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TMI Blog2007 (4) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... iving rise to these civil appeals are as follows: Peekay Re-Rolling Mills (P) Ltd., respondent herein, was registered as an industrial unit on September 6, 1991. They claim to have set up an industrial unit in the State on account of tax exemption given to industrial units from payment of sales tax for the fixed period commencing from the date of commercial production. Tax exemption was in fact granted under section 10 of the Kerala General Sales Tax Act, 1963 ("1963 Act") vide notification dated November 4, 1993. Under that notification, tax exemption was admissible to medium scale units for seven years from the commencement of commercial production. In the present case, the respondent commenced the said production on March 31, 1995. In between, on account of acute power shortage in the State, the Government issued an order, inter alia, stating that certain industries included in the negative list would not be eligible for State investment subsidy and certain other assistance. One of the items in the negative list, being item No. 7, was "power intensive units", whose total power requirement exceeded 2,500 KVA and where the cost of power exceeded 25 per cent of the cost of product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a clarification to the G.O. dated November 26/27, 1993. By the said G.O., it was clarified that tax exemption would continue to be available to all industries which were provisionally registered before December 31, 1993 and only those industries in the negative list which stood registered on or after December 31, 1993 alone would be ineligible for financial assistance/tax exemption from the Government. Therefore, in the said O. P. Nos. 32947 and 32807 of 2000 Reported as Peekay Re-Rolling Mills (P.) Ltd. v. Secretary to Government [2004] 138 STC 198 (Ker). one of the grounds taken by the respondent was that the Government as well as the Director of Industries had erred in denying tax exemption to the respondent without considering the clarificatory G.O. dated April 19, 1994. In the said writ petitions, the order passed by the Director of Industries dated October 21, 2000 holding that the respondent was not entitled to tax exemption in respect of the additional capital investments was questioned. This order was passed by the Director of Industries based on an inter departmental letter dated July 5, 2000 addressed by the Principal Secretary to the Director of Industries, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of production, cannot be read conjunctively and that they have to be read disjunctively. In other words, the learned single Judge has read the word "and" as "or". The learned single Judge also rejected the contention raised by the respondent that the respondent was entitled to exemption since its unit stood registered before December 31, 1993. This argument was rejected on the ground that under clause 3 of G.O. dated November 26/27, 1993, expansion of existing unit in the areas included in the negative list was not entitled to tax exemption unless application was made on or before December 31, 1993. According to the learned single Judge, the respondent was granted tax exemption on initial investments for the full period of seven years from March 31, 1995 to March 30, 2002. This, according to the learned single Judge, was in view of the clarificatory G.O. dated April 19, 1994. According to the learned single Judge, the respondent's unit was not in the negative list on November 26, 1993. It came under the negative list only by virtue of additional investments made by the respondent after July 1, 1995 and, therefore, it was not a case of an existing industry in the negative list ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision Bench. According to the appellants, the said clarificatory G.O. was not applicable to units which made additional investments after November 26, 1993. However, this aspect has not been examined by the division Bench. The division Bench has also not examined clause 3 of G.O. No. 169/95/ID dated November 1, 1995, which reads as follows: "3. Investments in generators shall be eligible for the purpose of tax exemption. Additional investment for balancing equipment and lines of backward or forward integration shall qualify only as additional investment for the purpose of tax exemption. Additional investment for purposes of determining tax exemption eligibility will mean those investments necessary to the running of the unit which, however, do not qualify independently as expansion/diversification/ modernisation, units shall consequently be entitled only to increase in the monetary limit for tax exemption already enjoyed without extension in the period. Tax exemption for additional investments may be given during the period the unit is enjoying its initial tax exemption or when the unit is enjoying tax exemption on account of expansion/ diversification/modernisation." The Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urb excess electricity consumption and not to curb additional investments. The underlying reason for issuance of the said G.O. was to restrict power consumption and not to restrict expansion of units in terms of additional investments. This is the basic argument advanced on behalf of the respondent in support of their contention that the word "and" in clause 7 should be read conjunctively. On the other hand, it is argued on behalf of the appellants that the word "and" in the said clause should be read as "or" since the reason for issuance of the said G.O. was to curb excess electricity consumption either by way of exceeding the prescribed ceiling of 2500 KVA or by way of additional investments (capital expenditure for additional facility). These aspects have not been considered by the division Bench though it had been considered in favour of the appellants by the learned single Judge. For the above reasons, we hold that the State Government was entitled to issue comprehensive G.O. dated November 26/27, 1993 on account of acute power shortage in the State. We further hold that the comprehensive G.O. applies across the board to all units which became power intensive units. To that e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, if the said G.O. dated November 26/27, 1993 is found to be applicable then the G.O. dated November 24, 1998 which is modification of the earlier G.O. dated November 26/27, 1993 would apply as a clarificatory G.O. We may reiterate that in our judgment in Civil Appeal Nos. 8031 of 2004 and 8032-8033 of 2004 the question of interpretation of clause 7 of G.O. dated November 26/27, 1993 has been remitted to the High Court. However, as far as retrospectivity of G.O. dated November 24, 1998 is concerned, we are of the view that the said G.O. is clarificatory. Therefore, there is no merit in the contention raised on behalf of Premium Ferro Alloys Ltd. that the said G.O. dated November 24, 1998 is prospective and not retrospective. However, the issues, which we have remitted to the division Bench in the earlier matters (Civil Appeal Nos. 8031 of 2004 and 8032-8033 of 2004), also arise in the present case. In the circumstances, we remit this case also to the division Bench. Accordingly, we request the division Bench of the High Court to tag W. A. No. 1477 of 2003 with W.A. Nos. 991, 1316 and 1561 of 2003 and decide the appeals accordingly. Subject to above, the appeal is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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