G. SIVARAJAN, J. –

An assessee to sales tax under the Kerala General Sales Tax Act, 1963 (for short, "the Act"), is the revision petitioner. The assessment year concerned is 1995-96. The petitioner is a company engaged in the business of undertaking job-work of bleaching and dyeing of yarn and fabrics obtained from its customers. For the purpose of fulfilling the said work, the assessee had purchased items like furnace oil, dyes and chemicals. In the assessment for the year 1995-96, the assessing authority sought to include the value of the dyes and chemicals used in the bleaching and dyeing of the materials supplied by the customer. However, the assessing authority in the final assessment has given a deduction of 20 per cent of the total cost of raw materials used in the said process. The assessee had also taken a contention before the assessing authority that a mistake has crept in, in the returns filed by the assessee, in that, the total value of the dyes and chemicals used in the bleaching and dyeing of the yarns and fabrics was shown at Rs. 39.11 lakhs as against the correct figure of Rs. 22.75 lakhs. This was also not accepted by the assessing authority. The petitioner took up the matter in appeal before the first appellate authority who dismissed that appeal. The Tribunal in second appeal has confirmed the orders of the two authorities.

The petitioner had raised the following questions of law as arising out of the order of the Sales Tax Appellate Tribunal :

"(a) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in law in holding that the chemicals and dyes used up in the execution of job-works is taxable at the hands of the petitioner. Is not the decision of the Appellate Tribunal contrary to the statutory provisions and decided cases ?

(b) Whether, in the light of the specific ground No. 5 raised and pressed, the Appellate Tribunal is justified in law in omitting to deal with the same. Has not the Appellate Tribunal committed an error in this respect ?

(c) Whether, on the facts of the case, is not the observation of the Appellate Tribunal that the value of consumables comes to 39.11 is without any basis. While the actual value is only 22.75 lakhs, is not the revision petitioner entitled to 20 per cent deduction therefrom on the basis of the observations of the assessing authority himself ?

(d) Having found by the Appellate Tribunal that, "Chemicals used for bleaching are unconsumables which cease to have existence in any form after use", is the Appellate Tribunal justified in confirming the order of the authorities below without ordering proper allowance for the same ?

(e) Whether, on the facts and in the circumstances of the case, is not the revision petitioner entitled to exemption from sales tax, provided eligibility certificate is issued by virtue of the Government Notification governing the issue of exemption ?"

Dr. K. B. Muhamed Kutty, learned counsel appearing for the assessee, submits that the dyes and chemicals and other consumables purchased by the company and used in the process of bleaching, dyeing, measuring, compacting, printing, etc., are liable to be excluded from the assessment, in view of the provisions of section 5C(1)(c)(iii) of the Act, being consumables. The counsel submits that the assessee has not transferred any of the aforesaid items to the customers in an identifiable form. Counsel also submits that the provisions of section 5(1) of the Act are not attracted to the transaction. He points out that the assessing authority himself has taken the view that if the chemicals purchased by the assessee are used in the process of bleaching, etc., the value of the same is liable to be deducted from the charges received from the customer. Counsel also pointed out that the assessing authority had granted deduction in respect of the value of furnace oil, electricity, etc., which are used in the said process. On that basis, the counsel submits that the a