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2003 DIGILAW 709 (KAR)

LAMPS INDIA v. DY. COMMR OF COMMRL TAXES

2003-08-26

body2003
GURURAJAN, J. ( 1 ) PETITIONER in these petitions is seeking for various prayers. Petitioner is challenging clause-4 of the explanation II of the notification dated 7. 6. 1989 as repugnant to Industrial Policy Go No. CI 146 SPC 88 dtd 5. 12. 1988. ( 2 ) PETITIONER a partnership company is a SSI unit and an ancillary to M/s. Mysore Lamps Works Ltd. , Malleshwaram, Bangalore and is engaged in the manufacture and sale of HPMV Burners and lamps etc. , Petitioner set up a manufacturing unit at Mulbagal during 1990 on the basis of the impugned Industrial Policy. A copy of the Government Order is filed at Annexure-A. Sales Tax concession was implemented in terms Section 8-A of the Act. Notification dtd 7-6-1989 are filed at Annexures-B and C. Petitioner was issued with eligibility certificate by the Department of Industries in terms of Annexure-D. Assessment order was passed by the Assistant Commissioner of Commercial Taxes for the year 1994-95. Petitioner understood the Government order as a liability to the extent of 50% on the petitioner and 50% as tax exemption. Petitioners understanding was accepted by the Additional Deputy Commissioner. Thereafter the matter was reopened and subsequent assessment orders were passed in terms of Annexure-F and G. Petitioner is challenging Annexures-F and G and also Clause-4 of Explanation-II and notifications dated 7-6-1989 on various grounds. ( 3 ) RESPONDENTS have entered appearance and they have filed their statement of objections. ( 4 ) HEARD the learned Counsel for the parties. Petitioner invites my attention to the understanding of the Deputy Commissioner to say that the petitioner is fully justified in availing 50% in terms of the Act. According to the petitioner, the understanding is in consonance with the policy. He says that the subsequent assessment orders are liable to be set aside in the light of the mis-understanding of the circular. Per contra, Government supports the Order. After hearing, I have carefully perused the material on record. 4. Annexure-A is an order issued by the Government of Karnataka. It provides for package of incentives and concessions for new industries in Karnataka. The order is dated 5-12-1998. Clause I provides for Zones. Clause II provides for investment subsidies. Clause III provides for sales tax concession. After hearing, I have carefully perused the material on record. 4. Annexure-A is an order issued by the Government of Karnataka. It provides for package of incentives and concessions for new industries in Karnataka. The order is dated 5-12-1998. Clause I provides for Zones. Clause II provides for investment subsidies. Clause III provides for sales tax concession. It provides for eligibility for sales tax concession over a period of five years for industries in Zone-II and seven years for industries in Zone-III subject to limits prescribed in Annexure-II. Annexure-II deals with small scale industries. It provides for sales tax exemption of 50% of the value of fixed assets over a period of five years from the date of commercial production subject to a total ceiling of Rupees Twenty Lakhs. In case of small scale units in Zone-III the ceiling is thirty lakhs. Notification dated 7-6-1989 provides for a table. In so far as SSI units are concerned, it provides for exemption for a period of 7 years from the date of commercial production or from the date of notification whichever is later. Explanation-II provides for no eligibility under certain circumstances. It states that the provisions of the notification shall not be applicable to the turnover on which tax is collected by the eligible units under the provisions of the Karnataka Sales Tax Act. ( 5 ) IN the case on hand, it is seen from the material on record that the petitioner is issued with a certificate dated 9-11-1993 in the matter of exemption of sales tax. It is further seen from the material on record that the petitioner had collected sales tax and the petitioner was assessed at 50% of the liability. This order was passed by the Additional Deputy Commissioner. Thereafter noticing the error, respondents issued a notice. After hearing, they have chosen to say that in the light of the petitioner having collected the tax he is not eligible for any exemption. Petitioner in these circumstances has chosen to challenge clause-iv of explanation-II as violative of the policy. ( 6 ) POLICY provides for sales tax exemption up to 50% of the value of tax assessed over a period of 7 years. The policy does not provide for any liability of 50% in the matter. Petitioner in these circumstances has chosen to challenge clause-iv of explanation-II as violative of the policy. ( 6 ) POLICY provides for sales tax exemption up to 50% of the value of tax assessed over a period of 7 years. The policy does not provide for any liability of 50% in the matter. However, the same has been clarified in terms of explanation that in the event of tax collection, the notification shall not be applicable. This cannot be said to run counter to the policy. On the other hand, it is in aid of the policy. Policy provides for sales tax exemption, which would mean no collection. If any dealer collects the tax and seeks exemption later it would be contrary to the policy of exemption. Therefore Clause IV of Explanation-II cannot be set aside at the instance of the petitioner in the light of collection of tax by the petitioner. The argument of the petitioner with regard to understanding by the petitioner/deputy Commissioner cannot be accepted. Exemptions are given as a special case and exemptions are to be understood in terms of the notification. Understanding/misunderstanding of the petitioner/deputy Commissioner is not a ground to set aside the clause. ( 7 ) IN so far as merits of assessment proceedings are concerned, admittedly they are appealable in character. Therefore, I deem it proper to direct the petitioner to avail the appeal remedy within four weeks from the date of receipt of a copy of this order. If any such appeal is filed within four weeks, in terms of this order, the appellate authority would consider the case on merits, in accordance with law and complete the proceedings within six months from the date of receipt of a copy of this Order. Ordered accordingly. No costs. --- *** --- .