IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON THURSDAY, THE 2ND SEPTEMBER 2010 / 11TH BHADRA 1932 WP(C).No. 34042 of 2006(C) ----------------------------------------- PETITIONER(S): ------------------------ SHANKAR CONDUCTORS (P) LTD., UMAYANALLOOR INDUSTRIAL AREA, UMAYANALLOOR, QUILON-691 589, REPRESENTED BY ITS AUTHORIZED SIGNATORY, DINESH KUMAR SINGH. BY ADV. SRI.MILLU DANDAPANI RESPONDENT(S): --------------------------- 1. THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, QUILON. 2. THE DIRECTOR OF INDUSTRIES AND COMMERCE, CHAIRMAN, STATE LEVEL SALES TAX EXEMPTION COMMITTEE, DEPARTMENT OF INDUSTRIES, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 3. STATE OF KERALA, REPRESENTED BY SECRETARY TO GOVERNMENT, DEPARTMENT OF INDUSTRIES, SECRETARIAT, THIRUVANANTHAPURAM. 4. THE DEPUTY TAHSILDAR (RR), QUILON. 5. THE SALES TAX OFFICER, SALES TAX DEPARTMENT, CHATHANNUR. *ADDL.R6 IMPLEADED: R6. THE CHIEF ENGINEER, T C&M , KSEB, 4TH FLOOR, VYDUTHI BHAVAN, PATTOM PALACE, TRIVANDRUM - 695 004. (*ADDL.R6 IS IMPLEADED AS PER ORDER DTD. 20/11/2007 IN I.A.NO.13492/2007) R1 TO R5 BY GOVERNMENT PLEADER SRI. K.P.PRADEEP THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.34042/2006 C APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF ORDER NO.K9/3320/04/STE DTD. 11/04/2005 ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER. P2: COPY OF APPEAL PREFERRED BY THE PETITIONER BEFORE 2ND RESPONDENT VIDE SCPL/715/33/12006 DTD. 5/10/2006. P3: COPY OF PROCEEDINGS OF THE 2ND RESPONDENT NO.FC3/9920/05 DTD. 22/11/2006 ISSUED TO THE PETITIONER. P4: COPY OF DEMAND NOTICE NO.D8.3866/06 DTD. 9/11/2006 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER. P5: COPY OF DEMAND NOTICE NO.D8.3867/06 DTD. 9/11/2006 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER. P6: COPY OF DEMAND NOTICE NO.D8.3902/96 DTD. 15/11/2006 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONER. P7: ORIGINAL AFFIDAVIT DTD. 03/02/2007 SWORN IN BY DIRECTOR OF PETITIONER AND NOTARIZED AT JHARKHAND. P8: COPY OF LETTER DTD. 26/02/2007 ADDRESSED BY PETITIONER TO THE CHIEF ENGINEER (T,C&M), KSEB. P9: COPY OF LETTER DTD. 26/02/2007 ADDRESSED BY PETITIONER TO 5TH RESPONDENT. P10: COPY OF LETTER DTD. 26/02/2007 ADDRESSED BY PETITIONER TO DEPUTY COMMISSIONER, COMMERCIAL TAXES, QUILON. P11: COPY OF LETTER DTD. 18/04/2007 ISSUED BY KSEB TO PETITIONER. P12: COPY OF LETTER DTD. 19/02/2007 ISSUED BY KERALA STATE POWER AND INFRASTRUCTURE FINANCE CORPORATION LTD. TO THE PETITIONER. P13: COPY OF INTERIM ORDER DTD. 21/12/2006 OF THIS HONOURABLE COURT IN WP(C) NO.34042/2006 (C). P13(A):COPY OF INTERIM ORDER DTD. 28/03/2007 OF THIS HONOURABLE COURT IN WP( C) NO.34042/2006 (C). Kss ..2/- ...2.... WPC.NO.34042/2006 C P13(B):COPY OF INTERIM ORDER DTD. 08/05/2007 OF THIS HONOURABLE COURT IN I.A.NO.6181/2007 IN WP(C) NO.34042/2006 (C). P14: COPIES OF PETITION DTD. 13/07/2007 ASSESSMENT ORDER DTD. 29/03/2007, MEMORANDUM OF APPEAL DTD. 12/06/2007. P15: COPY OF LETTER DTD. 27/06/2007 ISSUED BY THE CHIEF ENGINEER, T,C&M, KSEB. RESPONDENT'S EXHIBITS: R1(A): COPY OF SRO 295/2000 DTD. 31/03/2000. /TRUE COPY/ P.A.TO JUDGE Kss P.R.RAMACHANDRA MENON, J. --------------------------- W.P.(C) No. 34042 OF 2006 -------------------------- Dated this the 2nd day of September, 2010 J U D G M E N T The issue raised in this case is whether the petitioner is entitled to the benefit of exemption under S.R.O.1729/93 for a period of seven years from the date of commercial production, notwithstanding the mandate under the subsequent S.R.Os, i.e., S.R.Os 1092/99 and 295/00, whereby the stipulation in the parent S.R.O. was amended to a substantial extent. The case of the petitioner is as follows: 2. The petitioner is a manufacturer of Aluminium Conductors (Steel Re-inforced) which is being supplied to KSEB, the additional sixth respondent herein. The industrial unit of the petitioner was set up as an SSI unit which was granted provisional registration on 10.11.1999 and trial production was taken on 31.12.1999. Thereafter permanent registration was obtained on 19.2.2000. 3. The Government had issued S.R.O. 1729/93 providing various benefits to the industrial sector, based on the industrial policy, as per which new industrial units were entitled WPC. No.34042/06 2 to have exemption from the purview of sales tax for a period of 'seven years' from the date of commercial production. The case of the petitioner is that commercial production was started by the petitioner only on 10.12.2003 and this being the position, the petitioner is entitled to have the exemption for a period of seven years as contemplated under the parent S.R.O., though the said S.R.O. was subsequently modified as per S.R.O. 1092/99, which however did not place any hurdle in so far as the case of the petitioner is concerned. It is based on the said S.R.O. that the petitioner invested huge amounts in the industry and the unit was set up and as such, tilting the balance is quite detrimental to the rights and interest of the petitioner; especially with regard to the right for getting exemption, submits the learned counsel. 4. The case as projected in the writ petition is that the petitioner filed an application claiming the benefit of exemption which was rejected by the first respondent as per Ext.P1 order dated 11.4.2005, placing reliance on the subsequent S.R.O. WPC. No.34042/06 3 295/00, whereby the benefit conferred by the earlier S.R.O. was modified, limiting the scope to a substantial extent, thus taking the petitioner outside the purview of the concerned SRO. This made the petitioner to file Ext.P2 appeal before the second respondent. However, without properly analysing the case projected by the petitioner, the said appeal was rejected as per Ext.P3 order, followed by Exts.P4 to P6 demand notices under the KVAT Act demanding a sum of Rs.32,29,505/-, which in turn has been subjected to challenge in this writ petition. 5. When the matter came up for consideration before this Court earlier on 21.12.2006, the coercive proceedings were intercepted on condition that the petitioner deposited 50% of the liability. Later, taking note of the submission made from the part of the petitioner that much amount is due from the KSEB to the petitioner, it was ordered on 28.3.2007 that the fifth respondent should collect the amount to satisfy the said extent from the KSEB. The KSEB was impleaded as the additional sixth respondent and appropriate directions were given in I.A. WPC. No.34042/06 4 No.6181 of 2007 directing the fifth respondent to comply with the orders dated 28.3.2007 and also granting stay of Ext.P15 (stated as pertaining to the very same demand notices Exts.P4 to P6) on 20.11.2007, in I.A. No.13491 of 2007. Learned counsel for the petitioner submits that the course pursued by the respondents rejecting the application for exemption as per Exts.P1 and P3 is not correct or sustainable and that the petitioner ought to have been given the benefit of exemption, which could not have been watered down under any circumstances. 6. Learned Government Pleader appearing for the respondents submits with reference to the relevant S.R.Os that the benefit originally intended to be extended to new entrepreneurs vide S.R.O. 1729/93 was subsequently modified by virtue of S.R.O. 1092/99 and thereafter by virtue of S.R.O. 295/00; whereby the benefit of exemption was brought down to a limited extent. Referring to the contents of Ext.P1, the learned Government Pleader submits that the application preferred by WPC. No.34042/06 5 the petitioner for exemption itself was on 4.1.2005, i.e., much after coming to existence of S.R.O. 295/00. This being the position, the said application preferred by the petitioner after the issuance of S.R.O. 295/00 could have been considered only in the light of the contents of the said S.R.O and it was accordingly, that Ext.P1 order was passed, rejecting the claim for exemption; which in turn was upheld by the second respondent as per Ext.P3 and thus, demanding the tax in respect of the assessment years 2005-06 and 2006-07 as given in Exts.P4 to P6 demand notices. The learned Government Pleader also submits that the issue is no more open to challenge in view of the law declared by the Division Bench of this Court as to the correctness and sustainability of the above S.R.O as per the decision reported in Anaswara Offset (P) Ltd. v. State of Kerala (2005 (2) KLT 651), whereby it was clearly held that, for claiming the tax exemption as per the notification S.R.O 1729/93, the assessee should have started the commercial production prior to 1.1.2000; which period was subsequently WPC. No.34042/06 6 extended by 'one year' as per S.R.O 295/00. This being the position, the petitioner who admits that commercial production was started only on 10.12.2003 is stated as not entitled to get the benefit of exemption. As such, the challenge raised against Exts.P1 and P3 rejecting the appeal is pointed out as wrong and misconceived. 7. Learned counsel for the petitioner submits that the petitioner is entitled to have the benefit of the decision rendered by the Apex Court reported in MRF Ltd., Kottayam v. Assistant Commissioner (Assessment, Sales Tax and Others (2006 (3) KLJ 523). The issue concerned therein was with regard to the plea of 'promissory estoppal'. In the instant case, there is no case for the petitioner that, by virtue of the modification brought about by S.R.O 295/00, the petitioner is entitled to have the matter considered on a different footing, based on the principle of promissory estoppal or as to any challenge in respect of the said S.R.O 295/00 in any manner. Since there is no challenge against the S.R.O 295/00 and further since the petitioner WPC. No.34042/06 7 submitted the application for exemption only on 4.1.2005 as referred to in Ext.P1, the matter could have been considered only in terms of the S.R.O 295/00 which governed the field, as on the relevant date. This being the position, the orders passed by the concerned authorities, vide Exts.P1 and P3, are not assailable under any circumstances. No tenable grounds have been raised by the petitioner in support of the case. The writ petition fails and it is dismissed accordingly. P.R.RAMACHANDRA MENON, (JUDGE) vps WPC. No.34042/06 8 WPC. No.34042/06 9