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TMI Blog2005 (9) TMI 604X X X X Extracts X X X X X X X X Extracts X X X X ..... cise of its powers under section 8A of the Act dated September 23, 1993, is in any way at variance with the industrial policy decision of the State Government for the period 1993-98? We do not intend to dwell in detail the fact-situation in the present cases. Suffice to observe that the petitioners are dealers registered under the provisions of the Karnataka Sales Tax Act and are engaged in the manufacture and sale of animal feeds. They are also registered as new industrial units (small-scale sector) and according to them, they are eligible for tax exemption both under the Karnataka Sales Tax Act, 1957 ( the KST Act , for short) and Central Sales Tax Act, 1956 ( the CST Act , for short), in terms of Government Order No. CI 140 SPC 93, dated July 12, 1993 up to 100 per cent of its investment in fixed assets for a period of six years from the date of commencement of commercial production. The petitioners as part of their manufacturing activity, effected purchase of de-oiled rice bran and oil cake from unregistered dealers and have used the same in the manufacture of animal feeds. In the annual returns filed, for the assessment period April 1, 1999 to March 31, 2000, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and concessions for the years 1993-98. For the purpose of these cases, we need to refer to the clauses, which provide for sales tax concessions and the clause which provides for requirement of issuance of separate guidelines for administration of these incentives and concessions by concerned departments. Clause 5.0 of the industrial policy provides for sales tax concessions. The same reads as under: 5.0 Sales tax concessions Industrial investments in the tiny/SSI/medium and large scale sectors would be provided with the option of either sales tax exemption or sales tax deferral (KST/CST). The option is allowed one time only, at the initial stage of availing the concession. The suggested scale and period of concessions are indicated below: SALES TAX EXEMPTION/DEFERRAL Zone Tiny and small-scale industries Medium and large scale industries No. of years Ceiling (Rs.) No. of years Ceiling (Rs.) I. Developed area (only the specified categories as in appendix II) 4(6) 100% value of fixed ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Keshava Murthy, learned counsel appearing for the petitioners in these writ petitions, would urge before us, that the expression sales tax exempted or sales tax deferral would include all the taxes payable under the provisions of the KST Act and the CST Act. That only means, according to the learned counsel, it includes purchase tax also which the petitioners' industries are primarily concerned with, in these writ petitions. In support of that submission, the learned counsel invites our notice to rule 20C of the Karnataka Sales Tax Rules, 1957, which provides for the procedure and conditions for granting deferred payment of tax or exemption of tax for new industry. The sum and substance of the contentions canvassed by the learned counsel is, that the sales tax exemption or sales tax deferral would encompass the exemption from levy of purchase tax or purchase tax deferral under the provisions of the KST/CST Act. Therefore according to the learned counsel, the notification which restricts the exemption under the Karnataka Sales Tax Act only in respect of goods manufactured and sold by new industrial units is in variance with the new industrial policy and therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion issued by the State Government is in any way contrary or in variance with the thinking of the policy-makers while issuing the new industrial policy? If our answer is yes , then necessarily the notification issued by the State Government requires to be struck down, for the reason that the executive cannot deviate from the policy of the State Government, which has the approval of the cabinet. The law on this point is clear. In fact, the Supreme Court in Suprabhat Steel Ltd.'s case [1999] 112 STC 258 has concluded that, the notification issued by the State Government in the Finance Department is to carry out the purpose, the objectives and the policy decisions taken in the industrial policy itself. Any notification issued by the State Government in exercise of its powers, if it is found to be repugnant to the industrial policy declared by the State Government, then the notification must be held to be bad to that extent. In Suprabhat Steel Ltd.'s case [1999] 112 STC 258, the apex court has observed: The issuance of a notification by the State Government in exercise of the powers under section 7 of the Bihar Finance Act, 1981, entitles industrial units to avail of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of raw material was concerned, which was provided in clause 10.4, old units, whose investment on plant and machinery did not exceed Rs. 15 crores on April 1, 1993, even though they had started production prior to April 1, 1993, would be entitled to the facility for a period of seven years; and (see para 6) (ii) that it was not open to the State Government to issue a notification under section 7 of the Bihar Finance Act, 1981, overriding the incentive policy itself. The expression 'such conditions and restrictions as it may impose' in section 7(3) did not authorise the State Government to negate the incentives and benefits which any industrial unit would be otherwise entitled to under the general Policy Resolution itself. To appreciate the contentions canvassed, we need to notice some of the expressions that find a place in the Act itself. The Karnataka Sales Tax Act provides for levy and collection of tax in the nature of sales tax, purchase tax, turnover tax, etc. In the dictionary clause, namely, under section 2(1)(u) of the Act, the expression tax is defined to mean, tax leviable under the provisions of the Act. The Act provides for different chargi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Dass Gopal Krishnan v. State of Punjab [1967] 20 STC 430, the transaction, which the sales tax laws are concerned with, is a transfer of property in goods for price, inter vivos, both in the case of sale as well as purchase. In the Government Order, what is provided to the new industrial units, is an option to claim sales tax exemption or deferment of sales tax both under the KST and CST Acts. In the field of taxation, it is recognised that the power to classify the objects or persons to be taxed or exempted from levy is with the Legislature. It also enjoys the power to select persons or transactions. A law of the State, could therefore, levy tax both at the sale point and at the purchase point. Under the Government Order, the policy of the Government as spelt out is that a tiny and small-scale industries and medium and large scale industries may exercise their option either for sales tax exemption or sales tax deferment for number of years prescribed in the Government Order itself. In the context in which these expressions are used, they only mean sales tax holiday or exemption from payment of sales tax for number of years specified, depending on where the tiny or small-scale ..... 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