TMI Blog1997 (3) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 towards sales tax for the assessment year 1985-86 and a sum of Rs. 17,630.60 by way of sales tax for the assessment year 1986-87. The assessing authority in the assessments for 1985-86 and 1986-87 gave credit to these amounts in the assessment orders and did not adjust the tax thus paid from the eligible amount of tax exemption. 3.. The Deputy Commissioner of Agricultural Income-tax and Sales Tax, Ernakulam issued notice dated May 15, 1991 under section 35 of the Kerala General Sales Tax Act, 1963 alleging irregularity in the assessments already completed and proposing to set aside the irregular assessments and to remand the cases to the assessing authority for fresh disposal in accordance with law. Notwithstanding the objections raised by the assessee in his reply dated June 1, 1991 to the proposal the Deputy Commissioner set aside the assessment orders for 1985-86 and 1986-87 and remanded the cases back to the assessing authority for fresh disposal. The reason given by the Deputy Commissioner in setting aside the assessment is extracted hereinbelow: I have also examined the contention and verified the records. The S.R.O. No. 968 of 1980 very clearly implies that tax if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to the learned Special Government Pleader, the notification only provides as a condition for exemption that the tax if any collected and remitted by such units by way of tax on their sales shall be paid over to the Government and that sales tax if any already paid by such units to Government shall not be refunded. The learned Special Government Pleader submitted that the assessing authority was not justified in giving credit to the tax collected and remitted by the assessee for the period during which the assessee was entitled to exemption under the notification. On that basis he submitted that the Deputy Commissioner was perfectly justified in cancelling the said assessment orders and remanding the same to the assessing authority for detailed consideration. The Special Government Pleader canvassed for acceptance of the findings of the Departmental Member in preference to the view taken by the majority. 6.. Learned counsel appearing for the assessee, on the other hand, submitted that the orders passed by the assessing authority in the instant case are perfectly in accord with the terms of the exemption Notification S.R.O. No. 968 of 1980 and that the Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business, after 1st April, 1979. 8. For appreciating the issue involved it would be helpful to advert to the background of the notification under consideration. The forerunner of the aforesaid notification is the Government Order dated April 11, 1979. The reason for the grant of exemption to small-scale industrial units to be set up after April 1, 1979 was given in the said Government Order. It is stated in the Government Order that the question of offering some incentives by the State to attract new industries has been under consideration of the Government. A committee was therefore set up to study the various problems and submit a report. The committee then finalised its report on March 20, 1979. The Government has considered the recommendations and suggestions of the committee in detail and they are pleased to approve the package of measures for promoting industrial development in Kerala. It is pursuant to the same that the Government issued order dated April 11, 1979 under which new industrial units under small-scale industries set up after April 1, 1979, will be exempted from the payment of sales tax for a period of five years from the date of production. It is this Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the said units. It provides that the amount of such exemption will be limited to 90 per cent of the cumulative gross fixed capital investment of the unit and that this will be determined by the District Industries Centre concerned by issuing a certificate in this regard. 10.. A Division Bench of this Court in Deputy Commissioner of Sales Tax, (Law), Board of Revenue (Taxes), Ernakulam v. K.P. Paper Products [1989] 74 STC 16 had occasion to consider the scope of Notification S.R.O. No. 968 of 1980. This Court after referring to the definition of taxable turnover in section 2(xxv) observed that under clause (e) of rule 9 of the Kerala General Sales Tax Rules, 1963 all amounts for which goods exempted by a notification under section 10 are sold or purchased, as the case may be, are deductible subject to the terms and conditions, if any, for the exemption. It was further observed that the tax payable on the turnover of the sale of goods produced and sold by the new industrial unit under the small-scale industries is exempted subject to the conditions specified under the notification and that what is exempted is only the tax payable and not the goods. It was further observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other adjustment to the collected tax. According to him, the collected tax should be paid over to the Government and the entire tax assessed should be deducted from the total amount of exemption as per the proceedings of the Industries Department. This in substance is the view taken by the departmental member. 12.. It is not correct to say that the notification does not give any indication regarding the question as to whether the tax collected and remitted on the turnover of sale of goods effected for the period during which the exemption is available should be adjusted from the eligible amount of exemption or not. The notification, according to us, gives clear indication on this aspect. The proviso to the notification clearly refers to tax concession . It signifies the benefit derived by the assessee by virtue of the notification in payment of tax. Reading the various ingredients of the said notification, it is clear that the tax concession is available for a period of five years. Since the amount of concession is limited to 90 per cent of the cumulative gross fixed capital investment of the unit as certified by the General Manager of the Industries Centre, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r during the period for which the exemption under the notification was available to him. 14.. We are of the view that the majority decision of the Tribunal is perfectly in accord with the understanding of the above notification. The aforesaid view is also fortified by a Circular No. 27 of 1993 dated December 31, 1993 issued by the Board of Revenue clarifying the point. The relevant portion of the circular issued by the Board of Revenue is extracted hereinbelow: Sub: Sales tax exemption under industrial policy-Refusal by the assessing authorities of the full facilities-Regarding: It has come to the notice of the Board that certain assessing authorities are deducting the tax collected and paid over to Government by an industrial unit during the period of exemption from the total eligibility. The various notifications granting exemption to new industrial units/sick industrial units have been issued subject to the condition that sales tax, if any, collected shall be remitted to Government and that sales tax, if any, remitted shall not be refunded. The notifications do not contemplate deduction of tax collected and remitted from the total quantum of sales tax exemption provided ..... X X X X Extracts X X X X X X X X Extracts X X X X
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