TaxTMI 
TaxTMI 
2014 (9) TMI 175
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....d, they are filed in respect of the assessment years 1998-99, 1999-2000 and 2000-01, respectively. The respondents in all these revisions are assessees under the Act. They are small-scale industrial units, registered with the Industries Department. The real question which arises for consideration in all these revisions is whether the respondent-assessees are entitled to the benefit of concessional rate of tax as vouchsafed under G.O. Ms. No. 124/88/ID dated August 31, 1988. The said order is extracted below for the sake of convenience: "The question of encouraging the rubber based industries in Kerala had been engaging the attention of Government for some time past and as rubber is an important raw material for industries, the State Government had been thinking to give further encouragement for setting up more rubber industries in the State. With this end in view, a meeting was held inviting all those concerned to discuss the ways and means of inducing more industries using rubber as raw material inside the State. The consensus arrived at the meeting was that there was need for giving some concessions and relief to the new entrepreneurs for starting rubber industries. Government....
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....sions, took the view that G.O. Ms. No. 124/88/ID dated August 31, 1988 is essentially meant for new industries. The Division Bench further held that in the aftermath of subsequent notifications, the assessees would not be entitled to claim the benefit of concessional rate of tax provided under G.O. Ms. No. 124/88/ID dated August 31, 1988. The matter was remanded to the Tribunal. Against the said judgment, the assessees carried the matter before the apex court and the apex court remanded the matter back to the Tribunal. The relevant portion of the said order is extracted below: "In the present cases, the High Court found that the Tribunal has allowed the appeals of the assessees without reference to the amendment in the Act and relevant notifications. Accordingly, the matters stood remanded by the High Court to the Tribunal. At this stage, we see no reason to interfere with the impugned orders. However, we make it clear that the Tribunal shall decide the cases de novo uninfluenced by any observation made by the High Court in the impugned orders." Later on, the petitioner filed interlocutory applications, seeking modification of the above quoted order and the apex court passed ....
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....ing all the existing notifications, except those, which are expressly mentioned. Therefore, G.O. Ms. No. 124/88/ID dated August 31, 1988 has ceased to exist. The further contention raised by the learned Government Pleader is that having regard to the insertion of definition of the word "notification" in the Act with effect from April 1, 1998, unless and until there is a notification issued as provided in the definition of the word "notification", the respondents-assessees could not possibly claim the benefit of the concessional rate of tax under G.O. Ms. No. 124/88/ID dated August 31, 1988. It is contended that the intention is very clear to the effect that it should supersede all notifications except those which are expressly saved. Per contra, the learned counsel Sri C.K. Thanu Pillai, appearing in three of the revisions, would address the following submissions before us. He would submit that the apex court has remanded the matter back to the Tribunal with certain observations. He would contend that it is not open to the State to contend that G.O. Ms. No. 124/88/ID dated August 31, 1988 is meant only for new industries. He would, in fact, contend that the Division Bench in ....
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....et decision, the benefit, which was vouchsafed under the same, by the continuance of G.O. Ms. No. 124/88/ID could not be taken away by the Taxes Department by issuing a notification under section 10 of the Act. In this context, the learned counsel would rely on the judgment of the apex court in State of Bihar v. Suprabhat Steel Ltd. [1999] 112 STC 258 (SC). He would also draw our attention to the reasoning of the Tribunal in this context. According to the Tribunal, it is not as if the grant of concessions is to be monopolized by the Taxes Department. Tax concessions can be given by the Industries Department also. G.O. Ms. No. 124/88/ID dated August 31, 1988 is issued by the Government of Kerala in the Industries Department. Subsequently, the same was continued by virtue of the Cabinet decision taken in 1992 vide G.O. Ms. No. 17/92/ID dated January 24, 1992. In such circumstances, the learned counsel would submit that even though the Appellate Tribunal has not expressly referred to the dictum laid down in Suprabhat Steel's case [1999] 112 STC 258 (SC), it is quite clear that the principle enunciated by the Supreme Court in Suprabhat Steel's case [1999] 112 STC 258 (SC) is sq....
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..... No. 1091/99 cannot have the effect of superseding G.O. Ms. No. 124/88/ID. Following is the definition of the word "notification": "(xva) 'Notification' means a notification issued by the Government, under the provisions of this Act and published in the gazette." The above-quoted definition was inserted by amending the Act with effect from April 1, 1998. In the Bill, the amendment was contemplated aided by an Explanation. The proposed clause read as follows: "(xva) 'Notification' means a notification issued by the Government in the Taxes Department under the provisions of this Act and published in the gazette." The Explanation to the said clause read as follows: "Notwithstanding anything contained in any judgment, decree or order of any court, Tribunal or other authority, a notification in existence on the April 1, 1998 which does not satisfy the requirement of this clause shall not be treated as a notification for the purposes of this Act." However, when the Bill came to be passed and was made law, the Explanation was omitted. Therefore, we are left with the definition of the word "notification" as it stands. It is admitted that G.O. Ms. No. 124/....
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....ation for the State to contend that this notification has not been issued under section 10 of the Kerala General Sales Tax Act. In the light of the decision reported above, it shall be declared that exhibit P1 notification is a notification issued under section 10 of the Act and the liability of the petitioner is only three per cent on finished rubber goods produced from factories in Kerala." In essence, the learned single Judge took the view that G.O. Ms. No. 124/88/ID is a notification issued under section 10 of the Act and the liability of the petitioner therein was to pay tax at three per cent on the finished rubber goods produced from factories in Kerala. The said judgment was affirmed in writ appeal. Still later, on September 14, 1998, a Division Bench of this court in Deputy Commissioner of Sales Tax (Law), Board of Revenue (Taxes), Ernakulam v. Cross Field Rubbers [1999] 115 STC 577 (Ker), took the following view (pages 577 and 578 in 115 STC): "2. These tax revision cases raise a common question for consideration whether under G.O. Ms. No. 124/88/ID dated August 31, 1988, concessional rate of tax at three per cent shall continue. The learned Government Pleader has no....
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....ot be treated as capable of conferring concessions legally on the respondents-assessees, after the word notification was defined. We may at once notice the submission of the learned Government Pleader when he addressed us on the alternate argument that at any rate, after the issuance of S.R.O. No. 1091/99, G.O. Ms. No. 124/88/ID must be treated as being superseded. It is here that the learned counsel for the party respondents would contend that G.O. Ms. No. 124/88/ID not being published in the gazette, cannot be treated as a notification and only a notification issued under section 10 of the Act can be superseded by S.R.O. No. 1091/99. We are of the view that the argument of the learned Government Pleader that with the insertion of the definition of the word "notification" in the Act, the benefit which was legally available under G.O. Ms. No. 124/88/ID, will cease to be available if the other conditions are satisfied, cannot be accepted. When an amendment is made to an Act, unless the words are clear or necessary implication is inevitable, a provision will have only prospective operation. In fact, the learned Government Pleader does not dispute the fact that in section 10 of the Ac....
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....ments of this court by introducing an Explanation. We have also noticed that the definition of the word "notification" also insisted that it must be issued by the Taxes Department. At any rate, as already held by us, the definition of the word "notification", would have only prospective operation and therefore, G.O. Ms. No. 124/88/ID would continue to retain its effectiveness as a notification issued under section 10 of the Act. The next contention raised by the learned Government Pleader is that at any rate, G.O. Ms. No. 124/88/ID cannot survive after the date of issuance of S.R.O. No. 1091/99. In this context, we must consider the arguments of the respondents-assessees that in S.R.O. No. 1091/99, there is no specific reference to G.O. Ms. No. 124/88/ID and therefore, G.O. Ms. No. 124/88/ ID will continue to hold the field, even after the issuance of S.R.O. No. 1091/99. Section 10 of the Act, being relevant, is extracted below: "10. Power of Government to grant exemption and reduction in rate of tax.-(1) The Government may, if they consider it necessary in the public interest, by notification in the gazette, make an exemption or reduction in rate, either prospectively or ret....
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....which is specifically referred to. Here, it is apposite to contrast the words of the aforesaid notification with the words of S.R.O. No. 1728/93. That was a notification, which was issued on the review of the notifications prevalent in 1993 and the Government issued S.R.O. No. 1728/93, providing specifically for the notifications, which were being superseded. That effect is inevitable on the following wording of the S.R.O.: "In exercise of the powers conferred by section 10 of the Kerala General Sales Tax Act, 1963 (Act 15 of 1963) and in supersession of the notifications mentioned in Schedule I, the Government of Kerala having considered it necessary in the public interest so to do hereby, 1. Make a reduction in the rate of tax payable under the said Act,- (1) On the sale or purchase, as the case may be, of goods specified in column (2) of Schedule II from the rate specified in column (3) to the rate specified in column (4) thereof, against each; (2) On the sale of goods specified in column (2) of Schedule II for the period mentioned therein from the rate specified in column (3) thereof, to the rate specified in column (4) thereof, against each; ..." In exercise ....
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....hat G.O. Ms. No. 124/88/ID was a notification issued under section 10 of the Act. At any rate, at the time when G.O. Ms. No. 124/88/ID was issued, the word "notification" was not defined in the Act. As already noted, the said definition of the word "notification" was inserted only in 1998. We have already held that it has only prospective operation. The parties were deriving the benefit under the said Government Order and therefore, once the notification is issued by the Government, intending to supersede all the notifications existing as on December 31, 1999, certainly, G.O. Ms. No. 124/88/ID will die a natural death. If we were to accept the contention of the learned counsel for the party respondents, we must hold that G.O. Ms. No. 124/88/ID is not a notification issued under section 10 of the Act. What we have to consider is that after it was issued, till the word notification was defined, whether it was a notification issued under section 10 of the Act. In this context, the matter is not res integra and judicial verdicts occupied the field, as already noticed. We do not see how the assessees can turn around and contend that it can only be deemed to be a notification issued unde....
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....iversification or modernization. . . ... (i) Sales tax concessions announced for rubber based industries in G.O. Ms. No. 124/88/ID dated August 31, 1988 will continue. (j) The concessions in CST for aluminium extrusions, electronic goods and power tillers announced in G.O. (P) No. 124/91/ID dated July 31, 1991 will also continue. (k) Other existing concession, if any, over and above those mentioned above, will also continue. These concessions, will not be available to State Public Sector Units. With regard to Central Public Sector Units, the concessions, if needed will be extended on a case-to-case basis after due consideration by the Industries and Taxes Departments. The notification necessary for the statutory validation of the above orders will be issued separately by the Taxes Department." It is a policy decision. It has evinced its intention to continue the concessions declared under G.O. Ms. No. 124/88/ID. If this is the basis for the Division Bench of this court in All Kerala Small Scale Tread Rubber's case [1999] 113 STC 612 (Ker); [2000] 1 KLT 564, to hold that despite the issuance of G.O. (P) No. 47/ 98/ID dated March 27, 1990, unless and until G.....
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....O. No. 654/89 referred to above and the purchase tax concession granted as per this notification shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit: Provided further that all the conditions prescribed for the sales tax concessions as per the notifications issued in S.R.O. No. 968/80 and S.R.O. No. 654/89 referred to above in the S.R.O. shall apply for the purchase tax exemption as per this notification: Provided also that the sales tax collected, if any, shall be paid over to Government. Explanation.-For the purpose of this notification, 'manufacture' shall not include any process to convert one form of rubber into another form which is taxable at the point of last purchase in the State, under any of the entries in the First Schedule to the Kerala General Sales Tax Act, 1963. This notification shall be deemed to have come into force on the 31st day of August 1988 and shall be in force till March 31, 1990." The Explanatory Note to the said S.R.O. reads as follows: "Government as per G.O. Ms. No. 124/88/ID dated August 31, 1988 has announced that rubber based industries will be exempted from purchase tax and sales tax o....
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.... Small Scale Tread Rubber's case [1999] 113 STC 612 (Ker); [2000] 1 KLT 564, there is no reference to S.R.O. No. 1091/99 and the issue fell to be considered with reference to G.O. Ms. 17/ 92/ID and S.R.O. No. 554/90, which we have adverted to earlier. Therefore, if G.O. Ms. 124/88/ID is treated as a notification issued under section 10 of the Act, then, certainly, the Government would have the power to supersede the same. Seemingly formidable arguments were addressed before us by Sri. C.K. Thanu Pillai, learned counsel, that having regard to G.O. Ms. No. 17/92/ ID, which indicates that a solemn decision has been taken by the Cabinet, as evident from the fact that it is signed by the Chief Secretary, it may not be open to the Government acting in the Taxes Department, by issuing a notification under section 10 of the Act, to take away the benefits granted as part of the Industrial Policy of the Government. In this regard, he would invite our attention to the decision of the apex court in Suprabhat Steel's case [1999] 112 STC 258 (SC). In Suprabhat Steel's case [1999] 112 STC 258 (SC), the apex court has, inter alia, held as follows: "The notification dated April 4,....
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.... from the date of production. (b) Such old industrial units whose investment on plant and machinery does not exceed Rs. 15 crores on April 1, 1993 shall be entitled for this facility for a period of seven years from April 1, 1993. (ii) All other industrial units shall continue to enjoy the existing facility of purchase of raw material on concessional rate of tax as announced and made applicable by the Sales Tax Department as before.' 7. Paragraph 10.5 provides as follows: '10.5. A separate order/notification for sales tax exemption will be issued by the Commercial Tax Department and the condition mentioned in that order/notification shall be binding in final terms.' 8. The case of the petitioners is that the language employed in paragraph 10.4(i)(b) being clear and unequivocal, there is no scope for any misunderstanding, since it is clear from a mere perusal of the said paragraph that it refers to old industrial units, meaning thereby industrial units which came into production before April 1, 1993. It does not provide for any date of production nor does it provide any condition as to whether the unit had or had not in the past taken the benefits under an....
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.... It is in the context of the said facts that the apex court proceeded to take the views, which it took. Here, we must immediately notice the nature of the proceedings. Writ petitions were filed in the Patna High Court, challenging the notification, on various grounds. The notification was challenged, inter alia, on the ground of violation of fundamental rights as also on the ground that it was violative of the doctrine of promissory estoppels, having regard to the detriment, which was caused to the petitioners by the clause, which was added to the terms of the industrial policy in clause (b) thereof. In other words, the notification was contemplated under clause 10.5 of the policy. The contention of the petitioners was apparently that going by the previous practice, such notifications could have been issued for the purpose of getting the details and for facilitating and implementing industrial policy, which was one for granting exemption as contemplated therein. By adding the words in the notification to the effect that if a particular party has already derived the benefit under the earlier industrial policy, they would not be entitled to the benefit, in effect, a notification....
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....e apex court was persuaded to lay down the proposition. We would think that the said proposition cannot be availed of by the respondents-assessees in the proceedings before us. We are reinforced, at any rate, by the fact that no time-limit was mentioned in the so-called industrial policy evidenced by G.O. Ms. No. 17/92/ID dated January 24, 1992, which is not capable of being withdrawn. We have already taken the view that G.O. Ms. No. 124/ 88/ID was held to be a notification issued under section 10 of the Act, by the Bench decisions of this court. We have also ready noticed the actual wording of S.R.O. No. 1091/99, which leaves us in no doubt that it clearly superseded all the notifications providing for reduced rate of tax. Incidentally, we may notice that by issuing S.R.O. No. 1090/91, another notification was brought out on the basis of review of the earlier notifications, providing for exemption of various goods from tax. But, we are concerned, in this case, with the reduction in the rate of tax. We would think that the Government had all the power to issue the notification under section 10 of the Act, purporting to withdraw G.O. Ms. No. 124/88/ID. We are not called upon to deci....