9911796707
TMI Blog1999 (2) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... ed January 2, 1992. The petitioner submitted application to the first respondent-General Manager, District Industries Centre, Idukki, for issue of eligibility certificate for exemption on the sales of its products in terms of the Notifications, S.R.O. Nos. 968/80, 654/89, 499/90, 717/91 and 521/92. The main products manufactured by the company are stated to be chilli powder, coriander powder, turmeric powder, pepper powder and mixed curry powders. The first respondent issued eligibility certificate dated October 15, 1992 (exhibit P-1) to the effect that it is eligible for a tax exemption of a sum of Rs. 35,14,413 (rupees thirty-five lakhs, fourteen thousand four hundred and thirteen only) for the period from February 26, 1991 to February 25, 1996. The petitioner produced the same before the assessing authority-Sales Tax Officer, Adimali, who directed the petitioner to produce the same along with the proceedings of the Deputy Commissioner of Agricultural Income-tax and Sales Tax. The petitioner thereupon applied to the second respondent-Deputy Commissioner of Agricultural Income-tax and Sales Tax on October 27, 1992 for necessary orders. The second respondent thereupon issued notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for an enquiry in connection with the sales tax exemption granted as per exhibit P2. It was followed by another notice dated March 2, 1994 to which the petitioner sent a reply dated March 12, 1994. Then the second respondent issued a detailed notice dated May 9, 1994 without reference to the earlier notices. It was stated in the said notice that the second respondent granted exemption to the unit as per exhibits P2 and P3 orders finding that there was manufacture of the items sold by the petitioner, but a Full Bench of the High Court by judgment dated January 27, 1993 in Namputhiris Pickle's case [1994] 92 STC 1 (Ker); (1993) 1 KTR 327 (Ker) has taken the view that when chilli, coriander and turmeric are converted into chilli powder, corriander powder and turmeric powder they essentially and substantially remain the same commodity and hence, the element of manufacturing is not involved in the process. It is stated that the sales tax exemption granted is therefore erroneous and hence proposed to cancel the said orders. It was also stated that the matter is proposed to be placed before the District Level Committee for sales tax exemption constituted as per G.O. (P) No. 16/93/TD dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Deputy Commissioner of Sales Tax concerned and that in the light of the above S.R.O. the second respondent, after obtaining the certificate of eligibility, granted sales tax exemption for the sale of chilli powder, coriander powder, turmeric powder, etc., manufactured by it for the period from February 26, 1991 to February 25, 1996 on a sum of Rs. 35,14,413. It is further stated that after the judgment in Namputhiris Pickle Industries v. State of Kerala [1994] 92 STC 1 (Ker) [FB]; (1993) 1 KTR 327 (Ker) [FB]; 1993 KLJ (TC) 198 [FB], the position is that when chilli and coriander are powdered, it essentially and substantially remains the same commodities and that no element of manufacture is involved in the conversion of chilli into chilli powder, coriander into coriander powder and turmeric into turmeric powder. As per Notification S.R.O. No. 499/90, the exemption is given in respect of the goods manufactured by the small-scale industrial unit and unless there is manufacture, exemption will not be available. The statement also contains an averment that the firm M/s. Eastern Coffee and Curry Powder closed down the above business and started in the new banner and style M/s. Ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the decision already taken and to cancel the same, for, he has no authority under the Government Order or under the exemption notification or under any of the provisions of the Act to do so. The counsel further relied on the decision of this Court in Deputy Commissioner of Sales Tax (Law), Ernakulam v. Surya Refineries (P) Ltd. (1991) KLJ (TC) 513 and also the decision in Deputy Commissioner v. Raghavan [1987] 65 STC 105; (1987) 1 KLT 136 and submitted that once the certificate is issued by the General Manager, District Industries Centre declaring the eligibility of the unit for claiming exemption from sales tax, it is not for the Sales Tax Officer to assume the role of a statutory authority and ignore the proceedings of the General Manager. The counsel further submitted that even on the merits of the case, chilli powder, coriander powder, turmeric powder , pepper powder and mixed curry powder are different commercial commodities from that of chilli, coriander, turmeric, pepper, etc., as per the decision of this Court in Ambika Provision Stores v. State of Kerala [1987] 67 STC 170 where it has been held that when chillies are turned into chilli powder and coriander into coriande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 15, 1992. It is seen from the said eligibility certificate that the petitioner-company is the applicant, that it was having permanent registration from January 2, 1992, that it started commercial production on February 26, 1991, that the products of the unit are chilli powder, coriander powder, turmeric powder, pepper powder and mixed curry powder, that it had invested a sum of Rs. 44,85,947.64 and that it is eligible for exemption on a sum of Rs. 35,14,413 for the period from February 26, 1991 to February 25, 1996. A copy of the said certificate is sent to the second respondent also. Pursuant to the eligibility certificate issued by the first respondent, the petitioner made application dated December 20, 1992 to the second respondent for tax exemption. The second respondent, though initially proposed to reject the claim for exemption on the ground that no manufacturing activity is involved in the conversion of chilli, coriander and turmeric into chilli powder, coriander powder and turmeric powder, after due consideration of the objections filed by the petitioner granted sales tax exemption to the petitioner accepting the eligibility certificate issued by the first respondent. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Industrial Development Corporation Limited (Convener). It further provided that the applications for the purposes of tax concessions mentioned in the notification shall be submitted to the Kerala State Industrial Development Corporation, which shall act as the nodal agency in such cases. It further provided that it shall be sufficient for the Committee to issue the proceedings by not less than two members of the Committee and a decision shall be taken by the Committee within three months from the date of submission of application by any unit provided the required details are furnished along with the application. The explanation also provided that "New industrial units" shall mean large and medium undertakings set-up on or after April 1, 1989 and registered with Department of Industries and Commerce as an industrial unit, but shall not include old industrial units closed down and reopened under a new banner and style of business, after April 1, 1989. Later the Government issued S.R.O. No. 499/90 in supersession of S.R.O. No. 968/80. By the said Government order also the Government in the public interest, made an exemption in respect of the tax payable under the Act by new industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t date, but shall not include old industrial units under the small-scale industries closed down and reopened under a new banner and style of business after 1st day of April, 1990. The word "manufacture" has also been defined to mean the use of raw materials and production of goods commercially different from the raw materials used but shall not include mere packing of goods, polishing, cleaning, grading, drying, blending or mixing different varieties of the same goods, sawing, garbling, processing one form of goods into another form of same goods by mixing with chemicals or gas, fumigation or any other process applied for preserving the goods in good condition or for easy transportation. Government issued S.R.O. No. 521/92 in partial modification of S.R.O. No. 499 of 1990 and S.R.O. No. 654 of 1989 effective from September 23, 1991. As per the said notification the exemption is for a period of seven years from the date of such commercial production. Under clause (3) of the said notification the eligibility certificate for exemption to small-scale industrial units will be issued by the General Manager, District Industries Centre on application by the unit and orders of exemption t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r exemption. 11.. In the instant case, it is evident that respondents 1 and 2 have adopted the procedure provided in S.R.O. No. 521/92. Eligibility certificate, as already stated, is issued by the General Manager, District Industries Centre concerned, and the exemption order is issued by the Deputy Commissioner of Sales Tax concerned. The petitioner did not have any complaints regarding the procedure adopted by the said respondents in the matter of issuance of eligibility certificate or in the matter of the issuance of exemption order. Certainly, the petitioner cannot have any grievance since the orders were issued in favour of the petitioner. Even otherwise in matters of procedure it is well-settled that the procedure that should be followed is the one available at the time of consideration of the application. S.R.O. No. 521/92 was the one in force at the time of consideration of the application submitted by the petitioner. 12.. Now the question for consideration is as to whether the second respondent acted legally and with jurisdiction in cancelling the exemption order. This again will depend on the provisions of the notifications as well as the established principles governi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntres under the Government notifications and matter came up before this Court also in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Surya Refineries (P) Ltd. (1991) KLJ (TC) 513 and other cases where it has been held that the assessing authorities under the Act cannot sit in judgment over the said certificates. It is only to avoid such a situation that a two tier scrutiny of the claim for exemption is provided by the notification mentioned above. Viewed in the above light, it would appear that if the Deputy Commissioner, while considering the application for exemption on the basis of the eligibility certificate issued by the General Manager, District Industries Centre, finds that the General Manager had not considered the relevant clauses of the notification or the decisions bearing on the point, it is open to the said authority to bring the above fact to the notice of the General Manager and to get the matter again considered by him and get the certificate modified. It is equally possible to construe that if the Deputy Commissioner of Sales Tax, while considering the question of grant of exemption based on the eligibility certificate issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority empowered to grant exemption under the said notification, had also considered the matter with reference to the eligibility certificate issued by the General Manager and had granted exemption to the petitioner. It is an admitted position that at the time of consideration of the application for eligibility certificate the decision of this Court was to the effect that chilli powder, coriander powder, etc., are different commercial commodities from that of chilli, coriander, etc. [see Ambika Provision Stores v. State of Kerala [1987] 67 STC 170 (Ker)]. The second respondent sought to reject the claim on the basis of another decision of the division Bench of this Court in Rani Food Products case [1988] 68 STC 446. However, the second respondent, by a very detailed order, exhibit P3, ordered exemption in view of the decision in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Surya Refineries (P.) Ltd. 1991 KLJ (TC) 513 and the decision in Deputy Commissioner of Sales Tax (Law) v. Raghavan [1987] 65 STC 105 (Ker); (1987) 1 KLT 136. Another incumbent in the post of the second respondent again sought to cancel the exemption order on the basis of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue consideration, granted exemption as per exhibit P3 order. Another incumbent of the second respondent on the very same ground cannot be allowed to cancel the exemption order by issuing a second notice for the said purpose. In this case, the second respondent has in fact cancelled the exemption order on the very same grounds which were considered by his predecessor in office. Only difference is that whereas the reason stated by the then incumbent of the second respondent for rejecting the claim for exemption was a decision of a division Bench of this Court in Rani Food Products case [1988] 68 STC 446, the reason stated for cancellation of exhibit P3 exemption order is the decision of a Full Bench of this Court in Namputhiris Pickle's case [1994] 92 STC 1; (1993) 1 KTR 327; (1993) KLJ (TC) 198. It must be noted that one of the Judges constituting the Full Bench took the view that chilli and coriander converted into chilli powder and coriander powder are different commercial commodities and manufacture is involved in the said conversion. It is also relevant to note that Namputhiris Pickle's case [1994] 92 STC 1 (Ker) [FB]; (1993) 1 KTR 327 [FB]; 1993 KLJ (TC) 198 [FB] was taken up b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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