1998 (7) TMI 662 - HC - VAT and Sales Tax

Summary

Issues:
1. Continuation of concessional rate of sales tax for tread rubber manufacturers.
2. Validity of circulars issued by the Board of Revenue and the Government.
3. Interpretation of Government orders and notifications regarding tax concessions for rubber industries.
4. Supersession of first notification by the second notification.
5. Application of legal principles regarding notification withdrawal and continued exemption.
6. Compliance with the Kerala General Sales Tax Act, 1963.

Analysis:
1. The petitioners, manufacturers of tread rubber, sought a declaration to maintain the concessional sales tax rate and challenged circulars issued by the Board of Revenue and the Government. The original petitions were based on the benefits granted to promote rubber industries, including tax exemptions and capital subsidies.

2. The Government's circulars clarified the intention not to provide further concessions to rubber-based industries beyond existing ones. The petitioners argued that the initial order granting concessions in 1988 was still in force and not superseded by subsequent notifications. They relied on a Madras High Court decision to support their claim of continued benefits under the first notification.

3. The Secretary of the Board of Revenue contended that the concessions were meant for new industrial units only, and the second notification effectively superseded the first. The court analyzed the purpose of the concessions to promote new industries and concluded that the benefits were not intended to be permanent, highlighting the limited duration specified in the second notification.

4. The court examined the legal authority under the Kerala General Sales Tax Act, 1963, allowing the Government to cancel or modify notifications. Referring to the Supreme Court's decision in Pournami Oil Mills case, the court emphasized that the second notification modified the first, limiting the concession period. The petitioners were deemed aware of the changes through circulars issued.

5. Citing precedents, the court emphasized that the subsequent notification superseded the first, restricting the concession to a maximum of seven years. Any other interpretation would violate constitutional provisions. The court upheld the validity of the circulars and dismissed the petitions, directing compliance with the second notification and circulars.

6. In conclusion, the court found no grounds to interfere with the circulars, deeming them valid and enforceable. The petitioners were not entitled to the declaration, and all concessions were to be made in accordance with the second notification and circulars. The court dismissed the original petitions, affirming the application of legal principles and statutory provisions under the Kerala General Sales Tax Act, 1963.