1983 (11) TMI 273

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....on issued by the Commissioner under rule 25-B(3) of the Karnataka Sales Tax Rules. The Commissioner issued the certificate to the assessee that his establishment is a cottage industry falling under item 15 of the table attached to rule 25-A. It appears, the Commercial Tax Officer (Audit) pointed out that the assessee was not entitled to the grant of exemption since he was manufacturing chappals also out of rubber and that therefore the exemption originally granted should be recalled. In pursuance to the said audit objection the Deputy Commissioner of Commercial Taxes initiated action under section 21 and proposed to revise the assessment orders and to withdraw the exemption granted earlier. He accordingly revised the orders of assessment....

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.... that the annual sales turnover thereof does not exceed rupees one lakh and the R.C. already issued continues to be valid. The audit party may be informed accordingly." But the Tribunal observed that that letter of the Commissioner cannot be considered to be an order or instruction issued under section 3A of the K.S.T. Act and on that ground it ignored that letter. 3.. Under section 8 of the Act, sale of goods specified in the Fifth Schedule, subject to the conditions and exceptions if any set out therein, is exempt from tax under the Act. The Fifth Schedule enumerates the goods that are exempted from tax under section 8. Item 28 in the Fifth Schedule refers to products of village industries which are entitled to exemption on being re....

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....essee, it was not open to the Deputy Commissioner to take action under section 21 to revise the orders of assessment and levy tax on the exempted turnover. The Tribunal also has failed to consider the legal effect of the certificate granted by the Commissioner. When the Commissioner is the authority under the Act to issue certificate of recognition for the purpose of granting exemption under the Act, it must be binding on every authority including the audit wing of the Department. Their task, in our opinion, is to unearth the suppression of turnover resulting in evasion of tax due to the State and not to differ from the view taken by the Commissioner in a matter like this. 6.. The sole ground on which the Deputy Commissioner revised the ....