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2005 DIGILAW 533 (KAR)

VASAVADATTA CEMENTS v. STATE OF KARNATAKA

2005-08-18

D.V.SHYLENDRA KUMAR

body2005
ORDER D. V. SHYLENDRA KUMAR J. - Writ petition is by a dealer registered under the provisions of the Karnataka Sales Tax Act, 1957 (for short, "the Act"). The petitioner has sought for quashing of the order dated February 4, 2000 (at annexure H) passed by the Chief Electrical Inspector, Government of Karnataka, whereunder the concerned officer had indicated that while the petitioner was entitled for refund in respect certain sales tax payments made for a particular period mentioned in the order but also declined to grant the remaining amount of refund claimed. It is aggrieved by this order, the present writ petition is filed. Submission of Sri Pramod N. Kathavi, learned counsel for the petitioner, is that the order declining refund in respect of major portion of its claim which was for a sum of Rs. 3,48,290 and allowing refund to an extent of Rs. 23,760 under the impugned order is clearly contrary to the Government notifications allowing refunds in respect of persons like the petitioner who had set up certain industries pursuant to certain incentive schemes offered by the Government as its industrial policy; that on an erroneous understanding of the relevant notification and referring to a notification which was not relevant to the petitioner, the authority has declined entitlement for refund; that the order requires to be quashed, etc. Learned counsel for the petitioner relying upon the Government Order No. DE 210 EEB 95, Bangalore, dated November 23, 1995 for entitlement of refund read with the Government Order No. PWD 76 EIP 85, Bangalore, dated October 30, 1985 (at annexure A) for such entitlement, submitted that the concerned officer by a wrong reference to the Government order No. DE 97 PPC 92, Bangalore, dated June 8, 1992 has declined such claim for refund. The Government Order No. PWD 76 EIP 85, Bangalore, dated October 30, 1985 reads as under : "Proceedings of the Government of Karnataka Subject : Incentive on captive generation of power, delegation of powers to the officers of the electrical inspectorate and refund of sales tax on consumption of diesel orders - Reg. The Government Order No. PWD 76 EIP 85, Bangalore, dated October 30, 1985 reads as under : "Proceedings of the Government of Karnataka Subject : Incentive on captive generation of power, delegation of powers to the officers of the electrical inspectorate and refund of sales tax on consumption of diesel orders - Reg. Government order No. PWD 76 EIP 85, Bangalore dated October 30, 1985 Read : (1) Government Letter No. PWD 76 EIP 85, dated April 6, 1985 (2) Correspondence ending with letter No. CEJG/D1/D2/1924/85-86 dated June 1, 1985 from the Chief Electrical Inspector to Government, Bangalore PREAMBLE : In the background of prevailing acture (sic) shortage of power in the State, the question of evolving remedial measures to encourage the industry's electricity consumers for setting up of captive generation was engaging attention of Government for some time past, so that the load/pressure on the State grid could be reduced to some extent. Accordingly, Government have exempted sales tax payable on the sale of diesel captive generation units. Further, the Government have also exempted from payment of electricity tax on captive generation from thermal and diesel. Government have also directed the concerned authorities that the applications seeking approval/permission for installation of captive generating units shall be disposed of quickly and to issue no objection certificate to the applicants for captive generating units. Government have decided to delegate the powers to the Divisional and District Level Officers in the Electrical Inspectorate for issue of suitable certificates for the diesel consumed on captive generation units in order to claim sales tax refund by the concerned industrial unit. The Chief Electrical Inspector to Government in his letter cited at (2) above has sent proposals to Government for delegation of powers to the Deputy Electrical Inspector to Government in his letter read at (2) above has sent proposals to Government for delegation of powers to the Deputy Electrical Inspector and Electrical Inspectors and has sought orders of Government in this behalf. Government have examined the matter in all its aspects and considers it necessary to issue appropriate orders in the matter. ORDER Government are pleased to accord sanction to the refund of the sales tax on diesel consumed by captive generating units, subject to the following conditions : (i) The application for refund of sales tax can be made only by those who are subject to the power cut. ORDER Government are pleased to accord sanction to the refund of the sales tax on diesel consumed by captive generating units, subject to the following conditions : (i) The application for refund of sales tax can be made only by those who are subject to the power cut. This refund on sales tax will not be applicable to the diesel consumption for power generation by Karnataka Power Corporation Ltd., and Karnataka (sic) Electricity Board. (ii) The contracted demand of the applicant should be 6 KVA and above, that is the applicant should be paying electricity tax and should be metered. The power so generated by the captive units should be used by the unit itself and should not be sold or generated for other purposes. The applicant's generator should be registered with the Electrical Inspectorate (sic) and metered. (iii) The Chief Electrical Inspector to Government shall ascertain the rate of sales tax levied at the relevant time from the Commissioner of Commercial Taxes and arrange to pass the refund order in favour of the unit generating power based on the meter reading which will be done once in three months. (iv) The Scheme shall come into force from November 1, 1985. (v) The diesel consumed for any other purposes of the unit except for generation of power will not attract this concession. 2. Sanction of Government is also accorded to delegate powers to the officers of the Electrical Inspectorate (sic) as indicated in para 3 below for issue of diesel consumption certificates for the diesel consumed for captive generation subject to the following conditions : (a) The DG set should be an authorised installation. (b) DG set installation should conform to I.E. Rules, 1956 and Electricity Supply Act, 1948. (c) Monthly returns for the energy generated information, etc., shall be sent to the Electrical Inspectorate (sic). (d) Monthly returns of diesel consumed are furnished (sic) to the respective officers (supported by manufacturer's certificates). (e) The energy meter installed for the DG set should be sealed by the officers of the Electrical Inspectorate. (f) The owners of the DG set should send the necessary requisition every month to the concerned officer, requesting issue of diesel consumption certificates. 3. Authorities competent to issue diesel consumption certificates are as indicated below : -------------------------------------------------------------------------------------------------- Sl. Total capacity of DG set Authority empowered Remarks No. in single premises to issue certificates -------------------------------------------------------------------------------------------------- 1. (f) The owners of the DG set should send the necessary requisition every month to the concerned officer, requesting issue of diesel consumption certificates. 3. Authorities competent to issue diesel consumption certificates are as indicated below : -------------------------------------------------------------------------------------------------- Sl. Total capacity of DG set Authority empowered Remarks No. in single premises to issue certificates -------------------------------------------------------------------------------------------------- 1. Up to and inclusive Dy. Electrical Stationed at all Dist. Head Qrs. of 500 KVA Inspector of the (except for Kodagu & Uttara District Kannada Dist.) which are covered by Dy. El, Inspector Hassan & Belgaum, respectively -------------------------------------------------------------------------------------------------- 2. Above 500 KVA and Electrical Inspectors Stationed at B'lore, Shimoga, up to and inclusive of Gulbarga, Dharwad 100 KVA -------------------------------------------------------------------------------------------------- 3. Above 100 KVA Chief Electrical Stationed at Bangalore Inspector -------------------------------------------------------------------------------------------------- 4. The expenditure on refund of sales tax may be treated as subsidy and the expenditure debited to 334 power projects - 2 - other expenditure - J'. Alternate source of Energy - I subsidy for captive generation of power (non-plan). 5. This order issues with the concurrence of Finance Department vide U.O. No. FD 40 CSI 85 dated October 24, 1985. By order and in the name of the Governor of Karnataka, Sd/- (THULASIRAMAIAH) Under Secretary to Government, Public Works, CAD & Electricity Dept. To : ..." The Government Order No. DE 210 EEB 95, Bangalore, dated November 23, 1995, reads as under : "Proceedings of the Government of Karnataka Sub. : Power Generation by Industrial Units through captive generation sets - Extending concessions - Reg. Read : Government Order No. DE 97 PPC 92 dated June 8, 1992 PREAMBLE : Due to failure of monsoon in the catchment areas of Hydel Generating Stations in Karnataka, the availability of energy in the State has been drastically reduced. As against the daily availability of around 38 MU units from Hydel Stations in good monsoon year, the availability of energy from these sources for the balance period from today till the end of June 1996 is only 20 MU units due to which the Government was forced to introduce power cuts and shedding of loads with effect from November 3, 1995. 2. Government is aware about the hardships faced by the small, medium and large industries. Most of the industries have installed captive power generation sets based on liquid fuels such as diesel, LGHS, furnace oil, etc. 2. Government is aware about the hardships faced by the small, medium and large industries. Most of the industries have installed captive power generation sets based on liquid fuels such as diesel, LGHS, furnace oil, etc. Government has considered the hardship faced by the industrial sector sympathetically and has, therefore, decided to extend certain facilities to the Industries who have installed captive power generating (CPG) sets to augment power to their industries. Order No. DE 210 EEB 95 Bangalore dated November 23, 1995. Government are pleased to order for the extension of the following concessions to the Industries who are generating power through their CPG sets. (a) All CPG sets installed by the industrial unit, irrespective of the date of installation, based on liquid fuels such as diesel, LSHS, furnace oil, etc., would be exempt from payment of electricity tax up to June 30, 1996. (b) All CPG sets irrespective of the date of installation of such sets, would be exempt from payment of sales tax on diesel and other liquid fuels such as LSHS, furnace oil, etc., up to June 30, 1996. (c) Benefits (a) and (b) above would be available to all industrial units which are certified to be eligible for the same by the Department of Industries and Commerce/Chief Electrical Inspectorate with necessary documentary evidence. (d) All industrial units having CPG sets in excess of 500 KVA would be permitted to supply surplus power, if any, to other industrial units through the KEB grid subject to condition that the industrial units pay necessary service charges to KEB for wheeling and banking as per Rules. (e) Industrial units intending to install new CPG units would be given financial assistance on priority by the State Financial Institutions, namely, KSFC and KSIIDC. (f) Industrial units desirous of installing new CPG units would be given necessary 'no objection' certificates by the Chief Electrical Inspectorate expeditiously and the unit may only inform KEB regarding the details of the CPG units without having any need to obtain permission from KEB and, (g) To the extent feasible, power cut would be suitably staggered and some relief given to continuous process industries. By order and in the name of the Governor of Karnataka, Sd/- (AHMED A. MOKHTADAR) Under Secretary to Government, Energy Department. To : ..." The basic claim for refund itself is under Notification No. PWD 76 EIP 85, Bangalore, dated October 30, 1985. By order and in the name of the Governor of Karnataka, Sd/- (AHMED A. MOKHTADAR) Under Secretary to Government, Energy Department. To : ..." The basic claim for refund itself is under Notification No. PWD 76 EIP 85, Bangalore, dated October 30, 1985. This was a notification which was very much available or in vogue at the time the assessee's tax liability was determined. It is not in dispute that the assessee had paid taxes and the matter had become concluded. However, the assessee had taken cue from the Government Order No. DE 210 EEB 95, Bangalore, dated November 23, 1995 for filing an application for refund. The Government Notification No. DE 210 EEB 95, Bangalore, dated November 23, 1995 is not one which enables the petitioner to claim any refund. It is only a notification indicating the extension of incentive scheme to the existing industries for a longer period. Ultimately, the benefit should be claimed as part of tax liability and not independent of it. The earlier notification being one which was available, the assessee could have made use of it, relied on that even at the time of assessment. But, the assessee having not done that, an independent application for refund based on subsequent notification which by itself does not allow any refund in respect of any sales tax paid earlier does not enable the assessee to claim refund. It is not tenable. Reliance placed on the Government Order No. PWD 76 EIP 85, Bangalore, dated October 30, 1985 (copy at annexure A) for claiming refund is also fallacious, inasmuch as, under this Government Order, sanction for refund is accorded on the sales tax levied and collected on diesel consumed by captive power generating units subject to certain conditions, etc. A "refund" connotes an earlier payment. It is such tax which had been paid earlier that is sought to be returned. This Government Order can only apply to the sales tax payments which had been made prior to the Government Order. In the case of the petitioner, the sales tax liability is in respect of the period quarter ending March 1992, September 1992, December 1992, March 1993, September 1993, December 1993 and March 1994, i.e., all payments made subsequent to the Government Order. In the case of the petitioner, the sales tax liability is in respect of the period quarter ending March 1992, September 1992, December 1992, March 1993, September 1993, December 1993 and March 1994, i.e., all payments made subsequent to the Government Order. The question of refund in such a situation, based on the Government Order No. PWD 76 EIP 85, Bangalore, dated October 30, 1985 does not arise. The incentive benefit if available should have been claimed as part of the petitioner's sales tax liability. If the petitioner had paid any taxes for this period, without claiming such benefit at that time when the assessment was concluded, any part of tax paid, assuming that the petitioner was entitled to certain concessions can be refunded only on correction of such corresponding assessment order and not otherwise. Reliance placed on the Government Notification No. DE 210 EEB 95, Bangalore, dated November 23, 1995 also does not help the petitioner for claiming refund, inasmuch as, this notification is not one which permits any refund to be granted. At any rate, it is not under this notification that the petitioner claims any benefit or tax concession as the notification is subsequent to the period during which the petitioner had paid sales tax. I do not find any occasion either to quash the impugned order or for issue of a writ in the nature of mandamus to direct the respondents to grant any refund in favour of the petitioner.