TaxTMI 
TaxTMI 
2011 (12) TMI 464
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....Added Tax Act, 2003 and the enabling provision under section 32 therein, is sought to be challenged by the very same petitioner in the other writ petition--W.P.(C) No. 7206 of 2007. Reference is made to the parties and documents, as described in W.P.(C) No. 6561 of 2007, except where it is mentioned otherwise. The petitioner is a public limited company incorporated under the relevant provisions of the Indian Companies Act, 1956, which is a medium scale industrial unit engaged in the manufacture of paper and paper boards used for writing, printing and such other purposes and is an assessee under the Kerala General Sales Tax Act, 1963 and Kerala Value Added Tax Act, 2003. In exercise of the power under section 10 of the Kerala General Sales Tax Act, notification bearing SRO No. 1729/93 was issued by the first respondent/Government, providing for exemption from sales tax for the fixed capital investments of the newly set up industrial units, enabling such units to enjoy the benefit to the extent as prescribed therein. As per the said notification, in the case of new industrial units under medium and large scale industries, there shall be an exemption for a period of "seven years" fr....
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....ized by the appellate authority. The appeal was rejected by the second respondent holding that the value of the "second hand" machinery, whether imported or indigenous, was not admissible. But subsequently, on filing review, the matter was re-considered by the appellate authority, whereby additional exemption to an extent of Rs. 68,74,748 was allowed as borne by exhibit P11 revised eligibility certificate; by virtue of which, the petitioner was granted exemption to a total extent of Rs. 3,88,84,481 and the rest was denied. The petitioner was served with exhibit P12 demand notice referring to the figures, as above and the balance tax of Rs. 55,97,433 was demanded as the arrears for the period from 1999-2000 to 2004-05, which is under challenge in the former writ petition. In respect of the subsequent year, by virtue of the mandate under section 32 of the Kerala Value Added Tax Act, brought into force with effect from March 1, 2005, the petitioner contended that he was eligible for deferment. But in view of sequence of events leading to rejection of the claim in respect of the imported "second hand" machinery, leading to exhibit P12 demand notice for the period 1999-2000 to 2004-05, ....
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....t the petitioner is not entitled to have any relief. It is pointed out that SRO. No. 1729/93 does never provide to reckon the capital investment in respect of "second hand" machinery and it has been clarified in para 10 of the manual as aforesaid. It is also stated that the manual was issued as early as on November 1, 1995 and since the petitioner commenced commercial production only in the year 1999, the party was very much aware of the position as above. It is further stated that the State, by virtue of the power under article 162 of the Constitution of India, is entitled to prescribe the conditions for granting the benefit of exemption and in the said circumstance, the manual issued in this regard is well within the power and competence of the authorities concerned. Reliance is sought to be placed on the decision rendered by the Supreme Court in [2007] 6 VST 773 (SC); [2007] 2 KHC 803 (Secretary to the Government v. Peekay Re-rolling Mills P. Ltd.), wherein it has been held that the State Government has the authority to issue comprehensive Government orders withdrawing the tax exemption on account of acute power shortage in the State. Going by the materials on record including....
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....ed as a matter of policy, with an intent to promote more and more industries and to bring in more and more investments in the industrial sector. Since no such exclusion clause was there in respect of "medium and large scale" industries and if beneficiaries like the petitioner have invested amounts for setting up such industries, availing of the benefit of tax exemption for the stipulated term of seven years as per the notification, it is not correct or proper for the respondents to contend that no such benefit of exemption will be given to persons like petitioner for want of any specific provision in the notification enabling to reckon second hand machinery as well. The question to be considered is whether the "statutory notification" debars the value in respect of "second hand machinery" from being reckoned. It can be answered only in the negative. The scope of exemption under different notifications relating to "turnover tax" under the Karnataka Sales Tax Act had come up for consideration before the apex court in State of Karnataka v. Balaji Computers [2007] 5 VST 120 (SC); [2007] 2 SCC 743. The observation made by the apex court in paragraph 35 in SCC (paragraph 32 in VST) is r....
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....cluding industrialists to have an awareness of the concessions available, etc." From the above, it is clear that the purpose of the manual was only to make an awareness of the concessions available under the Notifications. It was in the said circumstance, that approval was given by the Government in respect of the contents of the letter written by the Director of Industries, Thiruvananthapuram, in this regard. In other words, this court cannot re-write the notification issued by the Government or modify or water down the different heads of exemption contained in the statutory notification issued in exercise of the power conferred under section 10 of the Kerala General Sales Tax Act. This court finds support from the law laid down by the apex court in this regard, as per the decision reported in [2008] 14 SCC 336 Sandur Micro Circuits Limited v. Commissioner of Central Excise, Belgaum), the operative portion of which, at paragraph 6, is extracted below: "6. The issue relating to effectiveness of a circular contrary to a notification statutorily issued has been examined by this court in several cases. A circular cannot take away the effect of notifications statutorily issued. In fa....