TMI Blog2014 (9) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the Bill, there was an Explanation and in the law as finally made, the Explanation was omitted, unless and until G.O. Ms. No. 124/88/ID conforms to the definition of the word "notification", it cannot hold good after the insertion of the definition of the word "notification" in the Act. Non obstante clause refers to the judgments rendered and the intention of the Legislature to provide that any notification existing as on the date, despite any judgments to the contrary, which do not conform to the main provision of the definition, shall not be treated as a notification issued under the provisions of the Act. G.O. Ms. No. 124/ 88/ID was published on August 31, 1988. It was published by the Industries Department of the State of Kerala. It was intending to encourage the industrial activities of the State, especially rubber based industries, it was issued. Among the benefits vouchsafed under the said Government Order, was the grant of concession in the matter of rate of tax in respect of products sold by rubber industries situated in the State of Kerala. Government Pleader has not shown to us that the said G.O. was withdrawn by the Government or modified. Unless the G.O. is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the notification did not specifically withdraw G.O. Ms. No. 124/88/ID. More importantly, the Government in the policy decision in G.O. Ms. No. 17/92 dated January 24, 1992, specifically directed that the concessions announced in G.O. Ms. No. 124/88/ID will continue. G.O. Ms. No. 124/88/ID has to be held as a notification issued under section 10 of the Act, despite the insertion of the word "notification" in the definition clause of the Act. The definition clause would have prospective operation and if the notification is issued after the date of such notification, it must fulfil the requirements in the definition. - G.O. Ms. No. 124/88/ID would continue to have efficacy as a notification issued under section 10 of the Act as held by the Division Bench of this court only till the date of S.R.O. No. 1091/99. In other words, from January 1, 2000, G.O. Ms. No. 124/88/ID cannot be in force - Decided against Revenue. - S.T. Revision Nos. 55, 57,63,72,75,76 of 2011 - - - Dated:- 13-3-2013 - JOSEPH K.M. AND RAMAKRISHNAN K., JJ. For the Appellant : Bobby John Pulikkaparambil, Senior Government Pleader, For the Respondents : C.K. Thanu Pillai, S. Anil Kumar (Trivan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable to the industries. (3) Sales tax on finished rubber goods produced from factories in Kerala will be reduced to three per cent. In these revisions, we are concerned, only with the issue arising from the operation of the third clause in the aforesaid Government Order, namely, the direction that tax need be paid only at concessional rate, i.e., at three per cent on sale of finished rubber products produced by the factories in Kerala. The following are the questions of law raised in these revisions: (A) Has not the Tribunal gone wrong in directing the assessing authority to allow the claim of concessional rate of tax to the assessee as provided in the Notification G.O. Ms. No. 124/88/ID dated August 31, 1988? (B) Has not the Tribunal grievously erred in interpreting the amendment brought into the KGST Act, by way of introducing subsection (xva) to section 2, relying on the decision reported in 8 KTR 361, especially since the subject-matter of the said decision was an assessment year anterior to the amendment brought about on April 1, 1998? (C) Ought not the Tribunal have held that in any event, all exemption notifications were withdrawn by the Government by S.R. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no reason to interfere with the impugned orders. However, we make it clear that the Tribunal shall decide the cases de novo uninfluenced by any observation made by the High Court in the impugned orders. Accordingly, the special leave petitions are disposed of.' As can be seen from the above order, since interpretation of the amendment to the Kerala General Sales Tax Act, 1963 and relevant notifications were involved, we thought it fit to remit the cases to the Tribunal for de novo consideration. That order is retained by us. We see no reason to modify our order. We make it clear that in the first instance, the Tribunal will consider the matter in the light of the amendment to the Act and the relevant notification. However, if the Tribunal is of the view that the matter needs to be considered by the assessing officer in the light of the factual background, it may remit the cases to the assessing officer. Accordingly, the interlocutory applications stand disposed of. Pursuant to the order of remand, the matter was redone by the Tribunal in all these cases. The Tribunal found that the respondent-assessees are entitled to the benefit of concessional rate of tax as provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntil a notification is published in the gazette, it cannot be treated as a notification for the purpose of the Act. The resultant position would be that S.R.O. No. 1091/99, which purports to supersede the earlier notifications, would not take within its fold G.O. Ms. No. 124/88/ID dated August 31, 1988, as it cannot be treated as a notification fulfilling the ingredients of the definition of the word notification , after the amendment in the year 1998. Still further, he would contend that a Division Bench of this court had, in the decision in All Kerala Small Scale Tread Rubber Manufacturers Association v. State of Kerala [1999] 113 STC 612 (Ker); [2000] 1 KLT 564 taken the view that as long as G.O. Ms. No. 124/88/ID dated August 31, 1988 is not specifically withdrawn, the assessees could take resort to its provisions. He would also submit in this context that in S.R.O. No. 1091/99, there is no express mention of the authority, withdrawing G.O. Ms. No. 124/88/ID. In other words, having regard to the decisions of this court in All Kerala Small Scale Tread Rubber Manufacturers Association [1999] 113 STC 612 (Ker); [2000] 1 KLT 564 and Thamarappally Rubber Products v. Additional Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment machinery. Government in the Taxes Department cannot say that an order issued by the Industries Department will not be obeyed by the Taxes Department. To promote small-scale industries or for rehabilitation of sick industrial units, the Government in the Industries Department may have to announce certain tax reliefs to industrial units. Reference is made to G.O. Ms. No. 17/92/ID dated January 24, 1992 issued by the Chief Secretary to Government in accordance with the policy decision included in G.O. (P) No. 119/91 dated October 22, 1991 and ordering that the sales tax concessions provided under G.O. Ms. No. 124/88/ID will continue. It is also stated that the law officer has no case that the policy decision of the Government has since changed. So long as such an order changing the policy of the Government is not announced, sales tax concessions granted as per G.O. Ms. No. 124/88/ID cannot be superseded by another notification or Government Order, issued by the Secretary to Government in the Taxes Department. Referring to the Bill contained, the Explanation to the word notification sought to be inserted as clause 2(xva), the Tribunal found that the fact that the Explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of tax. According to the learned Government Pleader, while it is true that in the Bill, there was an Explanation and in the law as finally made, the Explanation was omitted, unless and until G.O. Ms. No. 124/88/ID conforms to the definition of the word notification , it cannot hold good after the insertion of the definition of the word notification in the Act. In order to appreciate these arguments, we must find out as to what really was the apparent reason for proposing an Explanation. A perusal of the Explanation would show that the order starts with a non obstante clause. In other words, the non obstante clause refers to the judgments rendered and the intention of the Legislature to provide that any notification existing as on the date, despite any judgments to the contrary, which do not conform to the main provision of the definition, shall not be treated as a notification issued under the provisions of the Act. G.O. Ms. No. 124/ 88/ID was published on August 31, 1988. It was published by the Industries Department of the State of Kerala. It was intending to encourage the industrial activities of the State, especially rubber based industries, it was issued. Among the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on finished rubber goods had been reduced to three per cent. There was no justification for the State to contend that this notification had not been issued under section 10 of the Kerala General Sales Tax Act, 1963. Therefore, the liability of the petitioner was only to pay tax at three per cent on finished rubber products from factories in Kerala. The Government Pleader further submits that the said decision of the learned single judge was affirmed by a Division Bench on appeal. This being so, we do not see any patent illegality in the order of the Sales Tax Appellate Tribunal. These revision cases are, therefore, dismissed in limine. Therefore, this court took the view though G.O. Ms. No. 124/88/ID was not published in the gazette and it was not issued by the Taxes Department that it was issued under section 10 of the Act. We are of the view that when the Explanation was proposed, the intention of the Legislature was that G.O. Ms. No. 124/88/ID, which continued to hold the field, apparently as on the date on which the Bill was introduced, should not be allowed to continue as a notification issued under section 10 of the Act. In other words, the movers of the Bill appar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under the provisions of the Act and published in the Gazette . When it was finally made into law, the word notification has been inserted to mean a notification issued by the Government under the provisions of the Act and published in the gazette. We are of the view that certainly, as far as any notification issued after the date of the Act is concerned, it can only be treated as a notification, if it fulfils the ingredients of the definition as inserted, i.e., to say, after the date of amendment, unless there is a notification issued by the Government under the Act and it is published in the Gazette, it would not have the force of a notification. Here, we are called upon to consider the question as to whether G.O. Ms. No. 124/88/ID, which is a Government Order and that too, issued by the Industries Department in the year 1988, would be affected by the insertion of the definition of the word notification in the year 1998. In this context, as already noted by us, we must not be oblivious of the law declared by the learned single judge of this court in the decision in Thamarappally's case [1994] 94 STC 178 (Ker) dated February 8, 1994 that G.O. Ms. 124/88/ID is a notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State or to any specified area or areas therein, (b) may be subject to such restrictions and conditions as may be specified in the notification. (3) The Government may by notification in the gazette, cancel or vary any notification issued under sub-section (1). Section 10 empowers the Government to make an exemption or reduction, both prospectively and retrospectively in respect of tax payable under the Act. Sub-section (3) empowers the Government to cancel or vary any notification issued under sub-section (1) of the Act. S.R.O. No. 1091/99 is a notification issued on a review of the previous notifications. There is no case at all for the respondents-assessees that S.R.O. No. 1091/99 is not published in the gazette as ordained in the definition clause and in section 10 of the Act. In S.R.O. No. 1091/99, the Government, inter alia, provides for concessional rate of eight per cent in respect of products sold by smallscale industries registered with the Industries Department. The wording of S.R.O. No. 1091/99, insofar as it is material, is as follows: In exercise of the powers conferred by section 10 of the Kerala General Sales Tax Act, 1963 (Act 15 of 1963) and in super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was expressly saved, were to cease to exist. The significance of this difference is sufficient to answer the contentions raised by the learned counsel for the party respondents that G.O. Ms. No. 124/88/ID was not expressly referred to and superseded. We are of the view that it is not necessary to expressly refer to G.O. Ms. No. 124/88/ID when the intention of the Government was that there must be one compendious notification, providing for reduced rate of tax as stated in S.R.O. No. 1091/99. No doubt, the learned counsel for the party respondents would submit that after the insertion of the definition of the word notification in the year 1998, when S.R.O. No. 1091/99 purported to supersede all notifications issued under section 10 of the Act, there is no legal efficacy for the Government to supersede G.O. Ms. 124/88/ ID by superseding the notifications issued under section 10 of the Act. In other words, according to the learned counsel for the respondents, insofar as G.O. Ms. No. 124/88/ ID was not admittedly published in the Gazette, it cannot be treated as a notification issued under section 10 of the Act after April 1, 1998. If it is not a notification issued under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17/92/ID in the following terms: In accordance with the policy decision included in the Government Order read first above, Government are pleased to order that the following tax concessions will be available to new industrial units, starting commercial production on or after September 23, 1991. (a) New units will be exempted from all connected State taxes for the first seven years from the date of commencement of commercial production. The exemption will, however, not to applicable to taxes due to local bodies such as property tax, profession tax, etc. (b) So far as sales tax and turnover tax are concerned, the exemption will be available for seven years from the date of commencement of commercial production, subject to a ceiling of 100 per cent of fixed capital investment. In the alternative, units in the medium and large scale sectors can opt for deferment of sales tax for ten years from the date of commencement of commercial production subject to the same ceiling. (c) Those units which opt for deferment may remit the accumulated sales tax and turnover tax over a period of five years. There will be no interest on the tax accumulation for the first ten years. However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxes Department in the State of Kerala, it is submitted. Support is sought to be drawn from the decision of the apex court in Suprabhat Steel's case [1999] 112 STC 258 (SC). It is further contended that in view of the Bench decision of this court in All Kerala Small Scale Tread Rubber's case [1999] 113 STC 612 (Ker); [2000] 1 KLT 564, unless G.O. Ms. No. 124/88/ID is specifically referred to and withdrawn, it must be treated as continuing, despite the issuance of S.R.O. No. 1091/99. In order to appreciate the context in which this court decided All Kerala Small Scale Tread Rubber's case [1999] 113 STC 612 (Ker); [2000] 1 KLT 564, we must understand as to what the notification dated March 27, 1990 purported to do. S.R.O. No. 554/90 read as follows: In exercise of the powers conferred by section 10 of the Kerala General Sales Tax Act, 1963 (15 of 1963), the Government of Kerala having considered it necessary in the public interest so to do, hereby make- (1) an exemption in respect of tax payable on the turnover of purchase of rubber by new medium and small-scale industrial units for use in the manufacture of rubber goods by such units for sale inside the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the exemption granted as per the notification published as S.R.O. No. 968/80 or as per the notification published as S.R.O. No. 654/89, subject to certain conditions as mentioned therein. The notification was to come into effect from the date of G.O. Ms. No. 124/88/ID, namely, August 31, 1988 and it was to continue till March 31, 1990. The notification is dated March 27, 1990. We notice that S.R.O. No. 968/80 provided for exemption from tax payable under the KGST Act, in respect of the turnover of the sale of goods produced and sold by new industrial units under the small-scale industries for a period of five years from the date of commencement of the sale of such goods by the said units subject to certain conditions. Quite clearly, the Government intended to give the benefit of concessional rate on those units which were governed by S.R.O. No. 968/80 also. Likewise, S.R.O. No. 654/89 provided for exemption in respect of tax payable on the sale of goods produced and sold by the new industrial units for a period of five years from the date of commencement of the sale, subject to certain conditions. The same came into force with effect from April 1, 1989. What is relevant is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o that extent. In the instant case, the notification issued by the State Government on April 4, 1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly, the policy engrafted in clause 10.4(i)(b). Consequently, the High Court was fully justified in striking down that part of the notification which is repugnant to clause 10.4(i)(b). It is not possible to accept the State's contention that it would be open for the Government to issue a notification in exercise of power under section 7, Bihar Finance Act, which may override the Incentive Policy itself. The expression 'such conditions and restrictions as it may impose' in section 7(3) will not authorise the State Government to negate the incentives and benefits which any industrial unit would be otherwise entitled to under the general policy resolution itself. It is necessary, however, to appreciate the contextual background as revealed by the factual background in the said case. The State of Bihar, with an intention to promote industrial activities in the State, had issued various industrial resolutions. Regarding the Industrial Policy in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on finished products. Those facilities have not been extended to old industrial units, but only a limited facility is extended to such old units whose investment on plant and machinery did not exceed ₹ 15 crores on April 1, 1993. The grievance of the petitioners is that despite the clear language employed in the industrial policy, the Commercial Taxes Department issued a notification on April 4, 1994, purportedly in exercise of authority under paragraph 10.5 of the policy laying down that the old industries which had made investment of less than ₹ 15 crores up to April 1, 1993 shall be entitled to get exemption provided they had not got any benefit under any previous industrial incentive policy. According to the petitioners, this amounts to depriving them of the facility/benefit granted to old industrial units under the Industrial Incentive Policy of 1993. Under paragraph 10.5 of the policy, the conditions with regard to grant of exemption could be specified by Commercial Taxes Department, and this could relate to details of the utilization of raw materials and other things, but a condition could not be imposed, whereby the exemption could be denied to old industri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a revision under section 41 of the Act. In fact, the respondents-assessees are estopped as, even according to them, in the appeal carried before the apex court, the matter has been remanded back for considering the effect of the notification. Therefore, at no stage, including before the apex court, the assessee has a case that the notification (S.R.O. No. 1091/99) is vulnerable on grounds, which ultimately found favour with the Patna High Court and later, with the apex court in Suprabhat Steel's case [1999] 112 STC 258 (SC). Therefore, we are of the view that the principle, which has been enunciated in the said case, cannot be canvassed by the respondents-assessees before us in these proceedings. The learned Government Pleader has a case that he is not clear as to whether there was a Cabinet decision. But, we also cannot overlook the argument of the learned Government Pleader that even G.O. Ms. No. 17/ 92/ID clearly states that the concessions announced in G.O. Ms. 124/88/ID will continue. The learned Government Pleader has a definite case that when an industry is in its infancy, a helping hand extended by the Government is one thing and a demand for continuing the same pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in G.O. Ms. No. 124/88/ID. Therefore, he would contend that it was essentially following the principle in Suprabhat Steel's case [1999] 112 STC 258 (SC) that G.O. Ms. No. 124/88/ID has been held as continuing, despite the issuance of S.R.O. No. 1091/99. It may be true that it was issued by the Industries Department. But, once the superior court, in writ jurisdiction, in Thamarappally's case [1994] 94 STC 178 (Ker), took the view that G.O. Ms. No. 124/88/ID is a notification issued under section 10 and it is admittedly affirmed by the Division Bench, it was not open to the Tribunal to say that it is one issued by the Industries Department, apparently, applying the doctrine enunciated in Suprabhat Steel's case [1999] 112 STC 258 (SC), as pointed out by the learned counsel for the respondents. The upshot of the above discussions is that the following conclusions are inevitable: 1. S.R.O. No. 1091/99 has the effect of superseding G.O. Ms. No. 124/88/ID dated August 31, 1988. 2. G.O. Ms. No. 124/88/ID has to be held as a notification issued under section 10 of the Act, despite the insertion of the word notification in the definition clause of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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