TMI Blog2010 (6) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... the consent of the learned counsel for the parties, the petitions are clubbed together, finally heard and are disposed of by this common order. The petitioner in W.P. No. 19680-81 of 2009 is a partnership firm carrying on the business of manufacture and sale of beedies in the name and style of M/s. Mangalore Ganesh Beedi Works and a registered dealer under the Karnataka Value Added Tax Act, 2003 (for short, the KVAT Act ) and also under the Central Sales Tax Act, 1956 (for short, the CST Act ). The petitioners in all the other petitions are registered dealers under the KVAT Act and distributors of beedies manufactured by Mangalore Ganesh Beedi Works. The core question for decision-making in these petitions is whether in the facts and circumstances, 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommittee of Finance Ministers to prepare a road map to introduce goods and services tax with effect from April 1, 2007. The said committee consisting of State Finance Ministers, in the minutes of the fourth meeting held on April 25, 2007, annexure A, having regard to the notification amending Duties Act, allowed States to tax tobacco and tobacco products without losing one per cent devolution, and recommended that the States should tax tobacco and tobacco products at 12.5 per cent except un-manufactured tobacco, beedies and tobacco used in the manufacture of beedies. In the said meeting the State of Karnataka was represented by its Deputy Secretary, Finance Department and Joint Commissioner of Commercial Taxes. The Additional Commissioner, issued a letter dated April 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 Principa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the KVAT Act as well as penalty. The orders when challenged in two separate appeals before the Joint Commissioner of Commercial Taxes (Appeals), though dismissed by common order dated February 23, 2008, annexure L, was modified to the extent of Central sales tax on actual sales turnover as recorded in the manufacturer/ petitioners' books. The request for rectification was allowed by order dated March 15, 2008, annexure M, reducing the quantum of Central sales tax. In the meanwhile, the Karnataka Beedi Industry Association (Regd.), submitted to the State, a representation dated May 18, 2007, annexure N, for clarification over exemption from tax with effect from April 1, 2007, in the light of the observations of the apex court in W.P. I.L. Ltd. v. Commissioner of Central 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c interest to support withdrawal of that concession. Yet again, having regard to the recommendation of the Empowered Committee of the State Finance Ministers in the minutes of the fourth meeting of 2007, annexure A, that the State should not tax un-manufactured tobacco including tobacco used for manufacture of beedies, coupled with the consistent policy of the State in exempting from tax, the sale of un-manufactured tobacco and tobacco used in manufacture of beedies, declared as goods of special importance, and keeping in mind that the manufacture of beedies is through cottage industries, the omission from the First Schedule to the KVAT Act by Amendment Act 6 of 2007 with effect from April 1, 2007, and the later notification dated May 15, 2007, annexure D, exempting from tax the 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 rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discrimination. Although learned senior counsel for the petitioners points out to the definition of the terms taxable turnover , total turnover , turnover and year in sub-sections (34), (35), (36) and (38) of section 2 and subsection (4) of section 27 of the KVAT Act as well as rules 13, 38, 42, 127 and 128 of the KVAT Rules, 2005 to contend that tax is referable to the year commencing from first of April of that year and therefore, the notification ought to be read as if the exemption was granted from April 1, 2007, by placing reliance upon the decision of a single judge of this court in Deepam Silk International v. State of Karnataka [2004] 134 STC 337. I am not impressed by that submission. The facts in Deepam Silk's case [2004] 134 STC 337 (Karn) related to an exemption 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 notif ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
