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TMI Blog2016 (2) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... 05. When the subsequent notification dated 18.4.2005 (effective from 1.4.2005) issued under the KVAT Act itself provides for collection of tax, and such benefit of exemption is granted for Karnataka Value Added Tax even when the assessee collects tax, then the same cannot be denied to the same assessee under the CST Act, as admittedly, the procedure provided under the general sales tax law of the State (which presently would be KVAT Act), would be applicable for the purpose of Central Sales Tax, but the substantive provisions of the CST Act were to be followed. The present is a case where the benefit has been for encouraging new industries. It is settled law that a beneficial legislation or notification, has to be liberally interpreted. - The law is thus clear that once an assessee is found entitled to grant of exemption, the procedure for the same is to be construed liberally in favour of, and for the benefit of the assessee. In the present case, the petitioner is admittedly eligible for grant of exemption. As such, the petitioner cannot be denied the benefit on technical grounds. - Decided in favor of assessee. - STRPs 54/2014, 279-324 / 2014 - - - Dated:- 5-10-2015 - MR. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... KST Act. For continuing the exemption of tax to new industrial units, such as the Unit of the petitioner, two fresh notifications, both dated 18.4.2005, were issued - one under the KVAT Act and the other under CST Act. By the notification issued under the KVAT Act, the net tax payable was to be paid to the State Government and thereafter refunded to the Unit. From the same, it is clear that the output tax had to be first collected by the assessee and after deducting the input tax paid by the assessee, the net tax was to be deposited by the assessee with the Government, which was to be refunded. This would clearly mean that the provision in the earlier notification dated 21.8.1997 providing for ineligibility of a Unit from exemption in case tax was collected by it, would not be applicable after the issuance of the notifications dated 18.4.2005. By the other notification of the same date i.e., 18.4.2005, issued under the CST Act, with regard to grant of exemption, there was no condition relating to payment or collection of tax by the assessee, after the coming into force of the KVAT Act in place of the KST Act with effect from 1.4.2005, but it was specified that the exemption gra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it, was forfeited. The petitioner assessee, thereafter, filed appeals against the orders requiring it to deposit the refunded tax amount, as well as for non-refund of the net tax which the assessee claimed was payable to it. By a common order dated 28.1.2012, the Assistant Commissioner of Commercial Taxes (Appeals), dismissed the appeals filed by the assessee. Aggrieved by the same, petitioner-assessee filed second appeals before the Tribunal, which have also been dismissed by order dated 13.8.2013. Challenging the said orders, these revision petitions have been filed. We have heard Sri K P Kumar, learned Senior counsel appearing with Sri V S Arbatti, learned counsel for petitioner, as well as Sri K M Shivayogiswamy, learned Government Advocate appearing for the respondent, and perused the record. Although these petitions were admitted on two questions of law, but learned counsel for both the parties have stated that the only question required to be answered in these petitions, would be the following: Whether the Tribunal below is justified in coming to a conclusion that petitioner is not entitled to collect CST and consequently not entitled to the tax refund mechanis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka Value Added Tax as well as Central Sales Tax. Not only the assessee petitioner understood that the said procedure had to be followed, but it is contended that even the Department accepted the returns of the petitioner assessee for the tax period 1.4.2005 to 31.3.2007 and had allowed refund as claimed under the said procedure, both under the KVAT Act as well as CST Act. Learned counsel has thus submitted that the denial of refund of Central Sales Tax after 1.4.2005, merely on the ground that the Unit would become ineligible in case it had collected tax, and solely on the ground that such was the condition in the notification dated 21.8.1997, is wholly unjustified as the procedure for grant of exemption had undergone a change after the issuance of notifications dated 18.4.2005, both for Karnataka Value Added Tax as well as Central Sales Tax. Per contra, Sri K M Shivayogiswamy, learned counsel for respondent has submitted that the condition laid down in the notification of 1997 for denial of exemption, or the Unit becoming ineligible for exemption, if it collected tax, was to continue even after 1.4.2005, as exemption itself contemplates that there would be no collection or paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957). (2) The tax exemption extended in this notification shall be limited to the un-availed portion of period and extent of tax exemption extended in the relevant notification and any Government Order and also subject to the overall tax concession originally extended. (3) The industrial unit shall charge and collect the tax applicable under the said Act, on the sale of goods manufactured by it, and pay the net tax payable along with the return prescribed under the said Act to the jurisdictional authority. (4) The industrial unit shall be refunded, such net tax paid within thirty five days after the end of the month to which the return relates, if it is furnished within the time specified under Section 35 of the said Act or within fifteen days from the date of filing of the return, if it is filed after the time specified, in the manner prescribed under the said Act by the jurisdictional authority and interest shall be paid for any delay in the refund, as specified under the said Act. 5) ....... (6) ...... (7) ...... (8) ....... (9) ....... (10) ....... (11) ....... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation to any registered dealer means the tax collected or payable under this Act on the sale to him of any goods for use in the course of his business, and includes the tax on the sale of goods to his agent who purchases such goods on his behalf subject to the manner as may be prescribed to claim input tax in such cases. (3) Subject to input tax restriction specified in Sections 11,12,14, 17, 18 and 19, the net tax payable by a registered dealer in respect of each tax period shall be the amount of output tax payable by him in that period less the input tax deductible by him as may be prescribed in that period and relatable to goods purchased during the period immediately preceding five tax periods of such tax period, if input tax of such goods is not claimed in any of such five preceding tax periods and shall be accounted for in accordance with the provisions of this Act. S:20 : Deduction of input tax on exports and inter- State sales and to special economic zone units and developers (1) Tax paid under this Act by any dealer on purchase of inputs in respect of - (a) any goods sold in the course of export out of the territory of India, or (b) any goods ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r it was provided that the tax would neither be collected nor paid by the assessee. After 1.4.2005, a different procedure was provided in the notification dated 18.4.2005 issued under the KVAT Act, which was to be applicable for grant of exemption under the KVAT Act, as well as the CST Act. Earlier also, the procedure provided under the notification issued under the KST Act, was applicable for Central Sales Tax. It is true that in the notification dated 21.8.1997 issued under the KST Act, there was a specific condition that if the Unit (exercising the option for tax exemption) collects any tax, it shall become ineligible for tax exemption. But the same was applicable only up to 1.4.2005. If such condition was to continue after 1.4.2005, then the procedure for grant of exemption, which was provided in the notification dated 18.4.2005 under the KVAT Act, which was that the output tax is to be collected and input tax is to be deducted, and net tax has to be paid, then only the net tax paid would be refunded, would clearly mean that after 1.4.2005, the condition of ineligibility of the unit if it collects tax, had been done away with. The notification providing for such ineligibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. In fact, an exemption provision is like an exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden of progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of an exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. The law is thus clear that once an assessee is found entitled to grant of exemption, the procedure for the same is to be construed liberally in favour of, and fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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