State of Kerala v. Selvam Broilers (P) Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** # **THE HONOURABLE MR.JUSTICE S.V.BHATTI** ## **&** **THE HONOURABLE MR. JUSTICE BECHU KURIAN THOMAS** **WEDNESDAY, THE 7[TH] DAY OF JULY 2021 / 16TH ASHADHA, 1943** **ST.REV. NO. 223 OF 2010** **AGAINST THE ORDER DATED 25.02.2010 IN TA 400/2009 OF** **S.T.A.T.ADDITIONAL BENCH, ERNAKULAM** ## **REVISION PETITIONER/ RESPONDENT/ REVENUE :** **STATE OF KERALA, REP. BY DEPUTY COMMISSIONER (LAW), COMMERCIAL TAXES, ERNAKULAM.** **BY SPL. GOVT.PLEADER SRI.C.E.UNNIKRISHNAN** ## **RESPONDENT/ APPELLANT/ ASSESSEE :** **M/S.SELVAM BROILERS(P)LTD., HILL PALACE ROAD, TRIPUNITHURA - 682 301.** **BY SR.ADV.SRI.SHRIKUMAR K.** **BY SRI.K.MANOJ CHANDRAN** **THIS SALES TAX REVISION HAVING COME UP FOR ADMISSION ON** **07.07.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **ST.REV. NO. 223 OF 2010** 2 ## **ORDER** Dated this the 7[th] day of July, 2021 ## **Bechu Kurian Thomas, J.** Own a farm on own land and gain exemption – claims the department. Owning a farm alone gains exemption – cries the assessee. A poultry farmer's claim for exemption from payment of sales tax is the subject matter of this revision. The Revenue contended that to claim exemption on the turnover for the year, a poultry farmer must conduct his farm on land owned by him and situated within the State. The farmer claimed that the benefit of exemption was available if the farm was owned by him, in contradistinction to ownership of the land. Assessee claimed that ownership was never contemplated under the exemption notification. The Tribunal granted the exemption against which the State is in revision under Section 41 of the Kerala General Sales Tax Act, 1963 (for short, 'the Act'). 2. The assessment year in issue is 2000-01. The assessing authority rejected the books of account of the assessee and denied the claim of exemption on the turnover of poultry reared in the assessee's farm while issuing the assessment order. The assessee's claim for exemption was rejected on the ground that the assessee was not the **ST.REV. NO. 223 OF 2010** 3 owner of the land where the farm was conducted. The Appellate Authority also refused to grant the benefit of exemption claimed by the assessee. However, the Kerala Sales Tax Appellate Tribunal by order dated 25.02.2010 in TA.No.400/2009 found that the assessee is entitled to the benefit of SRO.No.1090/99 as amended by SRO.No.291/2000 and held that the assessee was entitled for the benefit of exemption. 3. The facts necessary for disposal of the Appeal are not required to be narrated in detail. Suffice to state, the assessee was conducting its own poultry farms within the State of Kerala on leased lands. 4. To encourage poultry industry in Kerala, exemptions were granted to poultry farmers in Kerala in exercise of the powers under Section 10 of the Act. On 31.12.1999, SRO.No.1090/99, was issued exempting “turnover of chicks and chickens from sales tax. It was amended by SRO.No.291/2000 confining exemption to turnover of poultry reared on the farmer's own farm within the State. For the purpose of easier comprehension, entry 14 of SRO.No.1090/1999 as amended by SRO.No.291/2000 with effect from 01.04.2000 is extracted hereunder :- **ST.REV. NO. 223 OF 2010** 4 |Sl.No<br>.|Name of Dealer|Turnover which is<br>exempted|Conditions<br>and<br>restrictions| |---|---|---|---| |1|2|3|4| |14.i.|Hatcheries within the<br>State|Turnover of sale of chicks<br>hatched by them with the<br>State|Nil| |ii|Poultry farmers within<br>the State|Turnover of sale of poultry<br>reared by them in their<br>own farm within the State<br>whether hatched by them<br>or not and the meat<br>obtained therefrom|Nil| 5. Though there was another amendment as SRO.No.877/2000 w.e.f.23.09.2000, we are not extracting the same as there is no significant difference. 6. The assessee claimed that it owned a farm within the State of Kerala though it did not own the land and instead was run and leased land. He also claimed that owning the land was not a condition as per the notification relevant for the year 2000-01 for claiming exemption on the turnover. The only stipulation for claiming exemption was to own a farm within the State. Owning the farm and owning the land being two entirely different concepts the assessee claimed the benefit of the **ST.REV. NO. 223 OF 2010** 5 exemption on the basis of the above extracted Notification issued in exercise of the powers under Section 10 of the Act. 7. The assessing officer denied the claim of exemption on the basis of the amendment to SRO.No.1090/99 brought in by SRO.No.7/2002 made with effect from 01.04.2000. For the purpose of easier comprehension, the amendment brought in SRO.No.7/2002 to SRO.No.1090/99 is extracted as below : |Sl.No.|Name of Dealer|Turnover which is<br>exempted|Conditions and<br>restrictions| |---|---|---|---| |1|2|3|4| |14.i.|Hatcheries within<br>the State|Turnover of sale of<br>chicks hatched by them<br>with the State|Nil| |ii|Poultry<br>farmers<br>within the State|Turnover of sale of<br>Poultry reared by them<br>in their own farm within<br>the State, whether<br>hatched by them or<br>not, but run on land<br>owned by them, and<br>the meat obtained<br>therefrom|Own farm does<br>not include farm<br>run on land<br>taken on lease,<br>mortgage,<br>licence or any<br>other<br>arrangement.”| ## 8. We have heard the learned Senior Govt.Pleader Sri.C.E.Unnikrishnan on behalf of the State and the learned Senior Counsel Sri.K.Sreekumar on behalf of the respondent assessee. **ST.REV. NO. 223 OF 2010** 6 9. The sole point that arise for consideration is whether the assessee is entitled to the benefit of exemption for the year 2000-01 even though the land on which the farm was conducted was a leased land. 10. In this context, it is apposite to refer to a decision of this Court in _**Selvam Broilers (P) Ltd.v. Assistant Commissioner (Assmt.) and Others** [(2003) 129 STC 389 (Ker.)]_ wherein a learned Single Judge of this Court had declared that SRO.No.7/2002 does not have any retrospective operation. In coming to the said conclusion, this Court had taken note of the decisions in _**M.M. Nagalingam Nadar Sons v. State of Kerala** [(1993) 91 STC 61 (Ker)]_ and _**Deputy Commissioner (Law) v. M.R.F. Ltd.** [(1998) 109 STC 306 (Ker.)]_ 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. It was fairly submitted by the learned Senior Govt.Pleader Sri.C.E.Unnikrishnan that the judgment in _**Selvam Broilers (P) Ltd.**_ 's case (supra) had become final as no challenge was made against it. **ST.REV. NO. 223 OF 2010** 7 11. In our considered view, the issue raised in this revision is squarely covered by the legal principle laid down in _**Selvam Broilers (P) Ltd.**_ 's case (supra). 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. The Tribunal as the final fact finding authority had found that the chicks were reared into broiler birds under the complete supervision of the assessee on its own farms within the State of Kerala. The assessee satisfies the conditions for eligibility for exemption as per the prevailing notification. In view of the above, we find 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. This revision is therefore dismissed. Sd/- ## **S.V.BHATTI,JUDGE** Sd/- ## **BECHU KURIAN THOMAS, JUDGE** RKM , **ST.REV. NO. 223 OF 2010** 8 ## **APPENDIX OF ST.REV. 223/2010** ## **PETITIONER'S ANNEXURES :** |**ANNEXURE-A**|**TRUE COPY OF THE ASSESSMENT ORDER DATED**| |---|---| ||**30.01.2007.**| |**ANNEXURE-B**|**A TRUE COPY OF THE ORDER OF THE DEPUTY**| ||**COMMISSIONER (APPEALS) DATED 04.02.2009.**| |**ANNEXURE-C**|**A TRUE COPY OF THE ORDER OF THE STAT DATED**| ||**25.02.2010**| |**ANNEXURE-D**|**TRUE COPY OF THE JUDGMENT DATED 13.03.2001 IN**| ||**O.P. NO.32353/2000**|