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TMI Blog2004 (9) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... n 19 of the Act by issuing notices dated October 30, 2000 (exhibits P3 and P4). Petitioner filed objections (exhibit P5). The assessing authority passed reassessment orders dated November 16, 2000 and November 6, 2000 (exhibits P6 and P7 respectively) in which the exemption already granted to the petitioner's unit was taken away. Petitioner had challenged exhibits P6 and P7 orders in this writ petition. 2.. Shri C.K. Thanu Pillai, learned counsel appearing for the petitioner, submits that the petitioner's unit is entitled to get exemption from payment of sales tax on its turnover by virtue of Notification S.R.O. No. 1727/1993 under Schedule V, item No. 4 and that the assessing authority has erroneously rejected the said claim. Counsel too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned in Schedule I thereto and the Government having considered it in public interest made an exemption in respect of the tax payable under the Act, inter alia, by manufacturers on their turnover of sale of goods mentioned in column No. 2 of Schedule V subject to the conditions specified in column 3 against each. Schedule V deals with the goods the turnover of sale of which is exempt under sub-clause (4) of clause 1. Item No. 4 with the conditions read as follows: Sl. No. Name of goods manufactured and sold Conditions 4. Ready-made garments, brassieres and hosiery goods (i) Manufacturer's total turnover does not exceed rupees ten lakhs in a year, provided, if during the course of the year the turnover crosses Rs. 10 lakhs limit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91 to March 31, 1995 subject to the condition that the tax already collected will be paid over to the Government and tax remitted to the Government will not be refunded. However, this condition was further amended under which exemption was available for a period of two years from April 1, 1995 to March 31, 1997 subject to the conditions mentioned above. Explanatory Note to S.R.O. No. 658/94 states that in the case of units which crossed the exemption limit of Rs. 10 lakhs during the course of the year the unit would not have collected tax on the first Rs. 10 lakhs. In such a case if tax is levied on the whole turnover, the unit will be liable to pay tax which it has not actually collected. It was further observed that this is not the intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition it would appear that the basic exemption of Rs. 10 lakhs is applicable only during the year in which the turnover crosses this limit. From this it would appear that if for any year the turnover exceeds Rs. 10 lakhs, petitioner will not get the benefit of exemption in the subsequent years even if the turnover is below Rs. 10 lakhs. It would appear from a reading of the two parts of the first condition that there is some inconsistency, for, as per from the first part if the total turnover exceeds Rs. 10 lakhs, no exemption will be granted, but the second part would say that in a case where the turnover exceeds Rs. 10 lakhs during the course of the year, exemption will be granted up to Rs. 10 lakhs and tax will be assessed for the bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no obligation to collect any sales tax. Once the turnover exceeds Rs. 10 lakhs there is an obligation on the part of the petitioner to collect tax in respect of the turnover that exceeds Rs. 10 lakhs. Here it is necessary to note that the expression "turnover" occurring in the second part of condition (i) has to be understood as the "total turnover" referred to in the first part and not the turnover as defined under the Act. As an illustration, the goods manufactured inside the State by a smallscale industrial unit sells the goods locally and by way of inter-State sale, as soon as the sales turnover of local sales as well as the interState sale reaches Rs. 10 lakhs, the petitioner has to start collection of sales tax on the further local sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it will be difficult to hold that for all the years for which exemption is provided under condition (iii) the situation obtained in the first condition can be availed. Condition (ii), as already noted clearly provides that basic exemption will be available only during the year in which the turnover crosses this limit. The contention of the counsel for the petitioner is that since condition (ii) does not provide that the basic exemption will be available during first year in which the turnover crosses this limit as provided in the Explanation to item 8 of Schedule V to Notification S.R.O. No. 1728/93 unless the word "first" is read into condition (ii) such result cannot be reached. The submission of the counsel for the petitioner appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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