TaxTMI 
TaxTMI 
1992 (7) TMI 313
X X X X Extracts X X X X
X X X X Extracts X X X X
....r as they authorise the refund of sales tax on raw materials to new industries and all other Government Orders previously issued on the subject and in exercise of the powers conferred by section 8A of the Karnataka Sales Tax Act, 1957 (Karnataka Act No. 25 of 1957), the Government of Karnataka, having considered that it is necessary in the public interest so to do, hereby make a reduction of fifty per cent, with effect from 1st November, 1981, in the rate of tax or taxes payable under the said Act, on the turnover of goods manufactured and sold by all new industrial units as defined hereafter, for a period of five years from the respective date of commencement of their commercial production, subject to the following restrictions and conditions,- (i) the total quantum of sales tax concession available to a new industrial unit during each accounting year within the aforesaid period of five years by way of reduction in the rate of tax or taxes leviable on the finished products of such unit, under this notification as also under Notification No. FD 164 CSO 79 (II) dated 16th October, 1981, granting similar concessions under the Central Sales Tax Act, 1956, shall be restricted to ten....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ays by which the State Government could have extended the same. Nothing more need to be added in this context." The explanation of the assessees were not accepted by the several assessing authorities resulting in the levy of penalty on each of them. Before the appellate authority it was contended on behalf of the assessees that there was no contravention of section 18 to attract section 18A, because the assessees have not collected any tax in excess of the tax at the rate specified under section 5 and if at all the collection of tax was at the rate in excess of the rate envisaged by the aforesaid notification and that there is a distinction between the tax specified under section 5 and the tax envisaged by the notification issued under section 8A. In each of the case the assessees concerned made an offer that the amount collected in excess of the tax envisaged by the aforesaid notification would be refunded to the concerned customers and therefore the penalty provision under section 18A was not to be attracted. However, the appeals were rejected by the various appellate authorities. The assessees were successful before the Karnataka Appellate Tribunal. The Appellate Tribunal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... at comparatively cheaper rate as compared to others. Therefore, both the manufacturer and consumer gain, one by concession of non-levy and other by non-payment. Such provisions in an Act or notification or orders issued by the Government are neither illegal nor against public policy." Thereafter there is an observation that no law can be made to refund tax to a manufacturer realised under a statute. But that was in the context of the doctrine of promissory estoppel invoked by the individual manufacturer. The observation of the Supreme Court referred above clearly brings out the purpose behind a tax concession granted to a newly established industrial unit. By the tax concession both the manufacturer and the consumer gain, one by concession of non-levy and the other by nonpayment of tax. The object of the concession is to confer a benefit not only on the manufacturer but also on the consumer. The manufacturer is able to compete with the other established units because he could charge a lower rate of tax and to that extent the price charged by him to the goods manufactured by him will be lower when compared to the price that will be charged by the established industrial units. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... [1992] 87 STC 349 (Kar). The two factors will have to be considered at this stage: (i) In all these cases, the assessees were led to believe that they were entitled to retain the excess tax collected by them because the notification was meant to be exclusively for their benefit and not for the benefit of the consumers; and (ii) all the assessees have undertaken to make a serious attempt to refund the excess collection to their respective customers and thereby have exhibited a conduct not to retain the amount collected and therefore there is no "collection" of the tax in contravention of section 18 read with section 18A of the Act. In view of the above, we are of the view, that the conclusion reached by the Appellate Tribunal will have to be upheld. All the revision petitions are consequently dismissed. Petitions dismissed. Appendix [The judgment of the Division Bench of the Karnataka High Court consisting of K. JAGANNATHA SHETTY, AG. C.J., and N.D. VENKATESH, J., in Arpee Electrical Pvt. Ltd. v. Finance Secretary and others (W.P. No. 15252 of 1983 decided on 9th June, 1986) is printed below: ] ARPEE ELECTRICAL PVT. LTD. FINANCE SECRETARY N.D. VENKATESH, J.-Thi....