IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.VINOD CHANDRAN MONDAY, THE 21ST NOVEMBER 2011 / 30TH KARTHIKA 1933 WP(C).No. 15234 of 2004(L) -------------------------- PETITIONER: --------------- M/S. KINGSWAY RUBBER PRODUCTS PVT.LTD., KELACHANDRA NAGAR, CHINGAVANAM, REPRESENTED BY ITS EXECUTIVE DIRECTOR, MR. K.J. THOMAS. BY ADV. SRI.A.M.SHAFFIQ SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.ANIL D. NAIR SMT.PRIYA MAHESH SMT.PRIYA MANJOORAN RESPONDENTS: --------------- 1. SALES TAX OFFICER-IV, II, CIRCLE, KOTTAYAM. 2. GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, KOTTAYAM. 3. DIRECTOR OF INDUSTIRES, THIRUVANANTHAPURAM. R1TO3 BY SENIOR GOVERNMENT PLEADER SRI. S. SUDHEESH KUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 21/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).No. 15234 of 2004(L) APPENDIX PETITIONER'S EXHIBITS: EXT.P1 : TRUE COPY OF THE PROCEEDINGS ISSUED BY THE 1ST RESPONDENT TO THE PETITIONER DT. 15.9.1993 EXT.P2 : TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER DT. 23.7.1994 EXT.P3 : TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER DT.28.11.1994 EXT.P4 : TRUE COPY OF THE ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR 1993-94 DATED 26.4.2001 EXT.P5 : TRUE COPY OF THE ORDER SENT BY 2ND RESPONDENT TO THE PETITIONER DATED 23.7.1994 EXT.P6 : TRUE COPY OF THE ORDER SENT BY THE APPELLATE ASSISTANT COMMISSIONER TO THE PETITIONER DATED 14.3.2002 EXT.P7 : TRUE COPY OF THE ORDER OF THE SALES TAX APPELLATE TRIBUNAL TO THE PETITIONER DATED 14.5.2002 EXT.P8 : TRUE COPY OF THE ORDER OF THE 2ND RESPONDENT TO THE PETITIONER DT. 13.6.2002 EXT.P9 : TRUE COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 3RD RESPONDENT DT.11.7.2002 EXT.P10 : TRUE FOPY OF THE ASSESSMENT ORDER ISSUED BY THE 1ST RESPONDENT FOR 1993-94-CST TO THE PETITIONER DATED 28.9.2002 EXT.P11 : TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT TO THE 3RD RESPONDENT DATED.19.12.2002 EXT.P12 : TRUE COPY OF THE ORDER OF THE DIRECTOR OF INDUSTRIES AND COMMERCE, DT. 28.4.2004 TO THE PETITIONER RESPONDENTS' ANNEXURES: NIL //TRUE COPY// jma K.Vinod Chandran, J. ---------------------------------------- W.P.(C).No.15234 of 2004-L ---------------------------------------- Dated this, the 21st day of November, 2011 JUDGMENT The petitioner took over the liabilities and assets of a sick SSI Unit and as per a revival package, the petitioner claimed exemption from payment of tax under the Kerala General Sales Tax Act (for short “KGST Act”) by G.O.(P).No.313/81/ID dated 21.11.1981. The petitioner was granted sales tax exemption with respect to the tax payable under the KGST Act for the period 18.10.1991 to 17.10.1996 by Exhibit P1. Subsequently, the petitioner applied for exemption under the Central Sales Tax Act also for the very same period; which was granted by the District Level Committee for Sales Tax Exemption by Exhibit P2. In Exhibit P2, the Central Sales Tax exemption granted was for the period 18.10.1991 to 17.10.1996 and the same was by virtue of SRO.No.752/94 (G.O.(P0.No.69/94/TD dated 3.6.1994). Subsequently, the petitioner made additional investments to the tune of `25,46,773/- and claimed exemption under the KGST Act as well as CST Act, which also was granted under the Sick Unit Revival Programme for the period from 31.1.1993 to 17.10.1996. WP(C).15234 of 2004 - 2 - 2. It is submitted by the learned counsel for the petitioner that the assessment for the period 1993-94 was completed granting the exemption both under the KGST Act as well as the CST Act. However, noticing the obvious anomaly in granting exemption by virtue of a Government Order of the year 1994 to an earlier period, the assessing officer made an application to the District Level Committee and pursuant to the same, the District Level Committee, after hearing the petitioner, passed Exhibit P5 order limiting the claim of exemption for the tax payable under the CST from 1.1.1994. On the basis of Exhibit P5 order, Exhibit P4 rectified assessment was also made. The petitioner challenged Exhibit P4 before the first appellate authority and the Sales Tax Appellate Tribunal, which resulted in Exhibits P6 and P7 orders. Exhibit P5 was challenged by way of clarification, which ended in Exhibit P8 order being passed by the General Manager, District Industries Centre. Exhibit P8 order was challenged before the State Level Committee by Exhibit P9 appeal, resulting in Exhibit P12 order, which is impugned in the instant writ petition. 3. The petitioner's counsel would contend that the Department having granted Exhibit P2 and P3 exemption cannot, at a later stage, turn back and deny the same, causing serious prejudice WP(C).15234 of 2004 - 3 - to the petitioner. It is also contended that the denial of an exemption on the basis of a subsequent amendment is irregular and cannot be sustained. The learned Government Pleader would submit that the denial of exemption was not due to a subsequent amendment, but the claim itself could be raised only on the basis of Government order of 1994 (S.R.O.752/94). The learned counsel for the petitioner also would contend on the basis of Exhibit P3 that the exemption granted for the additional investment is not based on S.R.O.752/94, but would relate to S.R.O.502/90, which takes in both the KGST as well as the CST liability of the petitioner. 4. I have heard the learned counsel for the petitioner as also the learned Government Pleader. 5. There cannot be any dispute that the CST exemption was granted to the petitioner by virtue of SRO.752/94 issued on 3.6.1994 and that the said G.O. has retrospective effect only from 1.1.1994. For the period before 1.1.1994, the exemption notification not having granted any exemption under the CST Act, the petitioner cannot have any claims for the prior period. Exhibit P3 order was passed without noticing the fact that the exemption available under the CST Act is only with effect from 1.1.1994. On facts also this is not WP(C).15234 of 2004 - 4 - a case in which the denial was made on the basis of a subsequent amendment; nor is it a case in which the assessing officer had gone behind the orders of exemption granted by the competent authority. The assessing officer having passed an order granting the exemption noticed the irregularity in the same and promptly brought it to the notice of the competent authority, the latter of whom modified the exemption granted by Exhibit P5. The contention of the petitioner, as observed above, that the denial of exemption is by virtue of a later amendment cannot be countenanced and this is clearly a case in which the irregularity was noticed and rectified properly after giving notice to the petitioner. The facts of this case would clearly indicate that the declaration of law made by a Division Bench of this Court in Premerajan v. State of Kerala, 2008(1) KLT 873, would squarely apply to this case. In the said case, the exemption granted to the petitioner therein by the District Level Committee was found to be irregular and improper by the assessing authority, who by a communication addressed the District Level Committee to re-examine the exemption granted. The District Level Committee, on re-examination found that the assessing officer was correct in terming the exemption granted as irregular and hence cancelled the WP(C).15234 of 2004 - 5 - exemption earlier granted. The petitioner challenged the cancellation of exemption on the ground that a benefit once granted cannot be taken away, the principles of promissory estoppal apply and also that the exemption even if liable to be cancelled, remains to be valid till its cancellation. A Division Bench held that the Government or public authority cannot be compelled to carry out a promise which is contrary to and beyond its powers and the DLC granting exemption contrary to Government orders can be cancelled at any time and the principle of promissory estoppal does not apply. The declaration of the law made by a Division Bench of this Court squarely applies in the present case. The further contention of the petitioner that Exhibit P3 with respect to additional investment would relate back to SRO.502/90 and is not regulated by SRO.752/94 also cannot hold any water. The exemption order, Exhibit P3, itself makes it clear that the exemption granted to the petitioner for the additional investments on his liability for KGST Act and CST Act was under the Sick Unit Rehabilitation Programme. This can only be so since the petitioner who had already applied for exemption for the amounts invested on the revival of the sick unit has been granted the said exemption. The fact that additional investments were claimed cannot take the petitioner out of the purview of the Sick WP(C).15234 of 2004 - 6 - Unit Rehabilitation Programme and make the petitioner's case applicable to an earlier Government Order. The petitioner having been granted exemption as a sick unit can only continue to be granted exemption under the Sick Unit Rehabilitation Programme and in that view of the matter, the right to exemption from liability to pay CST would crystallise only from the point on which SRO.752/94 was given effect to, that is to say from 1.1.1994. In the circumstances detailed above, I am of the opinion that the writ petition is devoid of any merit and is dismissed. No costs. K.Vinod Chandran, Judge. vku/-