Basant, J.

Is the decision contemplated under Section 59A of the Kerala General Sales Tax Act an institutional decision or a personal one? Can the hearing under Section 59A be held by someone other than the Commissioner of commercial taxes and the decision be rendered by the Commissioner? These questions of importance arise for consideration in this appeal.

2. The fact scenario is simple. S.R.O.1729/93 deals with reduction in rate of tax to industrial units. Small, medium and large scale industries are eligible for certain concessions. This notification was later modified as per S.R.O.170/95. Clause 6A was added to the notification. We extract below the said clause 6A.

"6A. In the case of large scale industrial units started production after 23rd September 1991 and which purchase coconut or copra for producing coconut oil and coconut oil cake within the State, there shall be a reduction in respect of the tax payable by such units under the Kerala General Sales Tax Act, 1963 on the turnover of coconut or copra purchased and used for production of coconut oil and coconut oil cake from 3% to 1% for a period of seven years from the date of commencement of commercial production subject to the condition that the reduction in purchase tax shall be applicable to such quantity of oil produced by them that is sold outside the State of Kerala and that the total of such concession availed of by a unit shall not exceed 100% of the fixed capital investment of the unit." (emphasis supplied)

3. The appellant is a large scale industrial unit using coconut/copra as raw material. Coconut/copra is consumed and oil and oil cakes are produced. The oil is sold as such within the State and outside. Some of the oil is sent to the neighbouring State by branch transfer. Some portion of such oil is not sold as such but is used as raw material for manufacture of some other products by the appellant himself. In assessment proceedings the Assessing Officer took the stand that the benefit of clause 6A extracted above will be available only if the oil is sold outside the State of Kerala. The benefit will not be available if there is only a transfer of such oil to a branch for the purpose of such oil being consumed in the production of another product in the neighbouring State.

4. The appellant in these circumstances wanted a decision to be rendered by the Commissioner of Commercial Taxes under Section 59A of the Kerala General Sales-tax Act.

5. Notice of hearing was issued. The appellants representative appeared at the hearing. The hearing was not conducted by the Commissioner of Commercial Taxes. Instead, a subordinate of his heard the representative of the appellant. The representative took part in the hearing without demur. Two statements/argument notes explaining the contentions of the appellant were filed before the Officer who conducted the hearing.

6. The officer who conducted the hearing along with his notes submitted the draft order for consideration of the Commissioner of Commercial Taxes. The Commissioner of Commercial Taxes approved the draft order and proceeded to pass the impugned order under Section 59A of the Kerala General Sales-tax Act. It was held that the benefit of clause 6A extracted above is not available for the appellant in respect of such quantities of oil which are transferred to the branch of the appellant outside the State and used up for manufacture of other products. Unless the sale of such oil takes place outside the State, the benefit of clause 6A was not available, it was held.

7. The learned counsel for the appellant and the learned Government Pleader (Taxes) have advanced their arguments. The following points arise for consideration:

(i) Whether there has been violation of principles of natural justice as embodied in Rule 59A by the procedure followed by the Commissioner of Commercial Taxes in leaving the hearing to a subordinate official?

(ii) Whether the impugned order warrants interference on merits?

8. It is one of