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TMI Blog2008 (6) TMI 555X X X X Extracts X X X X X X X X Extracts X X X X ..... nt exemption notification issued under section 8A of the Karnataka Sales Tax Act, 1957 (for short, "the KST Act") dated June 21, 1991 and being covered by entry at Sl. No. 11 which reads as under: NOTIFICATION No. FD 239 CSL 90(I), Bangalore, dated June 19, 1991 S.O. 1371, Karnataka Gazette, dated June 21, 1991 In exercise of the powers conferred by sub-section (1) of section 8A of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957), the Government of Karnataka hereby exempts with immediate effect the tax payable under the said Act, in respect of goods manufactured and sold by new industrial units mentioned in column (2) of the table below located in the zones specified in column (3) to the extent indicated in column (4) and during the period mentioned in column (5) thereof, namely:- Table Sl. No. Type of industry Location of the industry Extent of sales tax exemption Period of exemption 1 2 3 4 5 1 Tiny/small-scale/ medium and large-scale industrial units Situated in zone-II specified in annexure-I to Government Order No. CI/138/SPC/90 dated September 27, 1990 100 per cent tax exemption without any monetary limit Three years from the date of commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing concessions under this notification before September 30, 1993. (v) in procedure,- (a) in clause (1), sub-clause (b) shall be omitted; (b) in clause (2), sub-clause (b) shall be omitted." Note: For Notification No. FD 239 CSL 90(I), dated June 19, 1991 (See Sl. No. 27). Whereby the earlier exemption notification dated June 21, 1991 (copy at annexure E) came to be varied by omitting the entry at Sl. No. 11 from the eligibility of exemption. The liability is questioned on the premise that when under the earlier notification the exemption was mentioned for an indefinite period, the State Government could not have issued a subsequent notification withdrawing the exemption with effect from the date of issue of the subsequent notification; that it virtually amounts to going back on the promise culled out in the earlier notification; that the State Government has no power to withdraw the exemption that had been granted in favour of khadi and village industrial units as defined in Khadi and Village Industries Act, 1955. In so far as challenge to recovery proceedings, particularly, the forfeiture under annexure C dated June 23, 2006 and the so-called attachment order dated Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad in law. With regard to the proclamation as noticed earlier, the argument is that the proclamation is one which is issued under the RR Act the provisions of which Act are not attracted in the present situation as an arrear of land revenue contemplated under the provisions of the KST Act is different from the recovery proceedings under the RR Act. In support of the submission that the subsequent notification purporting to vary the earlier notification is not valid, learned counsel for the petitioner would rely upon the decision of the Supreme Court in the case of MRF Ltd., Kottayam v. Assistant Commissioner (Assessment), Sales Tax reported in [2006] 148 STC 225 (SC); [2007] 1 SCJ 190. On the other hand, Smt. Niloufer Akbar, learned Additional Government Advocate appearing for the State, would defend the action and for the purpose of supporting the action of Tahsildar as under annexure C would draw the attention of the court to the provisions of section 13(3)(a) of the KST Act which read as under: "13. Payment and recovery of tax.-(3) Any tax assessed, or any other amount due under this Act from a dealer or any other person may without prejudice to any other mode of col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not bad on the premise that it is a case of a notification which is bad on the principle of violating the promise made earlier and the Government being estopped from modification or rescinding the notification on the principles of promissory estoppel. In so far as the argument relating to the legality of the subsequent notification is concerned, it entirely depends upon the language used in the notification itself and by contending that the subsequent notification only seeks to vary the earlier notification and does not purport to cancel the exemption and is therefore bad. The effect of the notification cannot be avoided whether it is couched in the language of varying, or as specifically mentioned in section 8A of the KST Act as cancelling. The effect of the notification dated August 28, 1993 is only to cancel the exemption that had been granted in favour of the khadi and village industrial units as figured at Sl. No. 11 of the earlier notification. It is the impact of the notification that is important and not merely the manner of cancellation or the word used for cancellation. It cannot be disputed that the Government while exercising the delegated power for notifying t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng power in favour of the Tahsildar to order forfeiture. An order of forfeiture is a very serious order which is in the nature of penalty and until and unless it is an express provision, there is no question of reading the power of forfeiture in favour of any authority. In fact, under the KST Act what is enabled in favour of the officials of the commercial taxes department is for recovering the arrears of tax and for such recovery, amount as notified under the KLR Act as though it is arrears of land revenue can be resorted to. A recovery is different from forfeiting the properties. Even the KST Act does not envisage any forfeiture of any of the property belonging to an assessee in default. While that in itself is sufficient to invalidate the action under annexure C even under the KLR Act, there is no power of forfeiture and particularly on a reading of the statutory provisions referred to and relied upon by learned Additional Government Advocate. In so far as the legality of the proclamation under annexure F is concerned, I do not find it is necessary to go into this aspect any further for the reason that it is only in the nature of a direction issued to the petitioner not to alie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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