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TMI Blog2010 (6) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the notification, annexure D, is "ex abundanti cautela" the consistent policy of the State, for over few decades exempting un-manufactured tobacco (including tobacco used for the manufacture of beedies) from tax under the KVAT Act? The pleadings in the petitions disclose that traditionally and conventionally manufacture of beedies using tobacco is carried on through cottage industries, manned by persons having no special skill, training or education, more appropriately at the hands of the poorer sections of the society, as a means of livelihood. The sale of beedies is also through petty traders while bulk of the consumption is by persons belonging to the economically and socially weaker sections of the society. The Parliament enacted the Additional Duties of Excise (Goods of Special Importance) Act, 1957, Act No. 58 of 1957 (for short, "the Duties Act") to provide for the levy and collection of additional duties of excise on certain goods and for the distribution of the part of the net profit thereof among the States, in pursuance of the principles of distribution formulated and the recommendations made by the Finance Commission in its report dated December 18, 1989, whereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26, 2007, annexure B, addressed to the Principal Secretary, Finance Department, enclosing a draft notification to extend tax exemption on un-manufactured tobacco including tobacco used for manufacture of beedies, which when brought to the notice of the Deputy Chief Minister and Finance Minister, approval was accorded for exemption with effect from April 1, 2007, annexure C. However, at the intervention of the Principal Secretary that retrospective effect of exemption was impermissible, on the premise that dealers "would have already passed on their tax liability on sales", in the absence of any effort to ascertain whether tax was collected by the petitioners and the ilk, the Deputy Chief Minister is said to have approved the exemption from tax with effect from the date of notification, followed by the notification dated May 15, 2007, annexure D. The Budget speech delivered by the Deputy Chief Minister and Finance Minister, admittedly, did not indicate a proposal to omit from the First Schedule to the KVAT Act, un-manufactured tobacco and tobacco products including tobacco used in the manufacture of beedies. So also, there was no proposal to impose a cess under the KVAT Act on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise [2005] 181 ELT 359 (SC). W.P. No. 3250 of 2008 filed by members of the association, was disposed of on February 29, 2008 (Taj Traders v. Local VAT Officer), annexure P, with a direction to consider the representation as expeditiously as possible, within eight weeks from the date of receipt of the order. That representation is said to be pending before the State. The manufacturer/petitioner having preferred second appeals in S.T. A. Nos. 366 and 367 of 2008 before the Karnataka Appellate Tribunal calling in question the orders of the Joint Commissioner of Commercial Taxes (Appeals) and the orders of the first respondent, were dismissed by common order dated April 28, 2009, annexure Q. The other petitioners suffered orders of reassessments. Hence, the writ petitions by the manufacturer and the distributors of beedies. The petitions are opposed by filing statement of objections dated February 24, 2010 of the fourth respondent, inter alia, contending that beedies though exempt from VAT, were subjected to tax at 12.5 per cent on omitting item No. 50 in the First Schedule to the KVAT Act by Act, 6 of 2007 with effect from April 1, 2007, in accordance with section 4(1)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of beedies, cannot be construed as a withdrawal of the exemption and as if exemption was granted for the first time. In these circumstances, the period of 45 days intervening between the two notifications, the subsequent notification dated May 15, 2007 cannot but be held to be clarificatory and no duty could be demanded on the sale of the said goods. The learned senior counsel is correct in placing reliance upon the decision of the Larger Bench of the apex court in W.P. I.L.'s case [2005] 181 ELT 359 (SC), wherein on facts similar though not identical, held thus: "15. The learned counsel for the appellant is also right in relying upon a decision of this court in Collector of Central Excise, Shillong v. Wood Craft Products Ltd. [1995] 3 SCC 454. In that case, this court held that a clarificatory notification would take effect retrospectively. Such a notification merely clarifies the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties. 16. In view of the consistent policy of the Government of exempting parts of power driven pumps utilized by the factory within the factory premises, it could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification by Act No. 5 of 2001 of the Karnataka Tax on Luxuries Act, 1979, more appropriately as regards the entry relating to "silk fabrics" inserted at item No. 4 in the Schedule to the Act with effect from April 1, 2001. His Lordship having noticed in the notification the use of the words "tax payable under the said Act by stockist on his turnover of stock of silk fabrics", held that the notification did exempt levy of tax from April 1, 2001. Such is not the position in the notification, annexure D. The facts in Deepam Silk's case [2004] 134 STC 337 (Karn) being different and not identical to the facts of this case, that judgment, has no application. The authorities below, including the Karnataka Appellate Tribunal, in its order, annexure Q, while recording a categorical finding that the levy of tax for the short period of 45 days cannot be held to be in public interest on the premise that exemption was in existence for number of decades in the past, nevertheless concluded that, it is a matter to be decided by this court or the apex court under its extraordinary jurisdiction and the KVAT has no jurisdiction as it is a wrong forum, and directed the petitioners to approach ..... 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