2014 (6) TMI 1033 - HC - VAT and Sales Tax

Sales tax exemption - case of petitioner is that while issuing a fresh entitlement certificate under the provisions of the KVAT Act, no condition of the earlier entitlement certificate at Annexure-A should have been altered - HELD THAT - The entitlement certificate dated 21/03/2001 as been issued under the provisions of the KST Act following Notification dated 15/11/1996 and Government Order dated 15/03/1996. The requirement of obtaining a fresh entitlement certificate was on account of the enforcement of the KVAT Act. When the petitioner made an application in that regard, Annexures-C and D were the entitlement certificates issued - There is no dispute with regard to the period for which the petitioner is entitled to the certificate of entitlement with regard to exemption of sales tax and also the tax amounts specified therein. The respondent-authority who has issued the certificate under the provisions of the KVAT Act, was not authorized or empowered to impose any fresh condition while issuing the certificate of entitlement, contrary to the Government Order under notification as well as the earlier certificate issued under the KST Act - In that view of the matter, Annexures-C and D are quashed. A direction is issued to the respondent to re-issue a fresh certificate of entitlement in line with the earlier certificate dated 21/03/2001 - petition allowed.

Summary

Issues:
Challenge to entitlement certificates dated 19/06/2006, 24/07/2006, and endorsement dated 03/08/2013 under the Karnataka Value Added Tax Act, 2003.

Analysis:
The petitioner, engaged in the manufacture of bakery products and sweets, claimed sales tax exemption under the Karnataka Sales Tax Act, 1957. A certificate was issued in 2001 granting exemption for seven years. However, with the enactment of the Karnataka Value Added Tax Act in 2005, a new entitlement certificate was required. The petitioner applied and received certificates dated 19/06/2006 and 24/07/2006, which imposed conditions on turnover for tax exemption. The petitioner challenged these conditions as contrary to the original certificate and government orders.

Upon review, the court found that the conditions imposed on turnover in the new entitlement certificates were not in line with the original certificate issued under the Karnataka Sales Tax Act. The court noted that the authority issuing the new certificates had no power to add conditions contrary to the existing government orders. Consequently, the court quashed the certificates dated 19/06/2006 and 24/07/2006.

The court directed the respondent to issue a fresh entitlement certificate consistent with the original certificate dated 21/03/2001. Additionally, the court quashed the endorsement dated 03/08/2013. The respondent was instructed to complete this process within two months. As a result, the writ petition was allowed in favor of the petitioner.