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THE COCHIN MALABAR ESTATES versus THE STATE OF KERALA

High Court of Kerala

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THE COCHIN MALABAR ESTATES v. THE STATE OF KERALA - OP No. 16688 of 2000(J) [2007] RD-KL 15253 (8 August 2007)

IN THE HIGH COURT OF KERALA AT ERNAKULAM

OP No. 16688 of 2000(J)

1. THE COCHIN MALABAR ESTATES
... Petitioner

Vs

1. THE STATE OF KERALA
... Respondent

For Petitioner :SRI.JOSE JOSEPH

For Respondent :GOVERNMENT PLEADER

The Hon'ble the Chief Justice MR.H.L.DATTU The Hon'ble MR. Justice K.T.SANKARAN

Dated :08/08/2007

O R D E R

H.L.DATTU, C.J. & K.T.SANKARAN, J.

O.P.No.16688 of 2000-J

Dated this the 8th day of August, 2007.



J U D G M E N T

H.L.Dattu, C.J. The petitioner is a producer of raw rubber. It is also a dealer registered under the Kerala General Sales Tax Act 1963 and Central Sales Tax Act, 1956. (2). In this original petition filed under Article 226 of the Constitution of India, the petitioner calls in question the validity or otherwise of the notification issued by the State Government in S.R.O.No.767/98 dated 28th August, 1998. The said notification is as under. GOVERNMENT OF KERALA Taxes (B) Department NOTIFICATION G.O.(P) No.122/98/TD Dated, Thiruvananthapuram,28th August, 1998. S.R.O.No.767/98:--In exercise of the powers conferred by Section 10 of the Kerala General Sales Tax Act, 1963 (15 of 1963), the Government of Kerala, having considered it necessary int he public interest so to do, hereby make the following amendment to Notification I issued in G.O.(P) No.153/98 TD dated, the 3rd November, 1993 and published as S.R.O.No.1727/93 in the Kerala Gazette Extraordinary No.1120

dated, the 4th November, 1993 as subsequently amended, namely:--

AMENDMENT In the said Notification in Schedule III, after serial No.40 and the entries against it, the following Serial No. and entries shall be added, namely:--

"41. Dealers other than Part of the turnover being 1. The rubber purchased manufacturers the element of cess payable was sold inter-state or and planters. under the Rubber Act, in transferred to the the purchase turnover principal outside the of rubber. State or to a branch outside not being a manufacturing unit of the consignor. O.P.No.16688 of 2000 2

2. The exemption shall be in respect of goods purchased for the period upto and including 18th December, 1997.

3. Tax, if any, already paid shall not be refunded." By order of the Governor, VINOD RAI, Principal Secretary to Government, Explanatory note (This does not form part of the notification, but is intended to indicate its general purport)

In State of Kerala Vs. M.R.F.Limited, (1998) (6) KTR 118

SC), the Honourable Supreme Court held, reversing the decision of the Honourable High Court of Kerala in Deputy Commissioner

(Law), Vs. Bata India Limited, (1986) (62 STC-436), that rubber

cess, even though it is paid by the manufacturers subsequent to their purchase of rubber, form part of the purchase value of rubber and so was includable in the purchase turnover of rubber. As such cess payable on rubber under the Rubber Act can be included in the sale price of rubber from the point of sale by the planter onwards, retrospectively. But in respect of traders in rubber, Government had not taken any steps so far to include the amount of cess payable as per the Rubber Act in the purchase turnover or in the sales turnover of such dealers/traders and so they were not anticipating any liability. The dealers had therefore no occasion at any time to believe that at some point of time they may be made liable for purchase tax on the rubber cess element. Government consider that immense hard-ship will be caused to such dealers/traders due to the implementation of the above decision with retrospective effect. Government have therefore decided to grant exemption in respect of the tax payable by traders (other than manufacturers and planters) on the part of the turnover of rubber being the element of cess payable under the Rubber Act, for the period prior to the pronouncement of the judgment of the Honourable Supreme Court and to collect purchase tax on the rubber cess element from the date of order of Supreme Court only. The above notification is intended to achieve this object. O.P.No.16688 of 2000 3 (3). The explanatory note added to the notification explains the purport of the notification. (4). The object of the notification appears to be to apply the law

declared by the Apex Court in the case of State of Kerala Vs. Madras Rubber

Factory Ltd.{ (1998) 108 STC 583} is not made applicable to the traders in rubber retrospectively. However, it does not include the purchasers/manufacturers like the petitioner. (5). Sri. Jose Joseph, learned counsel appearing for the assessee would contend that the notification so issued by the State Government is arbitrary and discriminatory and therefore, the same requires to be struck down by this court. In support of that contention, the learned counsel relies on certain observations made by the Apex Court. In our opinion, reference to those decisions may not be necessary for the purpose of the disposal of this original petition.

(6). The Supreme Court in the case of State of Kerala Vs.

Madras Rubber Factory Ltd.{ (1998) 108 STC 583} was pleased to hold that rubber cess requires to be included in the purchase turnover for the purpose of purchase tax under the provisions of the Kerala General Sales Tax Act. This decision was rendered by the Apex Court by reversing the view of the Full

Bench of this court in the case of Madras Rubber Factory Limited Vs. State

of Kerala { (1989) 74 STC 56}. (7). In order to come to the aid of the small traders, the State Government has issued the impugned notification. In the said notification a distinction is made between traders and producers/manufacturers. The O.P.No.16688 of 2000 4 manufacturers and traders form a different class altogether. A producer/manufacturer cannot be treated similar to a trader. Keeping in view the capacity to pay by a dealer, the Government has thought it fit to exempt only the traders from the rigour of the decision of the Apex Court in State of

Kerala Vs. M.R.F.Limited, (1998) (6) KTR 118 SC), for the period prior to the

date of the decision. The same facility is not given to the producers/manufacturers. That only means the State Government has treated the unequals unequally. In view of that, it cannot be said that the said exemption notification is hit by Article 14 of the Constitution of India. In that view of the matter, we are of the considered opinion that the notification so issued by the State Government can neither be called arbitrary nor discriminatory. (8). In view of the above discussion, the reliefs sought for by the petitioner in this original petition cannot be granted by this court. Accordingly, the original petition requires to be rejected and it is rejected. (9). In view of the order passed in the original petition, all pending civil miscellaneous petitions are rejected. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (K.T.SANKARAN)

JUDGE

MS/dk


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