M/S.Parisons Foods PVT LTD vs. State Of Kerala

Facts

The petitioner, M/s. Parsons Foods Pvt. Ltd., is a manufacturer of refined Palmolein. The company purchases crude oil within the State and also imports it. The petitioner claimed input tax credit (ITC) for all purchases made within the State, even though the refined Palmolein was sold both within the State and outside on a consignment basis. Rule 12A of the Kerala Value Added Tax Rules, 2005, mandates apportionment of ITC based on the ratio of taxable and exempted turnover when inputs are used for both taxable and exempted goods. The petitioner argued that imported oil was used for consignment sales and locally purchased oil for local sales, supported by separate storage tanks and accounts. They relied on a previous Tribunal order for assessment year 2005-06, which was affirmed by this Court, where similar facts led to a favorable outcome for the assessee.

Held

The Court held that the Tribunal's decision in the current assessment years was justified, despite a previous order from a co-ordinate Bench. The Court found sufficient factual discussion by the Tribunal to warrant a difference in opinion, particularly due to additional contentions raised by the Revenue. The Revenue was entitled to raise these contentions for each assessment year as a separate cause of action. The Court noted a change in the petitioner's factual assertion: previously, they claimed DEPB imports were used for local sales, but in the current years, they claimed imported crude oil was used for consignment sales and locally purchased oil for local sales. The Tribunal's finding that the end product was uniform and not differentiated based on the raw material source, coupled with the presence of interconnecting pipes and valves, meant the assessee had not discharged its burden of proving exclusive storage. The Court found the application of Rule 12A to be imminent based on the facts and concluded that no question of law arose, nor were the factual conclusions perverse. The revisions were rejected, affirming the Tribunal's orders.

Key Issues

1. Whether the petitioner is entitled to claim full input tax credit on crude oil purchased within the State, irrespective of whether the refined Palmolein is sold locally or sent outside on consignment basis, considering the provisions of Rule 12A of the KVAT Rules, 2005? The petitioner argued that they maintained separate storage tanks and accounts for imported and locally purchased crude oil, and that the imported oil was exclusively used for consignment sales while locally purchased oil was used for local sales. They relied on a previous order of the Tribunal and this Court in O.T.Rev.No.8 of 2014, which dealt with similar facts and favored the assessee. The petitioner contended that the Tribunal's deviation in the current assessment years was unwarranted. The respondent, State of Kerala, contended that the end product manufactured from both imported and locally purchased crude oil is uniform. They pointed to the presence of interconnecting valves and pipes between storage tanks, making it impossible to ascertain exclusive storage. The Revenue argued that the assessee had not discharged its burden of proving exclusive storage and that the manufacturing process and finished product were not differentiated based on the raw material source. They also highlighted a shift in the petitioner's claim regarding the utilization of DEPB imports compared to the earlier assessment year.