State Level Committee's Decision Overturned, Granting MRF Limited Tax Relief on Finished Rubber Products
In a significant ruling, the Kerala High Court has granted tax exemption to M/s. MRF Limited for its "compound rubber" products, overturning a previous decision by the State Level Committee (SLC). The judgment, delivered by Justice Harisankar V. Menon on August 14, 2026, held that compound rubber qualifies as a finished product, thereby entitling it to tax exemption under S.R.O. No.1729/1993.
MRF Limited, a leading manufacturer in the rubber industry, had sought exemption from tax based on additional investments and modernization efforts in its industrial unit, as per eligibility certificates issued by the Director of Industries and Commerce. However, the Deputy Commissioner (General) restricted the exemption, citing amendments introduced by S.R.O. No.38/1998, which included a negative list excluding certain processes from being considered as "manufacture."
The petitioner challenged this decision, with their counsel arguing that compound rubber should not be excluded from tax benefits, referencing a previous Division Bench judgment in the case of State of Kerala v. M.R.F Limited [(2016) 90 VST 304 (Ker)], which had established that compound rubber is a finished product.
The Court examined the negative list in S.R.O. No.38/1998 and the explanations provided in S.R.O. No.1516/1990, ultimately agreeing with the petitioner's stance. It found that the principles laid out in the 2016 judgment apply here, as compound rubber is not merely an intermediate product but a finished one, used in further manufacturing processes.
The judgment mandates that the State Level Committee's decision denying exemption be set aside and instructed the competent authority to issue consequential orders within two months, confirming MRF's entitlement to the tax exemption.
This ruling is expected to have wide-reaching implications for manufacturers in similar sectors, reaffirming the criteria for tax exemption on finished products and clarifying the interpretation of the negative list under the Kerala General Sales Tax Act.
Bottom Line :
Tax exemption under S.R.O. No.1729/1993 cannot be denied for "compound rubber" manufactured by the petitioner, as it qualifies as a finished product and is not excluded by the negative list introduced by S.R.O. No.38/1998.
Statutory provision(s): S.R.O. No.1729/1993, S.R.O. No.38/1998, S.R.O. No.1516/1990, Kerala General Sales Tax Act
M/s. MRF Limited v. State of Kerala, (Kerala) : Law Finder Doc id # 2967159
