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2014 (9) TMI 175 - HC - VAT and Sales TaxExemption from tax - concessions and relief to the new entrepreneurs for starting rubber industries - benefit allowed to all industries be it new or old or allowed to only new industries - whether office order to be considered as Notification - G.O. Ms. No. 124/88/ID dated August 31, 1988 versus notification No. 1091/99 with retrospective effect from August 31, 1988 - Whether the respondent-assessees are entitled to the benefit of concessional rate of tax as vouchsafed under G.O. Ms. No. 124/88/ID dated August 31, 1988 - Held that - G.O. Ms. No. 124/88/ID is not published in the gazette. In S.R.O. No. 1091/99, it is specifically stated that it is issued under the provisions of the Act. If we are persuaded to hold that G.O. Ms. No. 124/88/ID is not published in the gazette and therefore, it cannot be treated as a notification, it cannot be treated as a notification issued under section 10 of the Act, which was superseded and therefore, the respondent-assessees would be entitled to the benefit of reduced rate of tax. According to the learned Government Pleader, while it is true that in the Bill, there was an Explanation and in the law as finally made, the Explanation was omitted, unless and until G.O. Ms. No. 124/88/ID conforms to the definition of the word notification , it cannot hold good after the insertion of the definition of the word notification in the Act. Non obstante clause refers to the judgments rendered and the intention of the Legislature to provide that any notification existing as on the date, despite any judgments to the contrary, which do not conform to the main provision of the definition, shall not be treated as a notification issued under the provisions of the Act. G.O. Ms. No. 124/ 88/ID was published on August 31, 1988. It was published by the Industries Department of the State of Kerala. It was intending to encourage the industrial activities of the State, especially rubber based industries, it was issued. Among the benefits vouchsafed under the said Government Order, was the grant of concession in the matter of rate of tax in respect of products sold by rubber industries situated in the State of Kerala. Government Pleader has not shown to us that the said G.O. was withdrawn by the Government or modified. Unless the G.O. is withdrawn or modified, that would continue to remain in force. This controversy earlier also came up before this court and then a learned single judge of this court in Thamarappally Rubber Products v. Additional Sales Tax Officer 1994 (2) TMI 282 - KERALA HIGH COURT held that it could be seen from the order that the Government had issued orders to the effect that the sales tax on finished rubber goods had been reduced to three per cent. There was no justification for the State to contend that this notification had not been issued under section 10 of the Kerala General Sales Tax Act, 1963. Therefore, the liability of the petitioner was only to pay tax at three per cent on finished rubber products from factories in Kerala. Whether G.O. Ms. No. 124/88/ID, which is a Government Order and that too, issued by the Industries Department in the year 1988, would be affected by the insertion of the definition of the word notification in the year 1998 - Held that - In exercise of the powers conferred under section 10 of the Act and in supersession of the notifications mentioned in the Schedule, the Government proposed various deductions. When we contrast the wording of the aforesaid notification with the wording of S.R.O. No. 1091/99, it is quite clear that the intention of the Government was that once S.R.O. No. 1091/99 came into force, all earlier notifications which were in force as on December 31, 1999, except the notification which was expressly saved, were to cease to exist. The significance of this difference is sufficient to answer the contentions raised by the learned counsel for the party respondents that G.O. Ms. No. 124/88/ID was not expressly referred to and superseded. We are of the view that it is not necessary to expressly refer to G.O. Ms. No. 124/88/ID when the intention of the Government was that there must be one compendious notification, providing for reduced rate of tax as stated in S.R.O. No. 1091/99. Government intended to give the benefit of concessional rate on those units which were governed by S.R.O. No. 968/80 also. Likewise, S.R.O. No. 654/89 provided for exemption in respect of tax payable on the sale of goods produced and sold by the new industrial units for a period of five years from the date of commencement of the sale, subject to certain conditions. The same came into force with effect from April 1, 1989. What is relevant is that the notification did not specifically withdraw G.O. Ms. No. 124/88/ID. More importantly, the Government in the policy decision in G.O. Ms. No. 17/92 dated January 24, 1992, specifically directed that the concessions announced in G.O. Ms. No. 124/88/ID will continue. G.O. Ms. No. 124/88/ID has to be held as a notification issued under section 10 of the Act, despite the insertion of the word notification in the definition clause of the Act. The definition clause would have prospective operation and if the notification is issued after the date of such notification, it must fulfil the requirements in the definition. - G.O. Ms. No. 124/88/ID would continue to have efficacy as a notification issued under section 10 of the Act as held by the Division Bench of this court only till the date of S.R.O. No. 1091/99. In other words, from January 1, 2000, G.O. Ms. No. 124/88/ID cannot be in force - Decided against Revenue.
Issues Involved:
1. Entitlement to the benefit of concessional rate of tax under G.O. Ms. No. 124/88/ID dated August 31, 1988. 2. Interpretation of the amendment introducing subsection (xva) to section 2 of the Kerala General Sales Tax Act, 1963. 3. Effect of S.R.O. No. 1091/99 on the continuation of tax concessions. 4. Applicability of G.O. Ms. No. 124/88/ID to new industrial units only. Detailed Analysis: 1. Entitlement to the Benefit of Concessional Rate of Tax: The core issue was whether the respondent-assessees, who are small-scale industrial units, were entitled to the benefit of a concessional tax rate of three per cent on finished rubber goods, as per G.O. Ms. No. 124/88/ID. The Tribunal initially allowed the assessees' appeals, finding them entitled to the concessional rate. However, the State contested this, arguing that the said Government Order was meant for new industries only and had been superseded by subsequent notifications, particularly S.R.O. No. 1091/99. 2. Interpretation of the Amendment Introducing Subsection (xva) to Section 2: The amendment introduced subsection (xva) to section 2, defining "notification" as a notification issued by the Government and published in the gazette. The State argued that since G.O. Ms. No. 124/88/ID was not published in the gazette, it could not be treated as a notification under the Act post-amendment. The Tribunal, however, held that the omission of the Explanation in the final amendment indicated that the definition of "notification" would have prospective operation only and would not affect the validity of G.O. Ms. No. 124/88/ID retrospectively. 3. Effect of S.R.O. No. 1091/99: S.R.O. No. 1091/99, issued on December 31, 1999, purported to supersede all earlier notifications under section 10 of the Act, except one specific notification. The State contended that this effectively nullified G.O. Ms. No. 124/88/ID. The Tribunal, however, found that since G.O. Ms. No. 124/88/ID was not specifically mentioned in S.R.O. No. 1091/99, it continued to hold the field. The High Court, however, concluded that S.R.O. No. 1091/99 did supersede G.O. Ms. No. 124/88/ID, rendering it ineffective from January 1, 2000. 4. Applicability to New Industrial Units Only: The State argued that G.O. Ms. No. 124/88/ID was intended only for new industrial units established after August 31, 1988. The Tribunal did not find it necessary to address this issue in detail, as the specific cases involved both new and existing units. The High Court, however, noted that in the cases of new industrial units set up after the issuance of G.O. Ms. No. 124/88/ID, the assessees were entitled to the concessional rate until January 1, 2000. Conclusion: 1. S.R.O. No. 1091/99 Supersedes G.O. Ms. No. 124/88/ID: The High Court held that S.R.O. No. 1091/99 effectively superseded G.O. Ms. No. 124/88/ID, ceasing its applicability from January 1, 2000. 2. Prospective Operation of Definition of "Notification": The definition of "notification" inserted in 1998 has prospective operation, and G.O. Ms. No. 124/88/ID continues to be valid as a notification under section 10 until superseded. 3. Entitlement to Concessional Rate Until January 1, 2000: Assessees are entitled to the concessional rate under G.O. Ms. No. 124/88/ID until January 1, 2000. 4. Specific Case Outcomes: The High Court allowed the State's revisions in STR Nos. 55/2011, 57/2011, and 63/2011, restoring the appellate authority's order. In STR No. 72/2012, the revision was dismissed as the assessment year was 1998-99. In STR No. 75/2012, the Tribunal's order was modified, granting the benefit of the concessional rate until January 1, 2000, and directing the assessing officer to pass fresh orders accordingly. This comprehensive analysis ensures that all relevant legal terminologies and significant phrases from the original text are preserved while providing a detailed understanding of the judgment.
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