TMI Blog2023 (3) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the State Government that the benefit is denied to the petitioner based on the interpretation of the words manufacture and production . It is only at the time of final hearing of this writ petition the learned Additional Advocate General sought to justify the action of the State Government by placing reliance of Arihant Tiles. The indubitable fact remains that, according to both petitioner and the State Government, the activities of petitioner and Chamundeshwari are one and the same. The State Government s action amounts to conscious discrimination between two similarly situated industrial units. It is relevant to note that Chamundeshwari Industry was granted sales tax exemption on sale of by-products of sugar under Industrial Policy 1993-98 and it also enjoyed the benefit of deferral of purchase tax as interest free loan from 2000 to 2010. The petitioner being similarly situated as that of Chamundeshwari shall be entitled for exemption from payment of sales tax on by-products namely molasses, bagasse and filter mud - petition allowed. - WRIT PETITION NO. 15174 OF 2018 (T-KST) - - - Dated:- 3-3-2023 - HON BLE MR. JUSTICE P.S. DINESH KUMAR AND HON BLE MR. JUSTIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , bagasse and filter mud. 4. The Government of Karnataka vide Order [Government Order No. CI 30 SPC 96] dated March 15, 1996 (Annexure B) issued a package of incentives and concessions in terms of the New Industrial Policy 1996, effective from 1996 ending with 2001 and classified sugar industry as a thrust sector . In pursuance of the Order, the Government of Karnataka issued a Notification No. FD 32 CSL 96(1) dated November 15, 1996 (Annexure C) granting exemption and deferment of the tax payable under the KST Act in respect of goods manufactured. 5. On December 12, 1999 (Annexure D), Petitioner made an application to the Joint Director, District Industries Centre, Mandya, for sales tax and purchase tax incentives and it was forwarded to the Joint Director, Industries Commerce, Bengaluru for issuance of New Unit Certificate and FAVC [Fixed Assets Valuation Certificate] to claim purchase tax deferral and sales tax exemption benefits and the same was issued. Thereafter, the second respondent issued a letter dated December 29, 2000 stating that since sugar industries are eligible for deferment of purchase tax, they are not eligible for exemption with respect to sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SPI 2010 (Annexure Z) dated May 30, 2012 held that petitioner is not entitled for sales tax exemption on the sale of by-products under New Industrial Policy 1996-2001 because petitioner was already enjoying the benefit of purchase tax deferment for ten years as interest free loan and also held that no sugar industries were allowed to enjoy the benefit sales tax exemption/ deferment, on the products or by-products as per the Industrial Policy. 11. In the year 2000, the Joint Director issued FAVC to one M/s. Chamundeshwari Sugars Ltd. (Hereinafter referred to as Chamundeshwari ) and granted sales tax exemption on the sale of by-products in accordance with Industrial Policy 1993-1998. At that time, Chamundeshwari was enjoying the benefit of deferral of purchase tax on sugarcane as interest free loan from 2000 to 2010. On December 08, 2010, the said benefit was withdrawn. Again the State Government vide order (Annexure Z3) dated February 23, 2013 re-granted the sales tax exemption benefit on the by-products to Chamundeshwari. 12. On February 22, 2018, the Industries Commerce Department passed the impugned communication [NO CI 51 SPI 2015] , rejecting petitioner s claim for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls Co. Ltd Ors AIR 1963 SC 761. 15. Opposing the writ petition, the learned Additional Advocate General contended that: the claim of the petitioner seeking Sales Tax exemption on by-products like molasses, bagasse has been rejected vide Government Order dated May 30, 2012. The same has not been challenged; the communication dated 22.02.2018 is not an order, but it is an inter-departmental communication. Thus, the petitioner s claim based on inter-departmental communication does not merit any consideration; the Industrial Policy 1996 does not provide for exemption of by-products such as molasses, bagasses, etc. Hence, its scope cannot be enlarged by construing it liberally; exemption notification is a departure from regular rule and a person claiming benefit under such notification shall establish that his claim falls within contours of Exemption Notification and the same cannot be subjected to any interpretation by the Court; the notification dated March 15, 1996 categorically states that the incentives and concessions shall be available only for manufacturing units; the petitioner s industry manufactures sugar. The New Unit Certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AVC to Chamundeshwari for sales tax exemption on molasses, bagasse etc., though Chamundeshwari was enjoying the benefit of deferral on sugarcane as interest free loan, under 1993-98 Industrial Policy which is identical to 1996-2001 Industrial Policy. 19. The Revenue s specific case is, the exemption notification specifically mentions the word manufacture , hence, the by-products cannot be considered as products manufactured. The exemption granted in favor of Chamundeshwari is under a different policy i.e., Industrial Policy, 1993, which is not applicable to the petitioner s case. 20. Undisputed facts of the case are, petitioner is a Public Limited Company engaged in the manufacture of sugar, molasses, bagasse and filter mud. It is claiming sales tax exemption on the sale of by-products of sugar under Industrial Policy 1996-2001 and petitioner was enjoying the benefit of purchase tax deferment for ten years as interest free loan. 21. Thus, the main question that arises for our consideration in this petition is, whether the petitioner is entitled for exemption from payment of tax on molasses, bagasse and filter mud under 1996-2001 Industrial Policy? 22. One of the main g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence new goods by a process which may or may not amount to manufacture. 25. We may record that the Certificate issued by Joint Director, Department of Industries Commerce, (Annexure A) is for manufacture of sugar. It is also relevant to note that the Commerce Secretary in the impugned communication has opined that matter require consideration by SLCC. 26. We may record that it is not disputed that the activities of both petitioner and Chamundeshwari are identical. We may further record that there is no pleading on behalf of the State Government that the benefit is denied to the petitioner based on the interpretation of the words manufacture and production . It is only at the time of final hearing of this writ petition the learned Additional Advocate General sought to justify the action of the State Government by placing reliance of Arihant Tiles. The indubitable fact remains that, according to both petitioner and the State Government, the activities of petitioner and Chamundeshwari are one and the same. As noticed hereinabove, the State Government s action amounts to conscious discrimination between two similarly situated industrial units. 27. It is relevant to note ..... X X X X Extracts X X X X X X X X Extracts X X X X
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