant one. The petitioners cannot therefore claim the exemption without complying with the condition. The tall claim made by the petitioners that the exemption may be retained without the condition is not capable of being accepted even assuming that the condition is rather difficult to comply with. 14.. The various decisions cited by counsel for the petitioners do not deal with a case of this nature of an exemption dependent on fulfilment of a condition. The one apposite is that in Kedarnath Jute Manufacturing Co. Ltd. [1965] 16 STC 607 (SC); AIR 1966 SC 12. But I must refer to one decision relied on by the petitioners, of the High Court of Madhya Pradesh in M.P. Shoe House v. State of M.P. [1987] 67 STC 427. That was not a case of conditional exemption. It was a case where exemption was granted to sales of rubber and plastic footwear by those dealing exclusively in rubber and plastic footwear. That was held to be arbitrary and discriminatory and the expression exclusively was quashed. The case was dealt with under article 14. May be the decision is justi....
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....s or to claim the exemption. They need produce them only if they want the exemption. It is not an imposition of tax but the availing of an exemption. Therefore, the petitioners, as a matter of fact, are not put to any hardship, because they were all along liable under the section as enacted, and they are being benefited by the subsequent notifications. It is open to them to avail of it or not to avail of it. This argument of Sri Ramachandran Nair is only to be stated and rejected. 17.. Another subsidiary point was that the turnover tax is an yearly tax which need be paid only after the end of the year along with the annual returns. What is stated is that the liability attaches only when the turnover exceeds the limit prescribed. Moreover, in some cases like hotels and restaurants, the rate of tax itself changes depending on the quantum of turnover. Therefore the turnover tax need be paid only at the end of the year. I do not agree. Section 5(2A)(ii) provides that the provisions of the Act and the Rules relating to assessment, collection and refund of tax shall apply in relation to assessment, collection and refund of turnover tax. The tax due under sections 5 and 5A are payable ev....
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.... arise at all. This argument only deserves to be rejected in the light of the fact that the exemption is only a conditional one, to be granted only on production of the declaration. 21.. The contention that the production of form 25 declarations should suffice for availing the exemption is not sustainable. All that the declaration in form 25 testifies is that the purchaser is a dealer assessable to tax. It does not testify to the further requirements of those notifications that turnover tax is paid by the declarant. This contention is therefore overruled. 22.. A further submission based on a circular issued by the Board of Revenue was to the effect that the purchaser from the agriculturist should be exempted from payment of turnover tax. Such an exemption exists in S.R.O. No. 715/88 but not in the others. The exemption should be strictly confined to the terms of the notification and cannot be amplified by any circulars. This contention does not therefore merit consideration. 23.. There is a special point raised in O.P. No. 7582 of 1990 in which though the petitioner did not admit any liability for turnover tax, notices were issued in form No. 14D demanding tax and also threateni....