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2016 (4) TMI 535 - SUPREME COURT

2016 (4) TMI 535 - SUPREME COURT - TMI - Entitlement for benefit of exemption - Notification No. FD.11.CET.93(3) dated 31.03.1993 - Entry tax - Whether the appellant falls within the ambit of “new industrial unit”, essential requirement of exemption notification - Held that:- a Unit has to be certified to be eligible for exemption under the notification dated 21.06.1991. That is an essential requirement for a Unit to fall within the definition of “A New Industrial Unit” under the notification da .....

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ellant itself that the Department of Industries and Commerce issued eligibility certificate in terms of industrial policy G.O. No. CI 30 SPC 96 dated 15.03.1996 and notification dated 15.11.1996 issued under Section 19-C of the KST Act. Such eligibility certificate would not be of any consequence in as much as, in order to get the benefit of the notification dated 31.03.1993, the appellant was required to get certification under the notification dated 19.06.1991. Obviously, therefore, the appell .....

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ng benefit notification has to be construed liberally. However, in the present case, the appellant has not been able to cross the threshold and to find entry under notification dated 31.03.1993. Therefore, the appellant was not entitled to exemption from entry tax. - Decided against the appellant - Civil Appeal No(s). 4231/2006 - Dated:- 13-4-2016 - A.K. SIKRI AND ROHINTON FALI NARIMAN, JJ For the Petitioner : Mr. Raghavendra S. Srivatsa, Adv. For the Respondent : Mr. V. N. Raghupathy, Adv., Mr. .....

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the Karnataka Tax on Entry of Goods Act, 1979 (hereinafter referred to as the 'KST Act') against the order which was passed by the Karnataka Appellate Tribunal, Bangalore. The necessity of filing three petitions arose because of the reason that three Assessment Years i.e. 1997-1998, 1998-1999 and 1999-2000 are involved, though the question raised in all these petitions was identical which pertains to the levy of entry tax under the KST Act. All the authorities below including the Karnata .....

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under the provisions of the Companies Act, 1956. It is also a dealer registered under the provisions of the KST Act. The appellant is engaged in the manufacture of Dry Manganese Dioxide Batteries (DMD batteries). It has its manufacturing Unit at Somanahalli, Maddur Taluk, which falls under Zone-II of the notification dated 23.06.1997 issued by the State Government. Before establishing its manufacturing Unit at Somanahalli, Maddur Taluk, the appellant-company had approached the State Government f .....

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clear that the appellant-company should make an investment of a sum of ₹ 111 crores, to claim benefit under the notification dated 25.06.1997. After obtaining the said exemption from the State Government, the appellant-company established its manufacturing Unit at Somanahalli, Maddur Taluk. But for various reasons, the appellant-company could not make investment of a sum of ₹ 111 crores, as envisaged under the notification dated 25.06.1997. Therefore, the appellant-company was ineli .....

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levied entry tax on the causing of entry of raw materials and components into the local area, on the ground that the appellant-company could not have availed tax exemption, since it did not fulfill the primary condition stipulated in the notification dated 25.06.1997 and it was also held by the Assessing Authority that since Government Order/Notification dated 25.06.1997 had been specifically issued granting entry tax exemption to the appellant-company subject to fulfilling certain conditions, .....

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s order dated 18.03.2003 had partly allowed the appeal filed by the assessee. 2.4 For the Assessment Years 1998-1999 and 1999-2000, the Assessing Authority had also passed reassessment orders under Section 6(1) of the KST Act and also had levied penalty under Section 6(2) of the KST Act. Aggrieved by the said order, the assessee had filed first appeals before the First Appellate Authority in Appeal Nos.KTEG.AP.24/02-03 (1998-1999) and 25/02-03 (1999-2000), who by his order dated 20.01.2003 had r .....

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cted STA Nos. 329 and 330/2003 for the Assessment Years 1997-1998, 1998-1999 and 2000-2001. In its order, the Tribunal has concluded that the assessee is not entitled to benefit of the Notification No.FD.11.CET.93(III) dated 31.03.1993; insertion of clause (g) to the explanation to KST Notification No. FD.239.CSL.90(I) dated 31.03.1993; no penalty can be imposed under Section 5(5) of the KST Act on the assessee company for the relevant Assessment Years. 3. Not satisfied with the aforesaid outcom .....

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e High Court has rejected the plea by holding that due to amendment of notification dated 19.06.1991 by notification dated 31.03.1993, the appellant was excluded from getting the benefit of general Notification. In this behalf, it has concluded that subsequent insertion of clause (g) to Explanation III of notification dated 19.06.1991 was applicable to the general exemption issued under Section 11-A of Entry Tax Act. While so holding, the High Court has made a distinction between legislation by .....

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implementing general exemption notification dated 31.03.1993. The aforesaid principle stated by the High Court in the impugned judgment was severely criticised and attacked by the learned counsel for the appellant on the ground that in the present case there was legislation by incorporation and not by reference. However, we feel that it may not even be necessary to go into this aspect, having regard to the discussion that follows hereinafter. 4. As pointed out above, the order dated 25.06.1997 .....

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invest ₹ 111 crores in the project, as envisaged in the notification dated 25.06.1997. Therefore, insofar as exemption notification dated 25.06.1997 which was issued specifically in the case of the appellant, the appellant cannot be held entitled to the benefit thereof as it failed to fulfill the conditions. 5. The appellant, however, still claims the exemption by virtue of general Notification dated 31.03.1993 issued under the Entry Tax Act. This notification was issued under Section 11A .....

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t in dispute that the appellant industry stands covered by one such category of industry the description whereof is given in the notification. It is also located at a place which is stipulated in the said notification. However, the exemption was available to the new Industrial Units. The question arises as to whether the appellant falls within the ambit of new industrial unit as defined therein. Explanation in the notification defines a new industrial unit which reads as under: Explanation - (1) .....

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FD 239 CSL 90(I) dated 19th June 1991 issued under Section 8-A of the Karnataka Sales Tax Act, 1957 for claiming exemption under that notification shall mutatis mutandis apply to a industrial unit claiming exemption under notification. 6. Reading of the aforesaid definition clearly suggests that a new industrial unit is given the same meaning which is assigned in the notification dated 19.06.1991. For this purpose, one needs to look into the meaning that is given to a new industrial unit in the .....

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Khadi and Village Industrial Unit as defined under the Karnataka Khadi & Village Industries Act, 1956 from time to time. [See Note 3] (b) A New Industrial Unit means any of the units described in Clause (a) above, which are certified to be eligible for exemption under this Notification, by the authorities mentioned in Clauses (a) and (b) of Para (1) under Procedure below. 7. In order to qualify to be A New Industrial Unit , the following conditions need to be fulfilled: (i) It has to be eith .....

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istry of Industries, Government of India. (iii) Such a Unit has to be certified to be eligible for exemption under the said notification by the authorities mentioned therein. 8. What is significant for our purposes is that such a Unit has to be certified to be eligible for exemption under the notification dated 21.06.1991. That is an essential requirement for a Unit to fall within the definition of A New Industrial Unit under the notification dated 31.03.1993 as it is assigned the same meaning a .....

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tries and Commerce issued eligibility certificate in terms of industrial policy G.O. No. CI 30 SPC 96 dated 15.03.1996 and notification dated 15.11.1996 issued under Section 19-C of the KST Act. Such eligibility certificate would not be of any consequence in as much as, in order to get the benefit of the notification dated 31.03.1993, the appellant was required to get certification under the notification dated 19.06.1991. Obviously, therefore, the appellant does not fulfill the requirement of th .....

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the assessee to establish that the goods manufactured by him come within the ambit of the exemption notification. Since, it is a case of exemption from duty, there is no question of any liberal construction to extent the term and the scope of the exemption notification. Such exemption notification must be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption .....

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