1986 (12) TMI 355 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of eligibility for exemption under a notification regarding sales tax for new industrial units.
2. Determining whether the exemption is limited to the owner of the industrial unit or extends to lessees or licensees as well.
3. Consideration of the conditions and scope of exemption under the notification.
4. Clarification on the cumulative exemption limit for units and the possibility of separate claims by owner and lessee.

Detailed Analysis:
1. The judgment concerns a revision under section 41 of the Kerala General Sales Tax Act, 1963, regarding the assessment made on the respondent for the assessment year 1981-82. The issue revolves around the eligibility of the assessee, a lessee of an oil-mill, for exemption from sales tax under a notification applicable to new industrial units under small-scale industries.

2. The assessing authority initially denied the exemption claim based on the grounds that the assessee did not produce the required proceedings declaring the unit's eligibility and that being a lessee, the assessee was not entitled to exemption due to lack of investment in fixed capital. However, the first appellate authority upheld the denial based on the lessee status. The Tribunal, in the second appeal, accepted the assessee's claim, emphasizing that the notification did not stipulate that only the owner could claim the exemption.

3. The notification in question, S.R.O. No. 968/80, provides an exemption on the turnover of goods produced and sold by new industrial units under small-scale industries for a specified period. The key condition for exemption is that the goods must be produced and sold by the industrial unit, without specific limitation to ownership status. The judgment clarifies that the exemption extends to any person running the unit, whether as an owner, lessee, or licensee, as long as they have control over the unit and the goods are produced and sold by them.

4. The judgment addresses the concern raised by the Revenue regarding the possibility of both owner and lessee separately claiming exemption up to the prescribed limit. It highlights that the cumulative exemption granted to a unit is capped at 90% of the cumulative gross fixed capital investment, ensuring that the total concession does not exceed this amount. Therefore, there is no basis for apprehension regarding multiple claims exceeding the limit.

In conclusion, the High Court dismissed the tax revision case, affirming the Tribunal's decision to grant the exemption to the assessee, emphasizing that the ownership status does not restrict eligibility for exemption under the notification applicable to new industrial units under small-scale industries.