2012 (6) TMI 769 - HC - VAT and Sales Tax

Reduction of period of exemption assessee is a medium scale industrial unit - Held that - Relying upon K. Premerajan Versus State of Kerala 2007 (12) TMI 424 - KERALA HIGH COURT - in the matter of industries set up on or after April 1, 1989 and prior to April 1, 1993, the competent authority was conferred jurisdiction as per the notifications on a combined reading of SRO. No. 1729/1993 and SRO. No. 654/1989 - but the jurisdiction extended to grant of exemption only for a period of five years - The grant of exemption for seven years; to the extent of the additional two years, is definitely in excess of the jurisdiction and again cannot be considered as one of irregular assumption of jurisdiction or an error of law committed within the jurisdictional competence - To the extent of the exemption granted beyond the specific period of five years prescribed under the relevant notification, the same was definitely vitiated by lack of jurisdiction or want of jurisdiction - The authority clearly exceeded the jurisdictional mandate of SRO. No. 1729/1993 read with SRO. No. 654/1989 the AO was perfectly right in confining the exemption to five years, since annexure A to the extent it granted exemption for the additional two years was a nullity the assessing authority was justified in passing the assessment order under the Central Sales Tax Act rejecting the claim of exemption beyond five years and finding the assessee s claim for concessional rate under the Central Sales Tax Act to be governed under SRO. No. 1731/1993 Decided against petitioner assessee.

Summary

Issues Involved:
1. Period of tax exemption under the Kerala General Sales Tax Act (KGST Act).
2. Applicability of SRO. No. 1729/1993 and SRO. No. 1730/1993 versus SRO. No. 1731/1993.
3. Jurisdiction of the assessing officer to alter or go behind the exemption order.
4. Validity of the exemption order under the Central Sales Tax Act (CST Act).

Detailed Analysis:

1. Period of Tax Exemption under the KGST Act:
The petitioner, an assessee under the KGST Act, claimed an exemption for seven years based on SRO. No. 1729/1993. However, the assessing officer, supported by the first appellate authority and the Tribunal, reduced the exemption period to five years, citing SRO. No. 1731/1993. The petitioner argued that their exemption should be governed by SRO. No. 1729/1993, which allowed for a seven-year period, but the court found that the petitioner's unit, set up before April 1, 1993, was only eligible for a five-year exemption as per SRO. No. 654/1989, which was resurrected by SRO. No. 1729/1993.

2. Applicability of SRO. No. 1729/1993 and SRO. No. 1730/1993 versus SRO. No. 1731/1993:
The petitioner contended that their unit, defined as a "new industrial unit" under SRO. No. 1729/1993, should also benefit from SRO. No. 1730/1993 under the CST Act for a concessional rate of two percent for seven years. However, the court clarified that SRO. No. 1730/1993 applied to units set up on or after April 1, 1993, whereas the petitioner's unit was set up before this date. Therefore, the petitioner's unit was governed by SRO. No. 1731/1993, which allowed a concessional rate for only five years.

3. Jurisdiction of the Assessing Officer to Alter or Go Behind the Exemption Order:
The court examined whether the assessing officer had the jurisdiction to alter the exemption period granted by the Board of Revenue (Taxes). It was noted that exemption notifications must be construed strictly. The court referenced the principle from Deputy Commissioner of Sales Tax, Ernakulam v. Surya Refineries (P) Ltd., which stated that an assessing officer cannot sit in judgment over an authority granting exemption unless the order was without jurisdiction. The court found that the Board of Revenue (Taxes) had exceeded its jurisdiction by granting a seven-year exemption when only a five-year period was permissible under the relevant notifications.

4. Validity of the Exemption Order under the CST Act:
The court discussed the jurisdictional aspect, referencing the English law principle from Anisminic Ltd. v. Foreign Compensation Commission, which allows for judicial review where an order is a "nullity." The court concluded that the Board of Revenue (Taxes) exceeded its jurisdiction by granting a seven-year exemption, rendering that part of the order a nullity. Consequently, the assessing officer was justified in confining the exemption to five years under the CST Act.

Conclusion:
The court dismissed the petitioner's revision, upholding the assessing officer's decision to limit the tax exemption period to five years. All questions of law raised by the petitioner were answered in favor of the Revenue, affirming that the petitioner's unit was governed by SRO. No. 1731/1993 for the CST Act and was only entitled to a five-year exemption period under the KGST Act.