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2015 (3) TMI 432 - KERALA HIGH COURTDenial of exemption - Whether or not there was an exemption available to manufacturers of centrifuged latex and crumb rubber, from the payment of tax payable under the Kerala General Sales Tax Act, on the purchase turnover of rubber in any form used for the manufacture of centrifuged latex and crumb rubber - Held that:- Exemption from payment of tax payable under the KGST Act on purchase turnover of rubber used for the manufacture of centrifuged latex and crumb rubber was covered by Notification SRO 695/03 for the period from 01.04.1988 to 09.10.2001. Thereafter, the same exemption continued for the period from 10.10.2001 to 31.03.2004 through SRO 316/05. The benefit of exemption granted by the latter Notification was sought to be taken away through the introduction of a third Notification, namely SRO 946/07. - there is a distinction between the power to grant exemption which is available under Section 10 (1) and the power to cancel or vary any Notification that is available to the Government under Section 10 (3) of the Act. While the power to grant exemption or reduction in rate of tax payable under the Act can be exercised either prospectively or retrospectively, the power of the Government to cancel or vary any Notification issued under Sub Section (3) of Section 10 is one that can be exercised only prospectively. The respondents cannot rely on SRO 946/07 for the purposes of denying the benefit of exemption in terms of SRO 316/05 to the petitioners for the period from 10.10.2001 to 31.03.2004. - that insofar as the exemption Notifications in question clearly indicate the understanding of the State Government that there is a process of manufacture involved in the conversion of field latex to centrifuged latex and crumb rubber, it cannot be the stand of the department that there is no manufacturing process involved in such a conversion. In that view of the matter, the 2nd objection raised by the departmental authority while denying the benefit of exemption to the petitioners, also does not have any legal basis. Petitioners, cannot be denied the benefit of the exemption envisaged under SRO 316/05 for the period from 10.10.2001 to 31.03.2004. The assessments completed against the petitioners taking a contrary view, as also the notices issued by the respondents under Section 35 of the KGST Act on the basis that the exemption is not available to the petitioners, cannot be legally sustained - Decided in favour of assessee.
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