Kerala Sales Taxes

Clarifications 2001

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act- Clarification under section 59A- reg:

Ref:- Application dt.05..11..01 from M/s. Vysali Pharmaceuticals Ltd, Kerala

ORDER NO.C3.58920/01/CT Dt.30.11.01

M/s.Vysali Pharmaceuticals Ltd has sought clarification on a point arising out of the assessment order issued by the Asst. Commissioner (Assmt), Spl. Cir, Ernakulam.

2. Under section 59A(4) of the KGST Act Commissioner is prevented from issuing a clarification on an issue arising out any proceedings already issued.

3. The application is therefore rejected.

Sd/-

Commissioner

/Approved for Issue/

Deputy Commissioner (General)

To.

M/s. Vysali Pharmaceuticals

32/1289 A, Civil Lines Road

Palarivattom

Cochin 682 25

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act-clarification under section 59A-whether paint can be sold under concessional rate of tax-applicable to the sale of paint-order issued:

Ref:- Application dt.14.07.01 from Swaraj Paints Industries,Calicut.

ORDER NO.C3.37596/01/CT Dt.22.12.2001

M/s.Swaraj Paint Industries filed application under section 59A seeking clarification whether paint sold to manufacture of furniture, switchgear and motor manufacture would be eligible for concessional rate under section 5(3) of the KGST Act.

2. Sri.A.Abdul salam, Advacote appeared. He stated that assessment in this case had been completed and appeal was also filed which has since been disposed of. He therefore stated that the application was not being pressed..

3. The application is therefore rejected as not pressed.

Sd/-

Commissioner

/Approved for Issue/

Deputy Commissioner(General)

To,

M/s.Swaraj Paint Industries

Industries Development Plot

P.B.No.909, West hill

Calicut. 673 005

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act- medical ultrasound scanner and Diagnostic Imaging and Therapy

Equipments- Clarification Under section 59A- Reg:

Ref:- Application dt.13.07.01 from Trichur Dist. Co.Op.Hospital Ltd.,Trissur

ORDER No.C3.36996/01/CT Dt..27..12.2001

M/s. Trichur Dist. Co. Operative Hospital Ltd, Trissur has sought clarification whether will fall under item 18 of notification SRO.1096/99. so as to attract entry tax under the Kerala Tax on Entry of goods into Local Area Act, 1994.

2. Under section 59A of the KGST Act Commissioner can issue clarification only on matters connected with the KGST Act.

3. Therefore the application is rejected.

Sd/-

Commissioner

/Approved for issue/

Deputy Commissioner(General)

To.

M/s.Trichur Dist. Co. Operative Hospital Ltd.

No.R. 306

Shornur Road,

Trissur. 680 001

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub: KGST Act – Addl.salestax under Section 5D –whether leviable on compounded tax payable under Section 7- Turnover tax under section 5(2C) – whether payable by a dealer paying compounded tax under Sec.7 –clarification under Section 59A – regarding.

Ref: Application dt.13.8.2001 from Shri.Aby Mathew,Managing Director, Poabs Granite (P)Ltd,Thiruvananthapuram.

ORDER No. C3.43060/01/CT.28.12.2001

Poabs Granite (P)Ltd, Thiruvananthapuram has sought clarification under Section 59A on the following points:

(i) whether additional sales tax under section 5D of the KGST Act is leviable on compounded tax levied under section 7(1)(b) of the Act; and

(ii) Whether turnover tax under section 5(2C) of the KGST Act is leviable on a dealer paying tax under section 7(1) b) of the KGST Act.

2. Shri.Aby Mathew, Managing Director appeared along with Sri.R.Rajappan Nair, Salestax Practioner and they were heard. They argued that compounded tax under section 7(1)(b) is in lieu of other taxes payable under the Act and so additional tax will not be applicable to compounded tax. As regards turnover tax they argued that turnover tax is not leviable on the turnover in respect of which such dealer pay tax under section 5. Since compounded tax is in lieu of the tax payable under section 5, no turnover tax will be applicable to the turnover in relation to which the dealer has opted for compounding.

3. As per section 5D of the KGST Act, inserted by the Kerala Finance Bill 2001, The tax payable under section 5 and section 5A shall be increased by an additional sales tax at the rate of fifteen percent of the tax payable under the said sections. Section 7(1) of the Act reads:

“ (i) Notwithstanding anything contained in subsection (I) of section 5,

x x x x x x x x x xxx xxx

(b) any mechanised crushing unit producing granite metals may, at its option, instead of paying tax in accordance with the provisions of that subsection, pay tax at the following rates,, ………”

Therefore, tax payable under section 7is in lieu of the tax payable under section 5. So where tax under section 5 is increased by additional tax under section 5D, the increase will automatically apply to the tax payable under section 7 also.

4. Under section 5(2C) of the KGST Act turnover tax is leviable only on petroleum products and liquor in respect of which section 7 of the Act does not apply. So the question doesnot arise now.

5. The questions referred to me are clarified as above.

Sd/-

Commissioner

/Approved for issue/

Deputy Commissioner (General)

To.

Sri.Aby Mathew

Managing Director

Poabs Granits (P LTd.

Kuthirakalam P.O,

Thiruvananthapuram

C.C to All Dy.Commissioner

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act,1963- whether tower equipments used by ESCOTEL will fall under entry

2(ii) of Schedule II of the KGST Act- Clarification under section 59A - issued.

Ref:- Application dt. 07.08.01 from Escotel Mobile Communications Ltd., Kochi

ORDER No.C3.43057/01/CT dt.01.01.2002

M/s. Escotel Mobile Communications Ltd, Kochi has sought clarification whether tower equipments used by Escotel will fall under entry 2(ii) of schedule II of the KGST Act.

2. Sri.V.P.Sukumar, Advocate and authorised representative appeared and he was heard He argued that tower is an item manufactured from structurals and other steel items and will not come under declared goods.He relied on the decisions reported in 91 STC 476, 109 STC 306, 48 STC 411 etc to establish that tower is different from steel structurals.

3. The clarification is only on the point whether tower equipments will fall under entry 2(ii) of schedule II of the KGSTAct. The applicant has produced a photograph of the tower on which other electronic equipments are fitted. From the picture it can be seen that the tower is made of steel structural viz angles, joints, channels etc which clearly fall under item 2(ii) of the 2^nd schedule to the Act. The decisions relied on by the applicant were rendered in different context and are not relevant to the point under consideration,

4. The applicant has also produced a copy of the purchase order placed with M/s.A.R.M.Ltd, Hyderabad. In the purchase order the company has made supply order for tower and not tower equipment. In this case I am concerned only with the question whether the components of the towers fall under entry 2(ii) of the second schedule to the KGST Act viz iron and steel. The tower equipments, ie components which when asembled will form a tower, are clearly iron and steel falling under entry 2(ii) of schedule II to the KGST Act.

5. It is therefore clarified that the components of a microwave tower (except the electronic parts and dish fitted to it) will fall under entry 2(ii) of the 2^nd schedule to the KGST Act.

6. At the time of argument Sri .V.P. Sukumar, Advocate made a prayer for a clarification that the item will not attract tax under the Tax on Entry of Goods into Local Areas Act, 1994. But under section 59A of the KGST Act Commissioner can issue clarifications only on matters relating to the KGST Act. That prayer is therefore rejected

Sd/

Commissioner

/Approved for Issue/

Deputy Commissioner(General)

To.

M/s.Escotel Mobile Communications Ltd.

(Through Sri.V.P.Sukumar,Advocate,

Lawyers bureau,41/2668,

St.Vincent Rd, Ernakulam 682 018

C.Cto All Dy.Commissioner

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act- Clarification under section 59A-soda & soft drinks made by SSI Units whether manufacturing involved-rate of tax of soda & soft drinks manufactured by SSI units.

Ref:- Application dt.29..11.01 from Sri. A.V.Antony,Super drinks,Kokkali,Trissur

ORDER No.C3.64851/01/CT dt..29.12.01

Sri. A.V. Antony, Proprietor of Super Drinks, Trissur has requested clarification on the following points.

1. Whether in the case of a SSI unit producing Soda and soft drinks there is actually manufacturing activity involved.

ii. What is the rate of tax applicable to soda and soft drinks manufactured by a SSI unit.

iii. Whether SRO.301/99 is applicable in such cases

2. Sri.M.Vijayagopal, Chartered Accountant appeared and he was heard. He argued that water and soda are commercially different commodities and even the assessing authority has proposed to tax the item at the rate applicable to non-alcoholic drinks. He, however, stated that there was no dispute with regard to soft drinks.

3.As per letter No.19241/B3/95/TD dt.15..1.99 Government have clarified that production of soda water by mixing carbon dioxide with water amounts to manufacture. Hence SSI unit registered with the Director of Industries and Commerce, Kerala which produce soda will also be eligible for the concessional rate of tax of 8 % as per entry 6 of the schedule II of SRO. No.1091/99.

As notification SRO.1091/99 has been issued in supercession of SRO. 301/99, notification SRO.301/99 is not relevant with effect from 01..01..2000.

4. The questions referred to me are clarified as above.

Sd/-

Commissioner

/Approved for issue/

Deputy Commissioner(General)

To.

Sri.A.V.Antony,

Proprietor, Super Drinks

Ambady Lane, Kokkalai

Trissur- 680 021

C.C to Dy.Commrs

Registrar,C.T.S, Tvpm

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act- Clarification under section 59A- rate of plastic torch/flash light-reg .

Ref:- Application dt. 25.07.01 from (Nippo Batteries) M/s. Indo National Ltd,Chennai

ORDER NO.C3.52098/01/CT/Kdis/ Dt.18.04.02

M/s. Indo National Liited, Kochin has sought for clarification in respect of salestax applicable to plastic torch/ Flash lights. The case was posted for hearing Sri.O.V.Mukundan, Manager (Sales) appeared and heared.

The clarification sought for is in respect of sales tax applicable to plastics torch lights/ Flash lights. Indo National Ltd company have two types of transactions in respect of plastic torch lights/flash lights. They directly purchase plastic torch lights/flash lights from Matushita Lakhnapal Battery India Ltd, Cochin and effect 2^nd sale.

They effect branch transfer of plastic torch light/ flash light from their factories at Nelloore & TADA (Andhra Pradesh) and effect 1^st sale in Kerala.

Plastic torch light/ flash light is “an article of Plastic” & comes under entry 113 of KGST Act 1963, w.e.f. 01.01.00 which reads as under “Plastics & Articles of plastics including P.V.C pipe, plastic paper, cellophane, polythene etc….) and is taxable at the point of 1^st sale at 12 % .From 23.07.01, there is addl. Tax liability at 15 % of the tax due.

The position is clarified as above.

Sd/

Commissioner

/Approved for Issue/

Deputy Commissioner(General)

To.

M/s.Nippo Batteries

Indo NationalLtd,

39/5766, Tharakkandam Street

Kurisupally Road, Ravipuram

Cochin- 682 015

C.C to

All Dy.Commrs

Registrar, C.T.S.Tvpm

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act-clarification U/s 59A- Effect of T.O.T on Copra and Coconut- reg:-

Ref:- Application dt.14.08.01 from Malabar Produce Merchant Asso., Kozhikode.

ORDER NoC3.44502/01/CT Dt..27..04..2002

The Malabar produce Merchants Asso., Kozhikode has sought clarification under section 59A on the following points: (1). Effect of newly imposed turn over tax on Copra sale local, and interstate.

2. Tax on Coconut Oil.

a. Purchase made by a dealer on bought notes, when sold locally the rate of tax there on.

b. Purchase of Coconut Oil cake on brought notes and make Interstate Sales, the rate of taxes

there on.

c. Purchases of Coconut Oil Cake by a dealer from another dealer and makes Interstate Sales the rate of Sales tax there on.

d. By an oil miller the Sales of coconut oil cake locally and Interstates sales the rate of tax there on.

e. Is there any forms to be collected for Interstate sales.

f. Transfer of oil cake purchase on brought notes to the branch or Head Office, the rate of tax there on.

They requested to issue clarification on merits and needs no personal hearing.

1. Clarification has been sought for in respect of turnover tax on Copra sale.

As turnover tax has been withdrawn , there is nothing to clarify on this point.

2. Tax on Coconut Oil

There are 6 points to be clarified .

Under Section 59A of the KGST Act, Commissioner can issue clarification only in respect of disputes relating to KGST Act. Hence request to issue clarification on all points relating to CST Act is declined.

The other points relating to KGST Act are clarified as under:

1. The rate of tax on local sale of Coconut oil, purchased on bought notes, is 4 % (Entry 39 of 1^st schedule to KGST Act)

Sd/

Commissioner

/Approved for Issue/

Deputy Commissioner (General)

To.

General Secretary

The Malabar produce Merchant’s Associations

M.P.M.A. Buildings, 8/102,Corporation S. Road

Calicut. 673 032.

C.C to All Dy.Commrs.

Registrar,C.T.S, Tvpm

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub: KGST Act, 1963- clarification U/s.59A- tax liability as the sale of tea- reg:

Ref:_ Application dt. 14.09.01 from M/s. Jayasree Tea & industries Ltd, Kochi

ORDER No.C3.50785/01/CT dt.

The clarification sought is in respect of tax following points .

a. Whether tax sale of tea effected by a plantation company through brokers in cochin auction is the first sale in respect of which sales tax is collected and remitted by the brokers on the taxable turnover? Whether that will be an asst. of turnover tax on tax same turnover on the basis that the turnover of the applicant is the second sale for the purchase of turnover tax assmt. U/s.5(2A).

b. Whether the sale of tea on behalf of the applicant can be treated as 1^st sale in the hands of the applicant for the purpose of salestax and second sales tax in the hands of the same dealer for taxable turnover.

As the assessment completed is pending before the STAT, tax petitioner can raise his arguments citing the decided cases for redressal of his grievances as the entire clarification sought for is regarding liability to T.O.T. As per Sec. 59A (4), the Commissioner is not empowered to issue clarification “whether any question arise from any order already passed or any proceedings recorded under this Act or any earlier law, no such question shall be entertained for determination”.

Here the assessment has been completed. The law has been settled as per the decision in A.Jakkir Hussain, Fathima Spices Vs. Agril. Income Tax & STO; and the case is pending before STAT. The Commissioner may decline to issue a clarification in the matter.

M/s.Menon & Pai

Advocates

I.S.Press Road

Ernakulam

C.C. to All Dy.Commissioner

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act-rate of tax on axles of motor vehicles-clarification under section 59A- reg:-

Ref:- Application dt.07..02..01 from M/s.Poomkudy Auto Services (P) Ltd. Kochi.

ORDER NO.C3.9807/01/CT DT.20.03.2002

Poomkudy Auto Service P Ltd, Kochi has sought clarification regarding the rate of tax applicable to “Axles” of motor vehicles.

Sri. Sekhar,Chartered Accountant of M/s. Saju & Co., and authorised representative appeared and he was heard. He submitted that in Devan Enterprises Vs Commissioner of Sales Tax (1996) 102 STC (6) the Supreme Court has held that `axles’ are expressly mentioned in entry (xiv) of section 14 (iv) of the Central Sales Tax Act, 1956 and are therefore taxable @ 4 % being an item falling under entry 2(n) of the 2^nd schedule to the KGST Act and taxable @ 4 %.

In the above judgement the Hon’ble Supreme Court held:

“ In Asoka Tyres case (1988) 68 STC 123, this very entry came up for consideration before the Rajasthan high Court where the Tribunal held that the rims and axles fell within the ambit of entry (xiv) of clause (iv) of section 14 of the Act. While dismissing the petition filed by the Asst. Commercial Taxes officer, it was observed as follows:

“So far as the `axles’ are concerned the same are expressly mentioned in the above entry (xiv). For this reason the Tribunal’s decision relating to axles cannot be challenged. The question is only of the `rims’ used in wheels of cycles and other vehicles. The being so, the Tribunal’s view that rims are an integral component or part of a wheel or at least a wheel set, cannot be treated as unjustified. There is no other competing entry. This being so, of the above quoted entry (xiv) is wide enough to include rims within its ambit, then the applicability of the residuary entry would automatically been excluded. Taking into account the ordinary meaning of `wheel’ in the manner in which it is understood amongst persons dealing with the same, it is reasonable to hold that rim is included within the expression `wheel’ in the above entry, particularly when there is no other competing specific entry for it. This being a plausible view to take, a construction which favours the tax-payer must be preferred.”

The aforesaid reasoning of the Rajasthan High Court correctly interprets the said entry and we affirm the same.”

So the position of law with regard to the rate of tax on “axles” is well settled by the above decision of the Supreme Court.

Under section 59A of the Act, the Commissioner can issue clarification only where there is a dispute. Since “axles” are held to be falling under declared goods under section 14 of the CST Act, there cannot be any ambiguity with regard to the rate of tax applicable to the item, since entry (xiv) of clause (iv) of section 14 of the CST Act appear as item (n) of Sl.No.2(ii) of the 2^nd schedule to the KGST Act.

The application is therefore rejected as infractions.

Sd/

Commissioner

/Approved for issue/

Deputy Commissioner(General)

To.

M/s.Poomkudy Auto Services (P) Ltd.

Through Mr.Saju K.Abraham

Saju & Co., Chartered Accountant

Chittur Road, Ernakulam 11

PROCEEDINGS OF THE COMMISSIONER COMMERCIAL TAXES

THIRUVANANTHAPURAM

Present: V.SOMASUNDARAN.I.A.S

Sub:- KGST Act-Clarification U/s. 59A-rate of tax of aluminium Scrap-Reg

Ref:- Application dt.26.12.01 from M/s.K.S.E.B, Thiruvananthapuram

ORDER No.C3.287/02/CT Dt.

Sri.A.G.Bhadran, Executive Engineer, Transmission Construction Division Thrissur, appeared & requested immediate clarification in the matter, as it is urgently needed for production before the High Court. Eventhough the clarification issued by Commissioner has nothing to do with tax decision to be promulgated by High Court, The K.S.E. Board has requested for a clarification in the matter.

The clarification to be issued is in respect of the application for sale of Aluminimum scrap conducted at T.C. Circle Store, Madakkathara on 7..07..2001 (Trissur Dist) in which case delivery too to be done there.

As tenders from outside the state too have participated the clarification requested is that whether KGST or CST is applicable to them. The sale has been finalised in Kerala and the tax rate applicable is 8 % KGST, as per entry 6 of 1^st Schedule to KGST Act , 1963.

This may be clarified.

To.

Sri.A.G.Bhadran

Executive Engineer

Transmission Construction Division

K.S.E. Board

Trissur