TaxTMI 
TaxTMI 
2012 (8) TMI 866
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....assessee-company was taken over from M/s. Toyata Kirloskar Auto Parts Private Limited with effect from July 1, 2002. 3. The State Government formulated the comprehensive industrial policy in the year 2001. As per the said industrial policy, to encourage the establishment of new industries, certain benefits such as incentives and concessions have been extended. Subsidy on investment, exemption of entry tax, exemption of stamp duty and concessional charges for registration of the lands and sheds and special concession for the exports were also extended as per the G.O. No. CI 167 SPI 2001 dated June 30, 2001 and the implementation notification in FD 161 CSL 2001 dated November 30, 2001 wherein 100 per cent exemption was granted from entry tax to the export oriented unit payable on raw materials, components, packing materials, consumables, machinery and equipments, spares, material handling equipments, etc., subject to the condition that the goods are put to use in the manufacturing or processing of the goods in the unit located in Karnataka and the goods so manufactured or processed are exported out of the territory of India. 4. The respondent-company imported diesel generating sets....
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....der section 8(2) (ii) and issued demand notice for Rs. 64,80,300. Being aggrieved by the demand notice, the respondent preferred an appeal before the Joint Commissioner of Commercial Taxes (Appeals-3), Bangalore taking various contentions. The appellate authority after considering the matter in detail dismissed the appeal and upheld the order passed by the assessing authority by its order dated April 10, 2008. 6. The respondent being aggrieved by the said order has preferred an appeal before the Karnataka Appellate Tribunal in STA 262 of 2008. The Appellate Tribunal, after considering the matter, by its order dated January 9, 2009 allowed the appeal in part and set aside the levy of entry tax in respect of DG sets, parts and accessories including penalty and interest. The Appellate Tribunal further held that the Government Notification dated November 30, 2001 does not prescribe any conditions that the capital goods such as DG sets should be used in the manufacture of goods for export or that the power generated from the DG sets should be exclusively and to the full extent used only for production in the 100 per cent export oriented unit. Further the said notification does not pres....
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.... penalty and interest. The reasoning assigned by the Appellate Tribunal is quite contrary to the spirit of the notification issued by the State Government and sought for allowing the revision petition by setting aside the order passed by the Appellate Tribunal. 8. On the other hand, Sri G. Rabinathan, learned counsel appearing for the respondent, argued in support of the order passed by the Appellate Tribunal contending that the DG sets are classified under the machinery and therefore they are scheduled goods by virtue of the notification dated November 30, 2001. The exemption of paying entry tax on these goods was allowed in the original assessment order and the benefit was extended, subsequently, on review of the assessment order that benefit was withdrawn which is contrary to law. Further DG sets imported by the assessee produces optimum electricity. Instead of wasting the electrical energy, it is used in the manufacturing of auto parts by the other unit called "domestic tariff area unit". There is no such prohibition for using the excess power generated for the purpose of manufacturing the goods for domestic sale. In fact surplus power produced by the DG set is used in the dom....
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.... under: In exercise of the powers conferred by section 11A of the Karnataka Tax on Entry of Goods Act, 1979 (Karnataka Act 27 of 1979), the Government of Karnataka being of the opinion that it is necessary in public interest so to do, hereby reduces the tax payable by one hundred per cent export oriented units under the said Act to "nil" on raw materials, components, packing materials, consumables (excluding petroleum products like petrol, diesel, furnace oil, naphtha and LSHS used as consumables or for captive power generation units), machinery and equipments, spares, material handling equipment, intermediates, semi-finished goods and sub-assemblies brought into a local area for use in the manufacture of goods, subject to following restrictions and conditions: (i) Such goods are put to use by the one hundred per cent export oriented unit in the manufacture of goods for export the availment of entry tax at 'nil' rate shall be limited to the entry tax paid on the above mentioned goods which are used in the manufacture or processing of goods in the unit in Karnataka and the goods so manufactured or processed are export....
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....duction of goods subject to relaxation permitted by the Government of India from time to time. Further, for any reason, 100 per cent export oriented unit fails to comply with condition No. (iii), shall forthwith ceased to be eligible for the benefit of the said notification. Clause (v) also makes it very clear that for any reason, restrictions or conditions stipulated under clauses (i), (ii), (iii) are contravened or not complied with either wholly or partly sub-section (3) of section 11A shall apply and they have to pay the interest under section 8 of the Act. One of the conditions of the Government Notification makes it very clear that the export oriented unit shall manufacture goods only for export and they shall not do the business of domestic, then only they are entitled for exemption of the entry tax. In the instant case, the assessee has effected turnover of Rs. 67,55,68,696. However, exported the production of only Rs. 10,74,870 for the assessment year 2003-04. Hence, it is clear that the imported DG sets after getting exemption of entry tax, producing the certificate to the effect that the assessee is 100 per cent export oriented unit, has manufactured the goods for domest....