IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE THE CHIEF JUSTICE MR.H.L.DATTU & THE HONOURABLE MR. JUSTICE A.K.BASHEER MONDAY, THE 10TH NOVEMBER 2008 / 19TH KARTHIKA 1930 S.T.Appl..No. 1 of 2007 ------------------------------------ ORDER NO.R1.49432/2003/TX. DATED 17.11.2005 OF THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM .................... APPELLANT: ----------------- M/S.TAMILNADU AMMONIA (P) LTD., IDA, EDAYAR, MUPPATHADOM, ALUVA. BY ADV. SRI.K.SRIKUMAR SRI.C.N.SREEKUMAR SRI.K.JH.CHERRY BABU SRI.K.MANOJ CHANDRAN SRI.P.R.AJITKUMAR RESPONDENT: ---------------------- STATE OF KERALA, REPRESENTED BY THE GOVERNMENT PLEADER, HIGH COURT OF KERALA, ERNAKULAM. BY SPECIAL GOVERNMENT PLEADER SRI.VINOD CHANDRAN THIS SALES TAX APPEAL HAVING BEEN FINALLY HEARD ON 10/11/2008, ALONG WITH S.T.A.NO.2/2007, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: H.L.DATTU, C.J. & A.K.BASHEER, J. ------------------------------------------- S.T.A.Nos.1 & 2 of 2007 ------------------------------------------ Dated, this the 10th day of November, 2008 JUDGMENT H.L.Dattu, C.J. The proceedings of the Commissioner of Commercial Taxes, Thiruvananthapuram in Order No.R1.49432/2003/TX dated 17.11.2005 for the assessment years 1997-98 and 1998-99 in modifying the orders passed by the first revisional authority and confirming the orders passed by the assessing authority in imposing penalties under Section 45A(1)(c) and (d) of the Kerala General Sales Tax Act, 1963 ('the Act' for short) for the offence of evading or delaying the payment of tax legitimately due to the State Government by filing untrue and incorrect returns, is the subject matter of these appeals. (2) The assessee is a manufacturer of liquor Ammonia and Anhydrous Ammonia. In view of the notification issued by the State Government in exercise of their powers under Section 10 of the Act in S.R.O.No.521 of 1992, the petitioner Company being of the opinion that it is also entitled for exemption from payment of tax due under the Act, had approached the General Manager, Kerala State Industrial Development Corporation ('Corporation' for short) for grant of eligibility certificate to claim sales tax exemption from the competent authorities under the Act. S.T.A.Nos.1 & 2 of 2007 2 The aforesaid authority by its order dated 6th July, 1994 has issued the eligibility certificate for the products Anhydrous Ammonia and Liquor Ammonia manufactured by the appellant's industrial unit. (3) As envisaged under the notification S.R.O.No.521 of 1992, an appropriate order requires to be passed by the Deputy Commissioner (General). The said authority after considering the claim of the petitioner had rejected the same, on the ground, that, there is no manufacturing activity while manufacturing Liquor Ammonia and Anhydrous Ammonia. (4) Aggrieved by the order so passed by the Deputy Commissioner (General), the appellant was before this Court in O.P.No.10069 of 1995. This Court by its orders dated 28th April, 1998 was pleased to allow the original petition and in that the learned Judge was of the opinion that the activity of production of Liquor Ammonia would amount to a manufacturing activity and, therefore, the appellant is entitled for exemption from payment of sales tax on its sales turnover and in so far as Anhydrous Ammonia is concerned, the learned Judge was of the opinion that it would not amount to a manufacturing activity. Aggrieved by the orders so passed by the learned Single Judge, the assessee was before this Court in W.A.No.1384 of 1998. That writ appeal came to be disposed of by this Court directing the Deputy Commissioner (General) to S.T.A.Nos.1 & 2 of 2007 3 reconsider the whole issue once over again after affording an opportunity of hearing to the appellant. (5) When the matters were pending before this Court and before the authorities under the Act, the assessing authority had initiated proceedings under Section 45A of the Act, being of the opinion that the assessee has contravened certain provisions of Section 45A of the Act and accordingly had levied a penalty in a sum of Rs.4,50,000/- for each of the assessment years 1997-98 and 1998-99. (6) Being aggrieved by the order passed by the assessing authority, the appellant had filed revision petition before the Deputy Commissioner, Commercial Taxes, Mattancherry in S.T.R.P.Nos.81 of 2003 and 82 of 2003. The first revisional authority by its order dated 11.6.2003 has allowed the assessee's revision petitions and has set aside the orders passed by the assessing authority in imposing penalties under Section 45A (1)(c) and (d) of the Act. (7) The Commissioner of Commercial Taxes, Thiruvananthapuram had initiated suo motu revisional proceedings under Section 37 of the Act and after hearing the appellant has set aside the orders passed by the first revisional authority and has confirmed the orders passed by the assessing authority. (8) After disposal of the suo motu revisional proceedings by S.T.A.Nos.1 & 2 of 2007 4 the Commissioner of Commercial Taxes, the Deputy Commissioner (General) has passed an order dated 26.4.2006 and in that has granted exemption in respect of Liquor Ammonia (Rs.3.10 lakhs) and Anhydrous Gaseous Ammonia (Rs.59.19 lakhs) for the period from 31.3.1994 to 30.3.2001. (9) The assessee in these appeals, as we have already stated, calls in question the suo motu revisional order passed by the Commissioner of Commercial Taxes, Thiruvananthapuram dated 17.11.2005. (10) The Commissioner in the impugned order has stated that since the appellant did not have the benefit of the exemption from payment of tax due under the Act, ought not to have proceeded to assume that he would get appropriate exemption from the authorities under the Act and thereby ought to have collected the tax due under the Act and should have remitted the same to the Department. Since that has not been done, according to the Commissioner, there is contravention of the provisions of the Act. (11) In view of the subsequent order passed by the Deputy Commissioner (General) dated 26.4.2006 granting exemption to the appellant's industrial unit for the period from 31.3.1994 to 30.3.2001, the view of the Commissioner of Commercial Taxes, Thiruvananthapuram S.T.A.Nos.1 & 2 of 2007 5 pales into insignificance and, therefore, while allowing these appeals, the order passed by the Commissioner of Commercial Taxes, Thiruvananthapuram requires to be set aside. Accordingly we do so. Ordered accordingly. (H.L.DATTU) CHIEF JUSTICE (A.K.BASHEER) JUDGE vns/dk.