2009 (5) TMI 881 - HC - VAT and Sales Tax

Claim for sales tax exemption with respect to the building rejected - though the exemption sought for with regard to the plant and machinery stands accepted Held that - To have absolute right, it is very much necessary that the petitioner ought to have obtained requisite release deeds to be executed by other co-owners as well and it should have been produced before the authority for substantiating the claim for exemption; placing reliance on the dictum in exhibit P5 judgment. Accordingly, the matter is disposed of, directing the petitioner to produce proof as to his absolute right over the property by procuring necessary release deeds to be executed by other co-owners or otherwise and produce the same before the first respondent/State Level Committee for considering the claim for exemption within two months. On producing the same, the first respondent shall reconsider .

Summary

The Kerala High Court judgement, delivered by Justice Ramachandra Menon, pertains to a grievance raised by the petitioner against the denial of sales tax exemption for a "building" while the exemption for "plant and machinery" was accepted. The petitioner argued that they had commenced commercial production in 1998 and completed expansion in 1999, following which they applied for exemption in 1999 and 2001. The exemption for plant and machinery was granted, but the building exemption was rejected. The petitioner contended that the respondents' understanding of the exemption scope was flawed and cited a judgment to support their case.

The Government Pleader countered the petitioner's arguments by stating that the judgment cited was irrelevant to the current case due to a subsequent amendment. The court reviewed the previous judgment and the amendment brought about by a government order, which clarified that buildings constructed for industry purposes after obtaining land on registered lease would not be eligible for tax exemption. The court emphasized the importance of registering lease deeds and noted that the amendment aimed to prevent misuse of exemption provisions, particularly in lease cases.

The court directed the petitioner to provide proof of absolute ownership over the property by obtaining necessary release deeds from other co-owners and submitting them for reconsideration of the exemption claim within two months. The first respondent was instructed to review the case in light of the court's observations and the previous judgment, with final orders to be issued promptly. The writ petition was disposed of accordingly.