2024 (11) TMI 282 - HC - VAT / Sales Tax

Levy of Entry tax - benefit of the exemption notification dated 31.03.2000 - applicability of notification dated 18.12.2010 - notification dated 31.03.2000 was superseded by the notification dated 18.12.2010 or not - HELD THAT - Under Section 11A of the KTEG Act, 1979, the State Government is entitled to exempt specified class of persons or Class of dealers or Goods or Class of goods or All or any goods or class of goods from the tax payable under the KTEG Act, 1979. A perusal of the notification dated 31.03.2000 shows that exemption was granted to dealers with effect from 01.04.2000 from payment of tax on all kinds of Wind Mills Parts and Accessories thereof , brought into a local area for consumption, use or sale therein. A perusal of the supply contract between the petitioner and Gamesa shows that the price quoted by Gamesa included entry tax, if any, payable. There is nothing placed on record to establish that either the petitioner or Gamesa were registered as dealer under the provisions of the Act, 1979 when the supply contract was entered between the petitioner and Gamesa - the petitioner was not entitled to the benefit of the notification dated 31.03.2000 and claim exemption. This Court by Order dated 03-07-2024 called upon the petitioner to place on record the certificate issued by the Department of Energy, Government of Karnataka, certifying that the petitioner is a renewable energy project, its date of commencement, its date of commercial generation and its eligibility for exemption from tax. Unfortunately, the petitioner has failed to produce any of the above documents. A perusal of the clauses of the supply contract establish beyond doubt that the petitioner and Gamesa were consensus-ad-idem over the liability of payment of entry tax, in as much as they agreed that the cost of WTGs included the entry tax, if any. The petitioner has also claimed the benefit of the notification dated 18.12.2010, when it filed its reply to the notice issued by the authorities under the KVAT Act, 2003. Therefore, the petitioner cannot now contend that it was entitled to claim the benefit of notification dated 31.03.2000 and claim total exemption from payment of entry tax. Having regard to the Renewable Energy Project of State Government and the purpose of granting exemption from payment of entry tax, the petitioner is granted three months time from the date of receipt of a copy of this order, to comply with the prescribed procedure to claim the exemption. If the petitioner fails to avail the opportunity, the respondents are at liberty to proceed to recover the tax and interest payable by the petitioner in accordance with law. This petition lacks merit and is dismissed.

Summary

Issues Involved:

1. Whether the petitioner was entitled to claim the benefit of the exemption notification dated 31.03.2000 or whether the notification dated 18.12.2010 was applicable to the petitioner.
2. Whether the notification dated 31.03.2000 was superseded by the notification dated 18.12.2010.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption under Notification Dated 31.03.2000:

The petitioner contended that the notification dated 31.03.2000 specifically exempted "all kinds of wind mills and parts and accessories thereof" from entry tax, which should apply to its wind energy project. The petitioner argued that this specific exemption should prevail over the general exemption provided by the notification dated 18.12.2010, which covered all renewable energy projects. The petitioner relied on the judgment of the Supreme Court in Santhosh Maize and Industries Limited Vs. State of Tamil Nadu, which emphasized that specific provisions prevail over general ones. However, the court noted that the petitioner failed to produce the necessary exemption certificate from the Department of Energy, as required by the notification dated 18.12.2010, which was applicable to renewable energy projects established under the Karnataka Renewable Energy Policy 2009-14. The court concluded that the petitioner was not entitled to the benefit of the notification dated 31.03.2000 as it did not fulfill the procedural requirements under the notification dated 18.12.2010.

2. Supersession of Notification Dated 31.03.2000 by Notification Dated 18.12.2010:

The respondent argued that the notification dated 18.12.2010, being later and comprehensive, applied to all renewable energy projects, including wind energy, and thus superseded the earlier notification of 31.03.2000. The court agreed with this interpretation, noting that the broader scope of the 2010 notification covered entrepreneurs involved in setting up renewable energy projects, which included the petitioner's wind energy project. The court found that the petitioner had acknowledged the applicability of the 2010 notification in its initial responses to the tax authorities. Furthermore, the court emphasized that the petitioner had entered into a contract with Gamesa, which included provisions for the payment of entry tax, indicating an understanding that the 2010 notification was applicable. Consequently, the court held that the notification dated 31.03.2000 was not applicable to the petitioner, and the notification dated 18.12.2010 governed the tax exemption eligibility.

Conclusion:

The court dismissed the petition, concluding that the petitioner was not entitled to the benefits of the exemption notification dated 31.03.2000 and was subject to the conditions of the notification dated 18.12.2010. The court granted the petitioner three months to comply with the prescribed procedures to claim the exemption, failing which the respondents could proceed to recover the tax and interest payable.