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TMI Blog1998 (3) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... February 21, 1994 2,12,19,000-00 Total 2,98,48,000-00 3.. At the time of assessment for the year 1993-94 under the Karnataka Sales Tax Act, 1957 (in short the State Act ) and the Central Sales Tax Act, 1956 (in short the Central Act ), the assessee, on the strength of the said certificates issued by the competent authority of the Industries Department, claimed exemption both from the State Sales Tax Act and Central Sales Tax Act to the extent of the investment made by it in expansion of its existing industrial unit but the same was disallowed by the assessing authority to the extent of Rs. 81,60,000 and Rs. 58,54,000 total being Rs. 1,40,14,000 on the ground that the investment made to the said extent cannot be treated as made in acquiring fixed assets. Accordingly, the entitlement of exemption from sales tax was limited to Rs. 1,58,84,000 which according to the assessing authority the only available qualifying amount. 4.. The assessment orders dated April 21, 1997 passed under the Acts have been placed at annexures H and J respectively. The assessee-company challenged the said assessment orders by filing the writ petition before this Court questioning the jurisdiction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustries Department leading to wide ranging confusion in the administration of the State Act, we found it expedient to resolve the issue at the earliest and in an authoritative manner atleast to our level so that unnecessary litigation in future can be avoided. In order to resolve the issue, we, by our order dated July 22, 1997 called upon the Secretary, Department of Finance, Government of Karnataka, the Commissioner of Commercial Taxes, and the Director of Industries and Commerce to file their separate affidavit putting on record their views on the aforesaid issue which they have complied with. In the context of pleadings and the statutory provisions, we heard Sri G. Sarangan, learned senior counsel for the appellant and Sri D Sa, learned Government Advocate, appearing for the respondents. 8.. It is a matter of record that the notification dated June 21, 1991 was issued by the State Government as a follow-up action to effectuate the industrial policy of the State Government professed under Government Order No. CI/138/ SPC/90(P), Bangalore dated September 27, 1990. Clause (k) of Part XIV of the Government Order provides that: Separate guidelines for administration of these inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y/small-scale/medium/large scale industrial unit, a certificate in original issued by the Director of Industries and Commerce, or his authorised nominee certifying,- (i) that it is a unit registered as such; (ii) that investment in the unit having been made on or after 1st October, 1990 it is eligible for exemption under this notification; (iii) that date of commencement of its commercial production; and (iv) the serial number of the table above under which it is eligible for exemption; and (v) that no part of its plant and machinery at the time of commencement of its commercial production is old/used/second-hand, with the exception of imported second-hand machinery. (b) -------------------------------------------- . 12.. Under the Explanation II of the notification, an existing industrial unit, subject to fulfilment of other conditions, was entitled to avail the benefit of tax exemption to the extent of amounts spent as investment for expansion/ diversification/modernisation as certified by the Director of Industries and Commerce or his authorised nominee. Under the procedure laid down for claiming exemption, it has been made mandatory that such exemption can be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lying the law to such factual matters lies within the exclusive jurisdictional domain of the assessing officers. 16.. The Commissioner of Commercial Taxes has also highlighted that its department has come across various instances wherein the certificate issued by the Department of Industries and Commerce suffer from errors apparent on the face of the record and in such cases, the assessing officers have been constrained to take their own decisions even on the matters covered by such certificates mainly for want of relevant details in the certificates issued by the Department of Industries and Commerce. The Principal Secretary to the Government, Finance Department, has, on oath, in paras 7 and 8 of his affidavit stated that: 7. This honourable Court, by its order dated July 22, 1997, had required me to make known the stand of the State Government on the binding nature of the certificates issued by the Director of Industries for the purpose of sales tax assessments and further if not binding, why such a provision has been made which, for that very reason, would not satisfy the test of reasonableness under the Constitution of India. As no material is readily available to justif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as per clause (k) of the Government order which has been extracted above. In the case of Brooke Bond Lipton India Limited v. State of Karnataka (S.T.R.P. No. 55 of 1995, decided on November 21, 1997), wherein, Reported in [1998] 109 STC 265 (Kar). we have, in a greater detail, dealt with the scope of the notification, keeping in view the aforesaid aspects and various judicial pronouncements. There the learned Advocate-General had fairly conceded that the sales tax authorities has no competence either to question the correctness of the contents of the eligibility certificate granted by the Director of Industries and Commerce or the authorised nominee nor it is permissible on their part to take a view contrary to the one taken by the certifying authorities in respect of the factual aspects which have been left to discretion of officers of the Industries Department for being certified. 19.. In the case of Periyar and Pareekanni Rubbers Ltd. v. State of Kerala AIR 1990 SC 2192, para 9, it has been held that: Any concession made by the Government Pleader in the trial court cannot bind the Government as it is obviously always unsafe to rely on the wrong or erroneous or wanton conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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