TMI Blog2005 (11) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... o another form of the same goods by mixing with chemicals or gas fumigation or other processes as the mere conversion would not come under the term "manufacture" after January 15, 1998 since S. R. O. No. 1729/93 was amended under S. R. O. No. 39 of 1998 dated January 15, 1998. Petitioner was informed that the company had failed to pay tax on the purchase turnover of rubber from January 15, 1997 to March 31, 1998, 1998-99, 1999-2000, 2001-2002 and up to 11/2001. Petitioner was informed that non-payment of tax is in clear violation of KGST Act and Rules and the company has committed an offence punishable under clause (g) of sub-section (1) of section 45A of the KGST Act and a penalty of Rs. 49,39,45,410 was proposed to be imposed. Exhibit P12 objection was filed by the company questioning the validity of the notice as well as the jurisdiction of the officer. The first respondent rejected exhibit P12, vide by exhibit P13 order dated January 17, 2002 and directed the petitioner to file objection, if any, or before January 31, 2002, failing which it was pointed out the proposal would be given effect to. Petitioner then filed the present writ petition questioning the very basis on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale industrial units which undertake diversification, expansion or modernisation on or after the 1st April, 1993, there shall be an exemption for a period of seven years from the date on which such diversification, expansion or modernisation has been completed. (a) in respect of the tax payable under the Kerala General Sales Tax Act, 1963, (i) on the turnover of sale of goods manufactured in excess of full rated capacity of the unit prevailing immediately prior to such diversification, expansion or modernisation, and sold by them within the State; and (ii) on the turnover of goods, taxable at the point of last purchase in the State, which are used by such units for manufacturing the goods referred to in sub-clause (i) above, for sale within the State or interState; and (b) in respect of the surcharge payable under section 3 of the Kerala Surcharge on Taxes Act, 1957 (Act 11 of 1957) in relation to the goods referred to in sub-clause (a) above. Clause 10 of the notification deals with conditions and restrictions which stipulates that eligibility certificate for medium and large scale industries assisted by the Kerala State Industrial Development Corporation or the K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her or not the product suffers tax under the KGST Act or the Central Sales Tax Act, 1956. Later a Memorandum of Understanding dated April 10, 1996 was executed by the Government of Kerala and the petitioner as an addendum to the earlier Memorandum of Understanding entered into between the parties on October 6, 1993. The Government of Kerala later amended S. R. O. No. 1729/93 as per S. R. O. No. 38/98 dated January 15, 1998 in exercise of the powers conferred by section 10 of the KGST Act by which clause (h) was added to clause 11(ix) of S. R. O. No. 1729/93. The notification stipulates that processing one form of goods into another form of the same goods by mixing with chemicals or gas fumigation or any other process shall not be included in the term "manufacture". Amendment was intended to clarify that the above mentioned process also would fall within the exclusion clause of clause (ix) of paragraph 11 of S. R. O. No. 1729/93 and it was to come into effect from January 1, 1994. The Government of Kerala had earlier issued a Notification S. R. O. No. 641/81 giving reduction of tax payable on the purchase of rubber by manufacturers of finished rubber products within the State fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the eligibility certificate and the exemption order of the Board of Revenue exhibit P5 order dated June 30, 1998 the petitioner is entitled to get the benefit of S. R. O. No. 1729/93. The counsel submitted that by virtue of exhibit P5 order petitioner had acquired an absolute and indefeasible right of exemption in respect of sales tax, surcharge, additional sales tax and tax on purchase for a period of seven years from commencement of commercial production on December 30, 1996 to December 29, 2003. The petitioner submitted acting on the orders issued by the second respondent and the memorandum of understanding signed between the second respondent-Government, petitioner has made huge investment for expansion particularly for the manufacture of compound rubber. The counsel further submitted, first respondentAssistant Commissioner being a subordinate authority is bound by the order passed by the Secretary, Board of Revenue. The counsel placed reliance on the decision of the apex Court in Assistant Commissioner of Commercial Taxes (Asst.), Dharwar v. Dharmendra Trading Company [1988] 70 STC 59 counsel submitted that the Assistant Commissioner and the Deputy Commissioner (Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e KGST Act and that the Government had not held out any promise to the petitioner. No evidence has been adduced to establish the principle of promissory estoppel. We heard counsel on either sides at length and have also gone through the various notifications referred to earlier and also the various judicial precedents cited at the bar. Government, as we have already pointed out, have issued S. R. O. No. 1729/93 in exercise of the powers conferred under section 10(1) of the KGST Act in supersession of the notifications mentioned in the schedule thereto whereby it has granted tax exemption in public interest to industrial units/reduction in rate of tax payable on the sale or purchase of the goods. Clause 5 of the notification specifically stipulates that in the case of existing medium and large scale industrial units which undertake diversification, expansion or modernisation on or after April 1, 1993 there shall be exemption for a period of seven years from the date on which such diversification, expansion or modernisation has been completed on the turnover of goods taxable at the point of last purchase in the State which are used by such units for manufacturing the goods for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yond that. Clause 10(b) of S. R. O. No. 1729/93 stipulates that eligibility certificate for medium and large scale industries assisted by the Kerala State Industrial Development Corporation and Kerala Financial Corporation would be issued by the Corporation which render assistance and in other cases by the Director of Industries and Commerce on application by such units and orders of exemption would be issued by the Secretary, Board of Revenue (Taxes). Clause (d) also stipulates that eligibility certificate should contain the date of commencement of commercial production and the monetary limit of exemption the unit is eligible for and the eligibility certificate issued in respect of existing medium and large scale industrial units which undertake expansion, modernisation or diversification should also contain the date of commencement as well as the date of completion of such expansion, modernisation or diversification. We are of the view exhibit P5 though stipulates that period of exemption is from December 30, 1996 to December 29, 2003 so far as the processes which fall under sub-clause (h) of clause (ix) in paragraph 11 of S. R. O. No. 1729/93 are concerned the exemption will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in our view would not come to the rescue of the petitioner even by the application of clause 2 of S. R. O. No. 1092/99. We reiterate the order passed by the Board of Revenue cannot override the statutory notification issued by the Government. We are not impressed by the argument of the counsel based on the prin-ciple of promissory estoppel not only due to the fact that there is no factual foundation in the writ petition but also on legal principles. Whatever promises held out to the petitioner on the basis of S. R. O. No. 1729/93 have already been extended to the petitioner but only till January 14, 1998. From January 15, 1998 onwards amended S. R. O. No. 1729/93 would come into play. Further we have already indicated, even the unamended S. R. O. No. 1729/93 itself has got a clause that the Government can include other processes in the negative list of clause (ix) in paragraph 11 of the notification. These notifications are statutory and no plea of estoppel will lie against a statutory notification. Further even according to the petitioner the expansion was completed in the year 1996 and the order of the Board of Revenue is dated June 30, 1998 and there is nothing to show that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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