9911796707
TMI Blog2003 (10) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh MT of cement. There was acute power shortage in Karnataka leading to frequent stalling of production. With the object to accelerate industrial development in Karnataka and take the State to a prominent position in the industrial map of this country, a new industrial policy was introduced and it offered a package of incentives and concessions including exemption from payment of sales tax or deferment of the same according to eligibility and entitlement of the applicant. A State Level Committee was constituted to determine the eligibility of each applicant. The Industrial Policy is filed at annexure A. 1.2. Annexure B was issued by the respondent to give effect to the Industrial Policy by the Government. On October 11, 1995 annexure B was modified granting sales tax exemption to an industrial unit undertaking investment in expansion/modernisation thereby limiting it to the additional capacity created by it and of such investment subject to specified ceilings. 1.3. Petitioner according to petition averments, attracted by the concession granted by the State Government decided to augment and increase the captive power plant capacity for the purpose of better utilisation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als were filed in W.As. No. 108-112 of 1997 (Associated Cement Ltd. v. Government of Karnataka) against the order passed by the learned single Judge. Petitioner states in the body of the petition that there were similarly placed companies who had been issued with eligibility certificates but were being denied sales tax exemption. Those companies also filed writ petitions in this Court. The matter was thereafter taken by way of appeal by those petitioners in those cases. A division Bench of this Court in a judgment reported in [2000] 117 STC 244 (Wipro's case) ruled that the sales tax authorities have no competence either to question the correctness of the eligibility certificate issued by the Director of Industries and Commerce or authorised nominee nor it is permissible to take a view contrary to the one taken by the certifying authorities in respect of the factual aspects. Following the said judgment, a division Bench of this Court in W.A. Nos. 108-112 of 1997 (Associated Cement Company v. Government of Karnataka) filed by the petitioner set aside the order of the learned single Judge in WP Nos. 29825-29829 of 1996 (Associated Cement Ltd. v. State of Karnataka) filed by the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action. They have also filed annexure R1 in support of their contention. During the pendency of the proceedings, the respondents have chosen to further amend the certificate on January 24, 2003. The said certificate is also filed at annexure A. An application was filed seeking permission of the court to amend the prayers. The same is allowed. 3. Petitioner is represented by Sri. T. Andhyarujana, learned Senior Counsel. He elaborately argued before me to contend that injustice is meted out to his client. Learned counsel took me through the factual position to contend that certificate issued on an earlier occasion has become final and binding on the department. He refers to me the operative portion of the division Bench judgment in the petitioner's case to contend that liberty was reserved only to rectify the certificate in case of any factual error. According to learned counsel, there are no factual errors available on record and that therefore according to him the amended certificate runs counter to the direction issued by this Court. Petitioner also complains that the decision with regard to capacity is contrary to the policy of the State Government itself. Their further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , eligible for sales tax concessions. This is applicable to all units in Zone-II and III and specified categories in Zone-I. Sales tax and other incentives for existing units setting up captive generation sets would be limited to investment made on such generation set. In terms of G.O. No. DE 97: PPC 92 dated June 8, 1992 package of incentives to provide entrepreneurs who set up new industrial units in the State shall also be extended to the private entrepreneurs who set up power project, treating them as new industrial unit for the purpose of extension of these incentives. " 5.1 Clause (II) of the order of the Government provides for sanction of the incentive and concession subject to certain conditions. Clause (II)(a) provides for creation of maximum possible additional employment opportunities and provide minimum 80 per cent of employment to local people. The incentives and concessions according to the order is applicable only to all new and additional investments made on or before issue of this Government order. It further says that these incentives and concessions shall also be available for investments made for expansion, diversification and modernisation, but limited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment can only correct the factual error on the face of the record after notice and hearing. In the light of this order, division Bench of this Court in W.A. Nos. 108-112 of 1997 (Associated Cement Ltd. v. Government of Karnataka) filed by the petitioners set aside the order of the learned single Judge and the assessment orders and consequential demands and in the order liberty was reserved to the respondent to correct any factual error either on the face of the record or otherwise, after notice and after hearing the petitioner. 5.2. After division Bench judgment, a notice dated February 11/18, 1999 was issued to the petitioner seeking insertion in the original certificate. They wanted to amend the certificate by inserting clause 4(a) readings as under: "4(a). The tax exemption (both under the KST Act, 1957 and the CST Act, 1956) shall be limited to quantum of tax payable on additional production created by the unit for a period of five years from April 10, 1995." The exemption was referable to additional production created, i.e., the capacity. The amended certificate made substantial changes, the initial clause (4) was deleted and clause 4(a) was introduced. Thereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be covered by a certificate required to be issued and produced before him as per the procedure laid down under the notification including the amount of investment which is certified to be eligible for the said purpose. 22.. It is also necessary to be clarified that if the assessing officer discovers any factual error either apparent on the face of the record or even otherwise, then, he can request the concerned officers of the Industries Department to rectify the certificate after hearing the industrial unit concerned. We also find it advisable to observe that if the concerned officer does not take prompt or desired action in the matter, then the Commissioner of Commercial Taxes, at his level, can refer the matter to the State Level Committee whose decision has been given a finality under clause (k) of the Government order reproduced above." and thereafter has passed the following order: "10. Appeal is accepted and the order of the single Judge is set aside. Writ petition is allowed. It is held that the Sales Tax Officer is bound by the certificate issued by the Industries Department under the new industrial policy. The assessment framed by the assessing authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued. It is very necessary to quote the original certificate issued by the authorities. "4. The unit is located at Zone-II as per Government Order No. CI 140 SPC 93, Bangalore dated July 12, 1993 and eligible for 80 per cent sales tax exemption, i.e., both KST and CST on sale of finished goods for a period of 5 years from April 10, 1995 under expansion programme, i.e., the date of commencement of commercial production as evidenced by the unit letter dated June 12, 1993, and limited to Rs. 30.40 crores (rupees thirty crores and forty lakhs only) being 80 per cent of the accepted investment of Rs. 38.00 crores made on fixed assets under expansion programme." 6.2. Instead of the above paragraph 4, the following new paragraph 4 and 4(a) was added. "4.(i) The unit located at Zone II as per Government order No. CI 140 SPC 93 Bangalore dated July 12, 1993; Here italicised. (ii) The unit is eligible for exemption of KST and CST to the extent of Rs. 30.40 Crores (80 per cent of the investment of Rs. 38.00 crores made on fixed assets in installing the power generation set) on the sale of finished goods for a period of 5 years from April 10, 1995; The amended paragraph reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the sales tax exemption only to the extent of the additional capacity obtained from the investment made in establishing the captive power plant. The said investment would amount to expansion of the unit and therefore the omission of mention of this aspect in the certificate dated January 16, 1996 is only a mistake of fact and is not beyond rectification. Thus the proposed notice dated February 11/18, 1999 is well within the powers authorised to be exercised by the authority concerned as it amounts to only rectification of mistakes. The three different situations made out of clause (3.1) of annexure B to the Industrial Policy, 1993-98 are not correct since the clause has to be read in totality and not in piecemeal. The scheme envisaged in the said clause (3.1) is that the investment in captive generation set (for entitlement of the sales tax exemption) should be either as a part of the investment of the new industry or that of expansion since the words employed in the said clause are "and considered as part of original cost". Only upon this criteria being fulfilled, then the extent of the availability of the sales tax and other concessions is set out in the second part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not brought out. Further considering for a moment the facts in that case are similar to that of the present case, it is open to the authorities concerned to cause rectification of the mistaken stand. This being so, the support sought to be drawn by the company in this regard is of no avail. The argument that the company cannot be made to pay the demand with retrospective effect with the proposed action of the withdrawal of the certificate, as it had not collected tax is of no avail. This is for the reason that the company was not made average about the liability quite in time by the sales tax authorities in their proposal of provisional assessments during the relevant period. The sales tax authorities had issued notice holding that the certificate issued by the Director of Industries is not in conformity with the Industrial Policy G.O. dated July 12, 1993 and the consequential FD notification to this G.O. bearing No. FD/171 CSL 93(I) dated August 28, 1993 and FD 1 CSL 95(1) dated October 11, 1995. The challenge made in W.P. No. 29825-29829 of 1996 (Associated Cement Company v. State of Karnataka) of this action of the sales tax authorities did not find favour with the honou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Industries could only be sorted out by approaching the said authority and it is not open to the sales tax authority to reject the certificate. In this judgment it is held that: 'Thereafter it shall be open to the concerned officers of the industries department to either reaffirm its earlier certificate or to withdraw/modify the same in accordance with law. Till the order is withdrawn or modified, the Sales Tax Officer remains bound to accept the certificate.' The finding given by the honourable single Judge in the order dated November 29, 1996 as to the extent of applicability envisaged in the G.O. dated July 12, 1993 in that the sales tax exemption is available only to the additional capacity created out of the investment expansion/diversification/modernisation made by the unit establishing the captive generation set is found not set aside in the judgment dated September 2, 1998 of the division Bench in the Writ Appeal Nos. 108-112 of 1997. In view of this, the finding of the honourable single Judge is of utmost bearing on the issue and therefore the proposal to withdraw the certificate is in accordance and within the scope of the G.O. dated July 12, 1993 and therefore it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is unsustainable in law. 10.3 It is also interesting to notice that the committee has relied on the judgment of this Court in W.P. No. 7112 of 1998. In the said judgment, this Court has noticed that if the investment has already been made, prior to coming into force of the notification dated October 11, 1995, in terms of the notification dated August 28, 1993 the benefit of exemption cannot be denied giving effect to the notification dated October 11, 1995 retrospectively. In the case on hand, admittedly, investment has been made by the petitioner prior to October 11, 1995. After noticing the same, the respondents deny the benefits following the notification dated October 11, 1995. This again is a legal error committed by the respondent. On this ground also this Court has no option but to set aside the amended certificate. The amendment certificate in my view is factually and legally unsustainable in the light of division Bench judgment on the facts of this case. There are no factual errors shown to me in terms of the division Bench judgment. Looking from any angle, I am of the view that this Court has to come to the aid of the petitioner in the light of the division Bench ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
