TMI Blog2007 (4) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... - The judgment of the court was delivered by S. H. KAPADIA, J. Civil Appeal Nos. 8031 of 2004 and 8032-8033 of 2004: Being aggrieved by the common judgment dated August 22, 2003 delivered by the division Bench of the Kerala High Court in W. A. Nos. 991 and 1316 of 2003 Reported as Peekay-Re-Rolling Mills (P) Limited v. Secretary to Government, Finance and Taxes, Government of Kerala [2004] 138 STC 208 (Ker)., the State has come to this court by way of the present civil appeals. Facts giving rise to these civil appeals are as follows: Peekay Re-Rolling Mills (P) Ltd., respondent herein, was registered as an industrial unit on September 6, 1991. They claim to have set up an industrial unit in the State on account of tax exemption given to industrial units from payment of sales tax for the fixed period commencing from the date of commercial production. Tax exemption was in fact granted under section 10 of the Kerala General Sales Tax Act, 1963 ("1963 Act") vide notification dated November 4, 1993. Under that notification, tax exemption was admissible to medium scale units for seven years from the commencement of commercial production. In the present case, the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout going into unnecessary details, suffice it so state that both, the Government and the Director of Industries, proceeded to reject the claim for tax exemption by placing reliance on the above G.O. dated November 26/27, 1993. This led to the filing of O.P. Nos. 32947 and 32807 of 2000 Reported as Peekay Re-Rolling Mills (P.) Ltd. v. Secretary to Government [2004] 138 STC 198 (Ker). by the respondent herein in the High Court. To complete the chronology of events, on April 19, 1994 the Government issued a clarification to the G.O. dated November 26/27, 1993. By the said G.O., it was clarified that tax exemption would continue to be available to all industries which were provisionally registered before December 31, 1993 and only those industries in the negative list which stood registered on or after December 31, 1993 alone would be ineligible for financial assistance/tax exemption from the Government. Therefore, in the said O. P. Nos. 32947 and 32807 of 2000 Reported as Peekay Re-Rolling Mills (P.) Ltd. v. Secretary to Government [2004] 138 STC 198 (Ker). one of the grounds taken by the respondent was that the Government as well as the Director of Industries had erred in denying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned single Judge holding that the issue can be decided on interpretation of clause 7 with reference to the connected load and not with reference to the cost of production attributable to power charges. The learned single Judge interpreted the word "and" in clause 7 and read it disjunctively. On that basis, the learned single Judge held that though the word "and" was used in clause 7, the two conditions, namely, the contract load above 2500 KVA and the cost of power at more than 25 per cent of the cost of production, cannot be read conjunctively and that they have to be read disjunctively. In other words, the learned single Judge has read the word "and" as "or". The learned single Judge also rejected the contention raised by the respondent that the respondent was entitled to exemption since its unit stood registered before December 31, 1993. This argument was rejected on the ground that under clause 3 of G.O. dated November 26/27, 1993, expansion of existing unit in the areas included in the negative list was not entitled to tax exemption unless application was made on or before December 31, 1993. According to the learned single Judge, the respondent was granted tax exemption on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of sales tax for seven years. Similarly, the State had given concessions under Electricity Act. It had promised subsidies. All these exemptions/concessions were withdrawn by G.O. dated November 26/27, 1993 by the Ministry of Industries on account of acute power shortage. We do not find any infirmity in the issuance of the said G.O. dated November 26/27, 1993. The question still remains as to the scope of the clarificatory G.O. dated April 19, 1994. This question has not been examined by the division Bench. According to the appellants, the said clarificatory G.O. was not applicable to units which made additional investments after November 26, 1993. However, this aspect has not been examined by the division Bench. The division Bench has also not examined clause 3 of G.O. No. 169/95/ID dated November 1, 1995, which reads as follows: "3. Investments in generators shall be eligible for the purpose of tax exemption. Additional investment for balancing equipment and lines of backward or forward integration shall qualify only as additional investment for the purpose of tax exemption. Additional investment for purposes of determining tax exemption eligibility will mean those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisfied for making a unit a power intensive unit then, in the present case, the said G.O. dated November 26/27, 1993 would not apply since during the relevant period the respondent's unit did not incur expenses on account of cost of power exceeding 25 per cent of the total cost of production. In the present case, the division Bench has failed to consider the following aspects in the matter of interpretation of clause 7 of the said G.O. dated November 26/27, 1993. The reason for issuance of the said G.O. was to curb excess electricity consumption and not to curb additional investments. The underlying reason for issuance of the said G.O. was to restrict power consumption and not to restrict expansion of units in terms of additional investments. This is the basic argument advanced on behalf of the respondent in support of their contention that the word "and" in clause 7 should be read conjunctively. On the other hand, it is argued on behalf of the appellants that the word "and" in the said clause should be read as "or" since the reason for issuance of the said G.O. was to curb excess electricity consumption either by way of exceeding the prescribed ceiling of 2500 KVA or by way of add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing 6. Potassium chlorate 3. This order will be effective from the date of order and will be applicable to all units taking provisional registration or IEM/SIA, as the case may be, from the date of this order. All the conditions stipulated in the G.O. read above and subsequent amendments/ clarifications issued thereon will be applicable to this order also." Reading the above two clauses, it is clear that the G.O. dated November 26/27, 1993 got modified by G.O. dated November 24, 1998. Therefore, if the said G.O. dated November 26/27, 1993 is found to be applicable then the G.O. dated November 24, 1998 which is modification of the earlier G.O. dated November 26/27, 1993 would apply as a clarificatory G.O. We may reiterate that in our judgment in Civil Appeal Nos. 8031 of 2004 and 8032-8033 of 2004 the question of interpretation of clause 7 of G.O. dated November 26/27, 1993 has been remitted to the High Court. However, as far as retrospectivity of G.O. dated November 24, 1998 is concerned, we are of the view that the said G.O. is clarificatory. Therefore, there is no merit in the contention raised on behalf of Premium Ferro Alloys Ltd. that the said G.O. dated November 2 ..... 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