2005 (8) TMI 650 - HC - VAT and Sales Tax

Summary

Issues:
- Extension of period of sales tax exemption under section 10 of the KGST Act, 1963

Analysis:
The petitioner, a private limited company engaged in manufacturing, sought an extension of the period of sales tax exemption granted under S.R.O. No. 1729/2003 due to reasons including power cuts affecting production. The company had previously received exemption benefits based on its eligibility certificate and subsequent orders. The Commissioner of Commercial Taxes rejected the extension request, leading to a legal challenge. The High Court observed that the exemption was granted under the existing Industrial Policy for seven years and that the Government was not obligated to extend it further. The court highlighted that the petitioner had no legal right to demand an extension beyond the stipulated period and referenced a Supreme Court ruling emphasizing strict interpretation of exemption provisions in taxing statutes.

The petitioner argued that the Government had the power under section 10(3) of the KGST Act to extend the exemption period, citing examples of other industries receiving such extensions. However, the Special Government Pleader contended that the exemption was provided as per the Industrial Policy for a specified period and could not be extended for individual cases. The Government issued S.R.O. No. 78/2003 to grant extensions selectively based on specific criteria, not applicable to the petitioner's circumstances. The court noted that the extension was initially granted to industries using fly ash for environmental reasons, emphasizing that the petitioner's case did not align with the purpose of the notification.

In its analysis, the court referred to section 10 of the KGST Act, which empowers the Government to grant exemptions or reduce tax rates. The Government's authority to cancel or vary notifications under this section was highlighted. The court emphasized that the Government had the discretion to extend the period of exemption, as demonstrated by the issuance of S.R.O. No. 78/2003 based on specific considerations. The court concluded that the petitioner's case did not warrant an extension of the exemption period and upheld the decision of the learned single Judge, dismissing the writ appeal for lacking merits.