JUDGMENT : AKIL KURESHI, J. 1. This petition is filed by one Shree Shiv Shakti Oil Mill to challenge an order dated 31.03.2017 passed by the Deputy Commissioner of Commercial Tax-respondent No. 2 herein. 2. Brief facts are as under:— The petitioner is a proprietory concern engaged in the business of manufacture and sale of oil. The petitioner is a registered dealer under the Gujarat Value Added Tax Act, 2003 [‘the Act’ for short] and also registered as certified manufacturer with Gujarat Khadi Gram Udhyog Board [‘Khadi Board’ for short]. The Government of Gujarat had provided certain exemptions from payment of sales tax in case of certified manufacturers registered under the Khadi Board. On the purchases also, the petitioner was subject to certain condition not liable to pay tax. These exemptions were granted under the Gujarat Sales Tax Act. With the replacement of the State Sales Tax Act by the VAT Act w.e.f 01.04.2006, such exemptions stood withdrawn. However, the Government issued a notification on 18.08.2016 under the VAT Act granting similar exemptions to the manufacturers certified by the Board. These exemptions were granted only to certified industries and not including the industry in which the petitioner was engaged. The petitioner and other similarly situated industries filed writ petitions before the Gujarat High Court challenging the withdrawal of the exemption benefits. The Gujarat High Court in case of Kishorekumar Prabhudas Tanna v. State of Gujarat reported in 23 VST 298 struck down the notification rescinding sales tax exemption. It is not necessary to record in detail finer aspects of the further developments. Suffice it to note that the Commercial Tax Officer issued certificate of entitlement of the petitioner on 08.01.2010 which was later on renewed. Such renewals of certificate continued upto 16.06.2014 However, the Assistant Commissioner, Commercial Tax, issued a show cause notice to the petitioner proposing to cancel the certificate of entitlement with retrospective effect and eventually passed an order dated 12.02.2014 cancelling the certificate of entitlement with retrospective effect from 17.06.2008 After failing to persuade the appellate authority to set aside such order, the petitioner filed second appeal before the Tribunal and ultimately, approached this Court by filing tax appeal. The Division Bench by a judgment in case of Shree Shiv Shakti Oil Mill in Tax Appeal No. 444 of 2015 and connected writ petitions by order dated 22, 29/07/2016 held that the VAT Tribunal was justified in holding that the renewal of certificate of entitlement by the Commercial Tax Officer was contrary to the notification of the State Government but was of the opinion that the cancellation of certificate of entitlement granted to the various industries could not have been cancelled with retrospective effect. 3. The petitioner's assessment under the VAT Act for the assessment year 2012-13 was thereafter taken-up by the competent authority. Before the said authority, the petitioner raised the claim of exemption of the tax on the sales made by the petitioner and sought refund of the tax paid on its purchases relying on the judgment in case of Shree Shiv Shaki Oil Mill (supra). The respondent No. 2, by the impugned order, accepted the petitioner's claim for refund of an amount of Rs. 21,33,684/- of the tax on purchases. He, however, refused to grant refund of such amount making it adjustable against the petitioner's other demands. However, with respect to the tax on the sales, he was of the opinion that the Government scheme envisaged tax exemption which would enable the assessee to sale the product without inviting tax. In the present case, assessee had, however, collected the tax though exempt and was seeking remission of such tax. The authority was of the opinion that since the assessee had collected tax which would not be leviable, it must surrender the amount to the Government revenue. This order the petitioner has challenged on the ground that the State authority had committed a fundamental error in appreciating the scheme of the Government and thereby denied a legitimate benefit to the petitioner. The case of the petitioner further is that there is no provision in the VAT Act enabling the Assessing Authority to defer the refund amount to be adjusted against the petitioner's future claims. 4. Learned counsel Mr. Soparkar for the petitioner took us extensively through the Government scheme of remission and submitted that the purpose of granting the benefit was to support the Khadi and Village Industry by making the products more viable. The Government intended to waive tax component on sale of the specified products. 4. Learned counsel Mr. Soparkar for the petitioner took us extensively through the Government scheme of remission and submitted that the purpose of granting the benefit was to support the Khadi and Village Industry by making the products more viable. The Government intended to waive tax component on sale of the specified products. The manner of distribution of such tax component between the manufacturer, purchaser or the consumer was not within the purview of the Government scheme. The petitioner showed the tax component separately only for accounting purpose and could easily have formed part of the petitioner's sale price. However, the remission scheme itself envisaged that the petitioner would issue a tax invoice. This would enable the purchaser of such goods to take tax credit on such purchases. By giving examples, counsel elaborated that irrespective of whether the amount was collected by way of tax but not deposited in the Government revenue or collected by way of higher sale price, the loss to the ex-chequer would remain the same as envisaged under the remission scheme. With respect to the adjustment of the refund of amount of Rs. 21,33,684/-, counsel submitted that the statute did not make any provision enabling the Assessing Authority to postpone the refund for being adjusted in future assessments. 5. On the other hand, learned AGP Shri Trivedi opposed the petition contending that the remission scheme envisaged waiver of tax. In other words, the seller of the specified product enjoying exemption certificate would be able to sell the product without inviting VAT. Such seller could not have collected tax from the purchaser. Having collected the tax, the assessee had to deposit it in the Government revenue. With respect to the refund of Rs. 21,33,684/-, the counsel clarified that the Assessing Officer did not delay the refund of the amount to be adjusted in the future assessments or assessment of other assessment years of the assessee but adjusted the same against the Government's claim of the tax collected by the petitioner on the sale of the products which was much larger than the refund amount. 6. Section 40 of the VAT Act pertains to refund of tax for certain categories. 6. Section 40 of the VAT Act pertains to refund of tax for certain categories. Sub-section (1) of section 40 provides that subject to such terms and conditions as the Government may impose, if the Government considers it necessary so to do in public interest, may issue notification in the official gazzete authorizing the Commissioner to grant refund of the amount of tax separately charged by any registered dealer to any class of persons who have purchased the goods from such dealer. On the other hand, section 41 of the VAT Act pertains to remission of tax, penalty or interest and reads as under: “41. Remission of tax, penalty or interest. (1) Subject to such conditions as it may impose, the State Government may, if it is necessary so do in public interest in case of double taxation or to redress an [inequitable situation or for sufficient and reasonable cause], remit by an order either generally or specially, the whole or any part of the tax, penalty or interest payable in respect of any period by any dealer or a class of dealers of any specified class of sales or purchase. (2) The Commissioner, may in such circumstances and subject to such conditions and within such limit as may be prescribed remit the whole or any part of the tax, penalty or interest payable, in respect of any period by any dealer.” 7. Under sub-section (1) of section 41 thus subject to any condition which may be imposed, it would be open for the State Government in public interest to avoid double taxation or to redress inequitable situation or for any other sufficient and reasonable cause, remit the whole or part of the tax, penalty or interest payable by any dealer or class of dealers in respect of any period with respect to any sales or purchases. 8. In exercise of powers under sub-section (1) of section 40 of the VAT Act, the State Government had issued a notification on 27.02.2009 authorizing the Commissioner to grant refund of the tax separately charged by a dealer from the certified manufacturer on purchase of specified goods. The assessee's claim for refund of the tax on purchases was covered under this notification. The assessee's claim for refund of the tax on purchases was covered under this notification. The Assessing Authority noted that the assessee had already been granted provisional refund to the extent of 90% of such tax and therefore while passing order of assessement allowed refund of the remaining of 10% which came to Rs. 21,33,684/-. 9. The State Government had issued notification dated 27.02.2009 in exercise of powers under section 41(1) providing for remission of the whole of the tax payable by a certified manufacturer on the sales of specified goods subject to certain conditions. Relevant conditions thereof read as under: “1. The remission shall be granted with effect from 1st April, 2006 for the period of— (a) specified in eligibility certificate issued by the appropriate authority or (b) till the sales of specified goods does not exceed the quantity approved by the appropriate authority as specified in the eligibility certificate. 2. Whichever event occurs earlier. 3. The certified manufacturer shall issue tax invoice or retail invoice in accordance with the provisions of the Act and the rules made there under.” 10. For better and uniform implementation of the scheme, the Government issued a circular dated 07.03.2009 making certain clarifications. In such circular, it was provided that the eligible units would be granted benefits in two modes. One would be by way of the refund on the tax paid on its purchases and the second one would be by way of remission of the tax on the sales. On the purchase side, it was provided that 90% of the refund would be provided by way of a provisional exercise. The rest would be paid after the final assessment. On the sales side, it was clarified that the eligible unit would be granted remission of tax upon sale of the goods through tax invoice or retail invoice. The order for remission would be passed after the unit produces necessary evidence. 11. The Assessing Officer noticed that the assessee on the sale of its specified goods had computed tax @ 4+1% the tax credit of which came to Rs. 58,89,531/-. The assessee had collected a total tax of Rs. 60,93,037/- as per the Government scheme. The product was exempt from payment of tax and the assessee therefore, could not have collected tax on the product at the time of its sale. 58,89,531/-. The assessee had collected a total tax of Rs. 60,93,037/- as per the Government scheme. The product was exempt from payment of tax and the assessee therefore, could not have collected tax on the product at the time of its sale. However, having collected the tax the assessee could not have retained the same, otherwise the same would amount to unjust enrichment. 12. We have noticed that section 41 of the Act pertains to remission of tax penalty or interest. It was in exercise of powers under sub-section (1) of section 41 that the Government had issued a notification dated 27.02.2009 granting remission of whole of the tax payable on the specified products by a certified manufacturer on the sale of such goods. This was subject to limits imposed in terms of condition No. 1 to the notification. Condition No. 3 provided that the said certified manufacturer would issue tax invoice or retail invoice in accordance with the provisions of the VAT Act. In essence, the Government desired to waive tax component on sale of such specified goods by the certified manufacturer dealers. The entire philosophy and intention behind such Government scheme is not difficult to appreciate. For variety of reasons, the Government wanted to encourage specified products manufactured by Khadi and Village Industries. Such reasons could be the high production cost, could be less competitive quality of product compared to smaller product manufactured by more sophisticated mechanized industries or the similar profit margins because of higher cost of the raw materials and inputs. Whatever be the reason, the Government desired that such products should not weigh the additional burden of State tax. In essence, therefore through the remission scheme, the Government desired to spare such product being loaded with the Government tax component. Once the Government decided to waive such tax, it was not important from the Government point of view whether such tax element was retained in its entirety by the manufacturer seller or whether it was passed on fully or partially to the purchaser or the entire benefit flowed in favour of the ultimate consumer. These aspects were left for the market forces to work themselves out. The product in question did not come within the price control regime to be fixed by the Government. These aspects were left for the market forces to work themselves out. The product in question did not come within the price control regime to be fixed by the Government. In what manner therefore the assessee shared this additional benefit made available to it by the Government, was thereafter not the look out of the Government. In plain terms, the Government scheme envisaged that the product upon its sale by the petitioner would carry no VAT or additional tax. At the same time, the purchasers of the product could not be burdened by paying tax on the value addition which he did not contribute to. This could be ensured only by allowing the seller i.e the assessee, to issue tax invoice or retail invoice at the time of the sale. This would create a deeming-fiction where the assessee would not have charged tax but would issue a tax invoice which would enable the purchaser to take tax credit as if such tax was collected and duly paid in the Government revenue. This would be the essence of a remission scheme as compared to the scheme for refund. 13. The sole objection of the Assessing Officer in granting the remission as per the Government notification was that the assessee had shown the tax component as having been collected separately in the invoices. Basically, his stand was that no tax should have been collected. If the assessee had merged this additional component of 4+1% of the tax in the sale price itself, the Assessing Officer could not have and would not have raised any objection. Merely because the assesse showed such amount separately in the sale invoice would not change the very character of the sale. For accounting purpose, if the assessee showed such amount separately and also issued tax invoice to the purchaser, in our opinion, the assessee committed no default or breach of the condition of the remission and exempt notification. In fact, not showing this amount separately but issuing tax invoice or retail invoice would cause accounting mismatch. 14. We have perused the replies filed on behalf of the respondents and various instances cited in such replies. We are satisfied that in whatever manner the accounting treatment may be given to such tax component, the loss to the ex-chequer would be limited to 4+1% of the tax which, under the said notification, Government had decided to forgo. 14. We have perused the replies filed on behalf of the respondents and various instances cited in such replies. We are satisfied that in whatever manner the accounting treatment may be given to such tax component, the loss to the ex-chequer would be limited to 4+1% of the tax which, under the said notification, Government had decided to forgo. If the contention of the Assessing Officer is that the assessee having shown to have collected the tax from the purchaser and not deposited with the Government refund by granting refund of such amount, the Government revenue would suffer double loss, such contention is plainly erroneous. 15. In the result, the decision of the Assessing Authority to deny the tax remission to the petitioner is set aside. The Assessing authority shall pass fresh order granting such benefit to the assessee with further statutory benefits if any available. This shall be done preferably within four months from the date of receipt of copy of this order. The question of adjustment of the refund of amount of Rs. 21,33,684/- pales into insignificance. However, we appreciate the Assessing authority's point that such amount was not meant to be adjusted in future assessments but at the time of working out the petitioner's laility arising of this assessment order itself to which we have no dispute. 16. With these observations and directions the petition is disposed of.