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TMI Blog2017 (10) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... hases also, the petitioner was subject to certain condition not liable to pay tax. These exemptions were granted under the Gujarat Sales Tax Act. With the replacement of the State Sales Tax Act by the VAT Act w.e.f. 01.04.2006, such exemptions stood withdrawn. However, the Government issued a notification on 18.08.2016 under the VAT Act granting similar exemptions to the manufacturers certified by the Board. These exemptions were granted only to certified industries and not including the industry in which the petitioner was engaged. The petitioner and other similarly situated industries filed writ petitions before the Gujarat High Court challenging the withdrawal of the exemption benefits. The Gujarat High Court in case of Kishorekumar Prabhudas Tanna vs. State of Gujarat reported in 23 VST 298 struck down the notification rescinding sales tax exemption. It is not necessary to record in detail finer aspects of the further developments. Suffice it to note that the Commercial Tax Officer issued certificate of entitlement of the petitioner on 08.01.2010 which was later on renewed. Such renewals of certificate continued upto 16.06.2014. However, the Assistant Commissioner, Commercial T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity to defer the refund amount to be adjusted against the petitioner's future claims. 4. Learned counsel Mr Soparkar for the petitioner took us extensively through the Government scheme of remission and submitted that the purpose of granting the benefit was to support the Khadi and Village Industry by making the products more viable. The Government intended to waive tax component on sale of the specified products. The manner of distribution of such tax component between the manufacturer, purchaser or the consumer was not within the purview of the Government scheme. The petitioner showed the tax component separately only for accounting purpose and could easily have formed part of the petitioner's sale price. However, the remission scheme itself envisaged that the petitioner would issue a tax invoice. This would enable the purchaser of such goods to take tax credit on such purchases. By giving examples, counsel elaborated that irrespective of whether the amount was collected by way of tax but not deposited in the Government revenue or collected by way of higher sale price, the loss to the ex-chequer would remain the same as envisaged under the remission scheme. With respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 41 thus subject to any condition which may be imposed, it would be open for the State Government in public interest to avoid double taxation or to redress inequitable situation or for any other sufficient and reasonable cause, remit the whole or part of the tax, penalty or interest payable by any dealer or class of dealers in respect of any period with respect to any sales or purchases. 8. In exercise of powers under sub-section (1) of section 40 of the VAT Act, the State Government had issued a notification on 27.02.2009 authorizing the Commissioner to grant refund of the tax separately charged by a dealer from the certified manufacturer on purchase of specified goods. The assessee's claim for refund of the tax on purchases was covered under this notification. The Assessing Authority noted that the assessee had already been granted provisional refund to the extent of 90% of such tax and therefore while passing order of assessement allowed refund of the remaining of 10% which came to Rs. 21,33,684/-. 9. The State Government had issued notification dated 27.02.2009 in exercise of powers under section 41(1) providing for remission of the whole of the tax payable by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the said certified manufacturer would issue tax invoice or retail invoice in accordance with the provisions of the VAT Act. In essence, the Government desired to waive tax component on sale of such specified goods by the certified manufacturer dealers. The entire philosophy and intention behind such Government scheme is not difficult to appreciate. For variety of reasons, the Government wanted to encourage specified products manufactured by Khadi and Village Industries. Such reasons could be the high production cost, could be less competitive quality of product compared to smaller product manufactured by more sophisticated mechanized industries or the similar profit margins because of higher cost of the raw materials and inputs. Whatever be the reason, the Government desired that such products should not weigh the additional burden of State tax. In essence, therefore through the remission scheme, the Government desired to spare such product being loaded with the Government tax component. Once the Government decided to waive such tax, it was not important from the Government point of view whether such tax element was retained in its entirety by the manufacturer seller or whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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