1994 (3) TMI 367 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to orders limiting exemption period under sales tax for oil millers registered as small-scale industrial units.

Analysis:
The petitioners, oil millers registered as small-scale industrial units, challenged orders limiting their exemption period under sales tax up to March 31, 1991 only. The limitation was based on a subsequent notification, S.R.O. No. 440/91, which stated that oil mills producing coconut oil were not eligible for exemption after April 1, 1991. The petitioners argued that they should be entitled to the full exemption period mentioned in S.R.O. Nos. 968/80 and 499/90, applicable to their cases. The court examined the notifications and found that existing oil mills set up before March 31, 1991, should not be deprived of the benefits promised under the earlier notifications. The court cited the decision in Pournami Oil Mills v. State of Kerala [1987] 65 STC 1 to support the petitioners' entitlement to the full exemption period without limitation up to March 31, 1991. The court held that the orders imposing such limitations were unsustainable in law.

The court analyzed S.R.O. No. 440/91, which ceased the exemptions for oil mills crushing copra and producing oil and oil cake from April 1, 1991, but clarified that existing oil mills set up before March 31, 1991, should continue to enjoy the benefits under the earlier notifications. The court emphasized that the benefit of the notifications should be preserved for oil mills that had produced the required proceedings before the assessing authority, rejecting any time limit for producing eligibility certificates. The court deemed it unreasonable to make the exemption conditional on producing certificates before April 1, 1991, as it depended on the efficiency of the authorities issuing the certificates. Such a condition was held to be arbitrary and violative of constitutional principles.

The court referred to a government letter confirming that oil mills registered before April 1, 1991, could receive sales tax exemption if they met the conditions of the relevant notifications without the need for any amendments. Consequently, the court allowed the original petitions, quashed the orders limiting the exemption period to March 31, 1991, and directed the first respondent to amend the certificates to extend the exemption period in accordance with the notifications S.R.O. Nos. 968/80 and 499/90.