IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR TUESDAY, THE 4TH AUGUST 2009 / 13TH SRAVANA 1931 OP.No. 12707 of 2003(K) ----------------------- PETITIONER(S): --------------- M/S. R.S.A.POLYMERS (P) LTD., EDAVOOR 683544, REPRESENTED BY ITS MANAGING DIRECTOR SRI.M.A.RAFEEQ. BY ADV. SMT.S.K.DEVI SRI.K.P.PRADEEP (PAYYANNUR) RESPONDENT(S): --------------- 1. THE SALES TAX OFFICER II, FIRST CIRCLE DEPARTMENT OF COMMERCIAL TAXES, PERUMBAVOOR, ERNAKULAM DISTRICT. 2. THE STATE OF KERALA, REPRESENTED BY ITS SECRETARY (FINANCE), SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI. MOHAMMED RAFIQ THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 04/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: 2 ORDER ON CMP 21707 OF 2003 IN OP 12707 OF 2003 DISMISSED 4.8.2009 SD/-C.N.RAMACHANDRAN NAIR, JUDGE. APPENDIX PETITIONER'S EXHIBITS: EXT.P1 TRUE COPY OF THE SSI EXEMPTION ORDER NO. A8/2952/2000 DATED 6.6.2001 ISSUED BY THE GENERAL MANAGER, DIC, ERNAKULAM. EXT.P2 TRUE COPY OF THE ANNUAL RETURN FILED BY THE PETITIONER FOR THE YEAR 2001-02 DATED 30.4.2002 EXT.P3 TRUE COPY OF THE ASSESSMENT ORDER FOR THE YEAR 2001-02 ISSUED BY THE FIRST RESPONDENT VIDE NO. 23131892/01-02 DATED 24.12.2002 RESPONDENTS' EXHIBITS: NIL. TRUE COPY P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR, J. -------------------------------------------- O.P. NO. 12707 OF 2003 -------------------------------------------- Dated this the 4th day of August, 2009 C.R. JUDGMENT The short question raised in the O.P. is whether the petitioner is entitled to exemption from payment of additional sales tax under Section 5D of the KGST Act based on certificate of exemption issued under Government Notification SRO 1729/1993. I have heard counsel appearing for the petitioner and Government Pleader appearing for the respondents. 2. Petitioner is a small scale industrial unit which was granted sales tax exemption on the sale of products, namely, PVC pipes, for a period of seven years from the date of commencement of commercial production based on the notification above referred. Ext.P11 is the certificate of exemption issued to the petitioner wherein ceiling of quantity, tax limit for exemption are provided. Even though the assessing officer while completing the assessment for 2001-02 granted exemption from payment of sales tax and allowed the computed tax amount to be set-off against the amount covered by Ext.P1 certificate, separate demand is raised demanding 2 additional sales tax at the rate prescribed under Section 5D of the Act. According to the petitioner, petitioner is entitled to exemption under Ext.P1 certificate for additional sales tax payable under Section 5D of the Act also. Government Pleader referred to the decision of this Court in ABRAHAM V. COMMR. OF COMMERCIAL TAXES, (2002) 2 KLT 121 and contended that additional sales tax being a separate levy is payable by the petitioner. Further, according to the Government Pleader, Section 5D of the Act was introduced by Act 7 of 2001 with effect from 27.3.2001, that is subsequent to the notification issued under Section 10 of the KGST Act, i.e., SRO No. 1729 of 1993 based on which certificate of exemption was issued. The specific case of the respondents is that subsequent levy introduced by separate charging Section under the Act is not covered by the provisions of the earlier notification and the certificate of exemption issued thereunder. However, counsel for the petitioner referred to the provisions of the notification which provides in clause (i) that exemption is available in respect of tax payable by eligible units on the sales turnover of goods manufactured and sold by it under the Act. While the case of the petitioner is that under Section 5D liability is tax on tax payable on the sales turnover and hence 3 covered by the exemption, the contention of the Government Pleader is that tax payable under Section 5A is only covered by the notification. He has also referred to the provision in the notification which provides separate exemption for tax payable in respect of goods taxable at the point of last purchase in the State. Government Pleader also pointed out that in VATTUKULAM INDUSTRIES's case, 124 STC 233 the Supreme Court has held that liability under Section 5A is not covered by the exemption notification even though it is also tax payable under the Act. However, I do not think the decision of the Supreme Court stands in the way of the petitioner claiming exemption based on notification and exemption certificate issued thereunder because the liability under Section 5D though distinct and separate is tax on tax payable on the sales turnover. Further, it is seen that notification specifically grants exemption to new SSI units on the surcharge payable by them under Section 3 of the Surcharge on Tax Act. In fact levy under Section 5D is introduced in the form of additional sales tax after abolition of Addl. Sales Tax Act and Surcharge Act. In any case when exemption is granted for the tax payable on the sales turnover of goods under the notification, subsequent amendment to the KGST Act providing for additional levy 4 of tax on the sale of goods manufactured and sold by the exempted units will also qualify for exemption. So much so, I hold that petitioner is entitled to exemption under Ext.P1 certificate issued under SRO 1729 of 1993 on the additional tax payable under Section 5D of the Act. However, exemption so claimed on additional sales tax also will be set-off against eligible amount of sales tax exemption granted under the certificate. O.P. is allowed directing the respondents to grant exemption on additional sales tax payable under Section 5D of the Act to the petitioner and set -off the same against the amount certified for tax exemption. (C.N. RAMACHANDRAN NAIR) Judge kk 5