Tulshan Granites Private Limited, Bangalore vs The Assistant Commercial Tax Officer, VI Circle, Bangalore and Others

All these writ petitions are disposed of by this common order since the matter involved is common.

For the purpose of appreciating the facts the case of Tulshan Granites Private Limited is taken into consideration.

The petitioner has prayed that the circular issued by the Commissioner on 17-12-1992 may not be acted upon. So far as this prayer is concerned this Court has already held that the circular issued by the Commissioner shall not be acted upon. No further adjudication on that point is needed. The main prayer is with regard to quashing of notice dated 30-1-1995 by which the petitioner was required to submit the objections regarding the liability of entry tax. In the said notice it is mentioned that by virtue of notification dated 28th August, 1993 the petitioner is required to pay entry tax on the purchase value of machinery as only raw material and component parts are exempted and machinery is not exempted. Notification dated 28th August, 1993 is as under:

"NOTIFICATION

No. FD 171 CSL 93(III), Bangalore, dated 28th August, 1993 Karnataka Gazette, dated 23rd September, 1993

S.O. 1184.-In exercise of the powers conferred by Section 11-A of the Karnataka Tax on Entry of Goods Act, 1979 (Karnataka Act 27 of 1979), the Government of Karnataka being of the opinion that it is necessary in the public interest, so to do, hereby exempts with immediate effect, the tax payable under the said Act by an Export Oriented Industrial Unit eligible for tax concessions under the Government Order No. CI 140 SPC 93, dated 12th July, 1993 on the entry of goods into a local area for use as raw materials and component parts of goods manufactured and exported outside the country by such unit for a period upto five years from the date of commencement of its commercial production or upto 11th July, 1998 whichever is later.

Explanation.-For the purpose of this notification and Export Oriented Industrial Unit means.-

(i) an Industrial Unit which is registered as such with the Director of Industries and Commerce and exporting a minimum of 50% of the value of the goods manufactured in a year;

(ii) an Industrial Unit which is defined as 100% Export Oriented Unit in Annexure-C of the Government Order No. CL 49 SPC 93, dated 12th July, 1993".

The petitioner set up 100% Export Oriented Unit sometime in 1992. It is claimed that exemption from entry tax has to be provided in terms of notification dated 29-11-1989.

In W.P. No. 6484 of 1996 by notification dated 31-3-1993 issued under Section 11-A of the Karnataka Tax on Entry of Goods Act, 1979, tax from 1-4-1993 on raw material, components, inputs, machinery and its parts were exempted for the period mentioned in the said notification have been challenged.

The Government Order dated 29-11-1989 is not a notification but an order as published in another Government Order dated 27th September, 1990 in which exemption from payment of entry tax on raw materials, components, etc., have been given. The notification issued on 19-6-1991 published on 21-6-1991 was cancelled on 23rd September, 1993 as published in the Gazette dated 28th August, 1993. By Government Order dated 28th August, 1993 a new scheme was introduced by which claim of refund of sales tax paid on purchase of raw materials, components, intermediaries, some finished goods, actual goods and other items mentioned therein was granted for a period of five years from the date of commencement of commercial production or upto 11-7-1998 whichever is later. The two questions which are to be interpreted are:

(1) Whether exemption from payment of entry tax is available on purchase of capital goods?

(2) Whether the State Government was justified in withdrawing the notification dated 19-6-1991 and providing new scheme of refund of sales tax?

Exemption from entry tax on all raw materials, components, etc., procured for processing in the EOZ/EOU irrespective of their location was contemplated by Government Order dated 29-11-1989. The word ''etc.''whether include capital goods, reliance is placed on the decision given in the case of Hinduja Exports v State of Karnataka and Another, W.P. No. 5188 of 1990, DD: 8-1-1992 and other connected cases) disposed of on 8-1-1992. I have gone through the order. It has nowhere been held in the said case that the capital goods would be interpreted to be covered in the word ''etc.''. The word ''etc.''takes the colour from raw material and components and there is another adjective in that i.e., required for processing was beside raw material, components. Even processing material could be claimed exemption from entry tax, vide G.O. dated 29-11-1989. The notification has not provided exemption to the capital goods and therefore by no stretch of imagination exemption for capital goods can be claimed.

Regarding withdrawal of exemption dated 19-6-1991 published on 21-6-1991 which provided exemption from payment of sales tax even on capital goods it may be observed that the said notification was not for any particular period and in the Industrial Policy 1993-98 the Government has come forward with an order dated 28th August, 1993 by which 100% Export Oriented Units have been permitted to claim refund of sales tax on raw materials. Earlier in the Government Order dated 27th September, 1990 exemption from sales tax was given even to capital goods. It is by virtue of giving effect to this Government Order that notification dated 19-6-1991 was issued. Normally a unit which has been given exemption will be governed by notification which was issued before its commercial production. But the validity of notification dated 28th August, 1993 as published in the Gazette dated 23rd September, 1993 has not been assailed in this writ petition. If the notification ceases to be in existence, exemption cannot be claimed. It may also be observed that the Government Order dated 28th August, 1993 provide for refund of sales tax on capital goods, may be on account of the experience of the Government on certain malpractices adopted which need not be discussed at this stage. It is giving exemption in another manner. The Government Order dated 28th August, 1993 changing the policy of the Government cannot be said to be without jurisdiction and is supported by the decision in Sales Tax Officer and Another v Shree Durga Oil Mills and Another, (1998)108 STC 274 (SC), wherein change of policy by the Government could be if the situation so warrants. Reliance on the decision in M/s. Motilal Padampat Sugar Mills Company Limited v State of Uttar Pradesh and Others, AIR 1979 SC 620, therefore has no relevance.

Writ petitions having no force are accordingly dismissed.