V. Balakrishna Eradi, C.J.
1. The State of Kerala represented by the Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam, is the revision petitioner in these two connected revision petitions filed against the common order dated 28th February, 1979, passed by the Kerala Sales Tax Appellate Tribunal, Trivandrum, dismissing Tribunal Appeals Nos. 959 and 960 of 1977 filed before it by the State.
2. The assessee is M/s. Burmah Shell Oil Storage and Distributing Company Ltd., and the second appeals disposed of by the Tribunal arose out of the assessments to sales tax under the Kerala General Sales Tax Act, 1963 (hereinafter called the Act), made against the assessee for the assessment years 1974-75 and 1975-76. Two questions were raised before the Tribunal by the State in these second appeals. The first question was whether the excise duty paid to the Central excise department on petroleum products purchased by the assessee was liable to be included in the taxable turnover of the assessee for the two assessment years. The second question was whether the assessee was entitled to the benefit of the concessional rate of tax at 1 per cent on the turnover relating to the sale of naphtha inasmuch as it has produced open declaration in the prescribed form from the purchasing dealers as prescribed under Section 5(3) of the Act.
3. The relevant facts which lie in a short compass are not in dispute. The assessee-company purchased petroleum products from the Indian Oil Corporation's refinery at Cochin and they were delivered by pipelines to tanks owned by the assessee and licensed as bonded warehouses by the Central excise authorities. The Indian Oil Corporation had billed the assessee only for the actual value of the products sold and excise duty was not charged by the Indian Oil Corporation nor was it shown as part of the sale price. The products so purchased were stored by the assessee in their storage tanks at the Ernakulam installation, which, as already mentioned, are licensed under Rule 140 of the Central Excise Rules to store bonded stocks. On every occasion when the assessee-company received petroleum products into those tanks it executed surety bonds in form B4 prescribed under the Central Excise Rules undertaking to pay the excise duty in respect of the goods so received. Duty was thereafter paid by the company as and when the products were removed from those tanks as prescribed under Rule 157 of the Central Excise Rules. The amount of duty paid by the assessee was calculated on the basis of the rates prevailing at the time of withdrawal of the products from the tanks and not at the rate which was in force at the time of the purchase of the products* from the Indian Oil Corporation. The assessee-company became the owner of the products when it had obtained the delivery of the same through the pipelines into its storage tanks and it was in the capacity as the owner of the products that it had executed the bond to pay the duty on its own behalf under the statutory provisions contained in the Central Excise Rules.
4. The assessing authority while completing the assessment of the assessee-company for the years aforementioned included in the taxable turnover the amount of excise duty paid by the assessee on the basis that those amounts formed part of the purchase turnover of the petroleum products. The assessing authority also rejected the claim of the assessee that in regard to the sales turnover of naphtha it was liable to be taxed only at the concessional rate of 1 per cent in view of its having filed declaration from the purchasing dealers as required under Section 5(3) of the Act read with Rule 28 of the Rules. In the opinion of the assessing authority the assessee was not entitled to the benefit of the concessional rate of tax, because the final product, viz., chemical fertilisers, manufactured by the purchaser, did not contain naphtha in any form.
5. Aggrieved by the assessments so made against it, the assessee filed appeals before the Deputy Commissioner (Appeals) of Agricultural Income-tax and Sales Tax, Ernakulam. The Deputy Commissioner upheld the contention of the assessee that the excise duty paid by it did not form part of the purchase price and hence could not be included in the taxable turnover, relying on the decision of the Supreme Court in McDowell & Co. Ltd. v. Commercial Tax Officer [1977] 39 S.T.C. 151 (S.C.). On the second point relating to the eligibility of the assessee to the benefit of the concessional rate of taxation in relation to the sale of naphtha the appellate authority accepted the contention of the assessee in view of the decision rendered by the Tribunal in T. A. Nos. 253 to 256 of 1976 dated 13th April, 1976, wherein in relation to the same assessee the Tribunal had decided the identical point in the assessee's favour. The department thereafter took the matter before the Tribunal contending that the Deputy Commissioner had erred in upholding the aforementioned contentions put forward by the assessee. These appeals were dismissed by the Tribunal.
6. Notwithstanding the learned and persuasive arguments advanced before us by the Government Pleader appearing on behalf of the petitioner, we have unhesitatingly come to the conclusion that the decision rendered by the Tribunal on both the points is absolutely correct and does not call for any interference. The question whether the excise duty paid by the assessee directly to the Central excise department at the stage of removal of the petroleum products from its storage tanks which are licensed bonded warehouses for the purposes of the Central Excises Act and the Rules is liable to be treated as part of the purchase turnover of the assessee is directly covered by the decision of the Supreme Court in McDowell & Co. Ltd. v. Commercial Tax Officer [1977] 39 S.T.C. 151 (S.C.). The provisions of the Andhra Pradesh Excise Act which have been referred to in the judgment of the Supreme Court and those contained in the Central Excises Act and the Rules whereunder the excise duty was paid by the assessee are in pari materia. Though the excise duty is an impost on the manufacture or production of goods and the primary liability therefor is on the manufacturer or producer, the Central Excises Act and the Rules cast a liability for payment of such duty on a purchaser who acquires the ownership of the goods and who has been permitted to store the goods in his bonded warehouses under the licence issued by the Central excise authorities. The payment made by such purchaser is on his own account in discharge of the liability cast on him by the statute and the rules. As held by the Supreme Court the amounts paid by the purchaser directly to the excise authorities by way of duty on the goods owned by him at the stage of their removal from the bonded warehouses cannot be treated as forming part of the taxable turnover in view of the definition of the expression 'turnover' contained in Section 2(xxvii) of the Act as meaning (omitting unnecessary words) the aggregate amount for which goods are either bought or sold. The excise duty paid by the assessee to the Central excise authorities cannot, in any sense, be regarded as forming a component part of the price for which the goods were bought by the assessee from the Indian Oil Corporation. This position has been placed before us beyond doubt by the observations of the Supreme Court in the ruling aforecited. Accordingly, we hold that the Tribunal was perfectly right in holding that the amount of excise duty paid by the assessee is not liable to be included in the taxable turnover of the assessee for the purpose of Section 5A of the Act.
7. The second question relating to the entitlement of the assessee to the benefit of the concessional rate of taxation in relation to the turnover of sales of naphtha effected by it is also now directly covered by the decision of a Division Bench of this Court in Deputy Commissioner of Sales Tax v. Bharat Refineries Ltd. [1978] 42 S.T.C. 225, wherein this Court had occasion to consider the identical question in relation to the same assessee while dealing with revision petitions arising out of the assessments made against the assessee for the years 1970-71 to 1972-73. It was held that naphtha and chemical fertilisers being goods specified in the First Schedule to the Act and the assessee having sold naphtha to a manufacturer of chemical fertilisers and furnished the declarations obtained from the purchaser as required by the proviso to Section 5(3) of the Act, the assessee could not be denied the benefit of the concessional rate merely on the ground that there could be no use of naphtha directly in the manufacture of chemical fertilisers and it was only used as fuel for producing hydrogen, which, in turn, was used for the manufacture of the chemical fertilisers. We are in respectful agreement with the said pronouncement. Accordingly we uphold the finding of the Tribunal that the assessee is entitled to the benefit of the concessional rate of taxation at 1 per cent in respect of the turnover relating to sales of naphtha effected by it to M/s. Fertilizers and Chemicals Travancore Ltd.
The revision petition accordingly fails and it is dismissed. The parties will bear their respective costs.
Immediately after the pronouncement of the judgment in this case, the learned Government Pleader made an oral request under Article 134-A of the Constitution for the grant of a certificate under Article 133(1) to enable the State to prefer appeals before the Supreme Court. We are not, however, inclined to accede to the said request since the first question is already covered by a direct pronouncement of the Supreme Court, to which we have made reference in the judgment, and the second question cannot be said to be a substantial question of law, on which a pronouncement of the Supreme Court is needed. Accordingly, the request for grant of a certificate is declined.