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2002 DIGILAW 752 (KER)

STATE OF KERALA v. KILLICK KARRIBONIUM LTD.

2002-11-18

G.SIVARAJAN, K.BALAKRISHNAN NAIR

body2002
JUDGMENT G. SIVARAJAN, J. – This revision is filed by the State against the order of the Sales Tax Appellate Tribunal, Additional Bench, Ernakulam in T.A. No. 674 of 1994. The assessment year concerned is 1991-92. The only question involved in this case is regarding the rate of tax on computer ribbons. The assessee had collected tax on the sale of computer ribbons only at 4 per cent. The assessing authority noted this on verification of the accounts and he issued notice proposing to levy tax on computer ribbon at 15 per cent treating it as part of electronic item. However, after considering the reply filed by the respondent-assessee he levied tax only at 8 per cent treating computer ribbon on a par with typewriter ribbon. In appeal by the assessee the first appellate authority took the view that computer ribbons will fall under entry 68 of the First Schedule to the Kerala General Sales Tax Act, 1963, (for short "the Act"). As according to him, computer ribbon is an accessory to electronic items, instruments, apparatus and appliances taxable at 8 per cent. The appellate authority accordingly set aside the assessment order and remitted the same to the assessing authority for fresh disposal. The Tribunal in second appeal by the assessee taken the view that in view of the clarification issued by the Board of Revenue in regard to the scope of item No. 128 of the First Schedule to the Act and to the Notification S.R.O. No. 371 of 1992 the rate of tax on computer printer ribbons is taxable at the rate of 5 per cent. We have heard the learned Government Pleader for the revision-petitioner and Dr. KB. Mohammedkutty, learned counsel for the respondent. As already noted, the only question is regarding the rate of tax on computer ribbons. The assessing authority had initially sought to levy tax on the sale of computer ribbons under entry 68 of the First Schedule to the Act as it stood at the relevant time. However, the assessing authority had subsequently taken the view that computer ribbons have to be treated on a par with typewriter ribbon for which the rate of tax is 8 per cent. He accordingly completed the assessment on the sale of computer ribbons at 8 per cent. However, the assessing authority had subsequently taken the view that computer ribbons have to be treated on a par with typewriter ribbon for which the rate of tax is 8 per cent. He accordingly completed the assessment on the sale of computer ribbons at 8 per cent. The first appellate authority, as already noted, took the view that computer ribbon squarely falls under entry 68 of the First Schedule to the Act. Since the rate of tax provided under entry 68 is 15 per cent which is much in excess of the tax levied by the assessing authority, the first appellate authority without invoking his power of revision provided under section 34 had remitted the matter to the assessing authority to pass fresh orders in accordance with law. The Tribunal, as already noted, without going into the correctness of the findings of the first appellate authority under the relevant entry straight away referred to the clarification issued by the Board of Revenue (Taxes) in Circular No. 13/94/TX dated July 6, 1994 taking the view that computer printer ribbons and electronic typewriter ribbons will fall under the category of "tapes and cassettes for electronic equipments" under entry 128 of the First Schedule to the Act and taxable at 5 per cent under item No. 413 of S.R.O. No. 371/92 and item No. 4.11 to Notification S.R.O. No. 1728/93. The Tribunal noted that the only objection of the assessing authority in following the clarification issued by the Board of Revenue is that the clarification was issued only on July 6, 1994 and therefore it has application only in respect of the assessment years thereafter. The Tribunal held that the circular being a clarification explaining the scope of the relevant Entry it has to be applied even for earlier years. We notice that the Appellate Tribunal in relying on the circular issued by the Board of Revenue has failed to note that item 128 of the First Schedule to the Act referred to in the circular was introduced for the first time only with effect from April 1, 1992. Therefore even if the circular only explains the scope of item No. 128 it can only relate back to the date of introduction of the said entry. Therefore even if the circular only explains the scope of item No. 128 it can only relate back to the date of introduction of the said entry. We are not pronouncing on the question as to whether the clarification issued by the Board of Revenue regarding the scope of item No. 128 of the First Schedule is in tune with the scope of the said entry or as to whether the Board of Revenue has got the power to issue such clarification regarding rate in these proceedings. Suffice to say that since item No. 128 - tapes and cassettes for "electronic equipments" in the First Schedule to the Act was introduced only with effect from April 1, 1992. The said item as well as the clarification issued by the circular can have application only in respect of the assessment years from 1992-93. We accordingly hold that the Tribunal has committed a serious error in relying on the circular issued by the Board of Revenue and deciding the appeal. We accordingly set aside the order of the Sales Tax Appellate Tribunal and restore the order of the first appellate authority. The effect of such restoration is to direct the assessing authority to consider the issue afresh and in accordance with law. Since the first appellate authority has entered a prima facie finding regarding the applicability of item No. 68 of the First Schedule without issuing a notice to the assessee we are of the view that the assessing authority has to decide the matter independently and untrammelled by the observations made by the first appellate authority. While considering the question regarding the rate of tax on computer ribbons, of course, it is open to the assessing authority to consider this issue with reference to item No. 68 of the First Schedule to the Act also. The decision of the Andhra Pradesh High Court in Andhra Pradesh Computer Stationery Manufacturers Association v. State of A.P. [1999] 115 STC 173 is also worthy of consideration in this context. A decision as directed above, will be taken with notice and opportunity to the assessee. The tax revision case is disposed of as above. Petition disposed of accordingly.