IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM TUESDAY, THE 14TH JULY 2009 / 23RD ASHADHA 1931 WP(C).No. 25706 of 2005(I) -------------------------- PETITIONER(S): --------------- M/S. SKILTEK APPLIANCES PVT.LTD., KEECHERI, P.O. ANCHAMPEEDIKA, KANNUR DISTRICT, REPRESENED BY ITS MANAGING DIRECTOR T.R. BABU, S/O. LATE V. KARUNAKARAN NAMBIAR, `RAMAYAN', P.O. KALLIASSERY, KANNUR DISTRICT. BY ADV. SRI.P.M.PAREETH SRI.M.BENNY JOSEPH RESPONDENT(S): --------------- 1. GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, KANNUR. 2. STATE LEVEL COMMITTEE FOR SALES TAX EXEMPTION, REPRESENTED BY DIRECTOR OF INDUSTRIES & COMMERCE, THIRUVANANTHAPURAM. 3. STATE OF KERALA, REPRESENTED BY SECRETARY, DEPARTMENT OF REVENUE, GOVRNMENT SECRETARIAT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SRI.K.P. PRADEEP FOR R1 TO 3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/07/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).25706/05 APPENDIX PETITIONER'S EXHIBITS:- EXT.P1:- COPY OF ORDER NO.C9.5326/91/DDIS DT.18.1.94 EXT.P2:- COPY OF ORDER NO.C-2/12394/94 DT.3.7.95 EXT.P3:- COPY OF LETTER DT.26.3.94 SUBMITTED BEFORE GENERAL MANAGER DIC,KANNUR EXT.P4:- COPY OF LETTER DT.8.2.96 SUBMITTED BEFORE R2 EXT.P5:- COPY OF ORDER NO,B2-3751/97 DT.5.12.98 BY R2 EXT.P6:- COPY OF PROCEEDINGS NO.C2-1414/99/D.DIS DT.31.3.99 EXT.P7:- COPY OF APPEAL DT.6.8.99 FILED BEFORE R2 EXT.P8:- COPY OF ORDER NO.C2-4941/99/D.DIS DT.9.3.01 EXT.P9:- COPY OF ORDER NO.C2/5875/99K.DIS DT.11.6.01 ISSUED BY R2 EXT.P10:- COPY OF APPEAL DT.10.1.03 FILED BEFORE R2 EXT.P11:- COPY OF JUDGMENT DT.19.12.03 IN WP(C) 37133/03 EXT.P12:- COPY OF COMMON ORDER NO.FC3/3873/03 DT.20.1.05 ISSUED BY R2 EXT.P13:- COPY OF PROCEEDINGS NO.C2/291/2000/D.DIS DT.29.3.05 EXT.P14:- COPY OF ORDER NO.B2/941/05 DT.3.6.05 ISSUED BY R1 EXT.P15:- COPY OF LETTER DT.17.3.95 ADDRESSED TO R2 RESPONDENT'S EXHIBITS:- NIL okb //True Copy// P.A. to Judge C.K.ABDUL REHIM, J. ------------------------------ W.P.(C)No. 25706 OF 2005 ------------------------------ Dated this the 14th day of July, 2009 J U D G M E N T ---------------------- 1. The petitioner is a small scale industrial unit engaged in manufacturing of electrical appliances. The unit started commercial production on1.9.1989. Sales Tax exemption was granted to the petitioner for a period of 5 years from the date of commencement of commercial production as per Ext.P1 order. The petitioner effected expansion of the industry by contributing additional capital investment on Plant & Machinery. The expansion programme was sanctioned and included in the registration details of the Industries Department as per Ext.P5 order of the General Manager, District Industries Centre, the 1st respondent herein. The petitioner applied for additional sales tax exemption based on the expansion, under the provisions of SRO.1729/93. Through Ext.P6 order 1st respondent granted additional exemption to the tune of Rs.1,38,165/- for the period from 18.12.96 to 17.12.99. According to the petitioner they were eligible for the additional exemption for the period from 30.12.94 to 29.12.97 since the expansion was completed as on 30.12.94. Therefore the petitioner filed Ext.P7 appeal before the State Level Committee, the 2nd respondent herein. Further, he also W.P.(C).25706/05 2 approached the 1st respondent seeking to revise the order to the extent of granting additional amount of exemption for the investment on delivery van, which was not reckoned while sanctioning the additional sales tax exemption. The vehicle in question was purchased by the unit on 13.4.1994, after expiry of the original period of exemption. By Ext.P9 order the 1st respondent rejected the claim finding that the industrial units which effected expansion is eligible for additional sales tax exemption only with respect to investment in Plant & Machinery, and on the purchase of delivery vehicle. Against Ext.P9 also the petitioner preferred appeal before the 2nd respondent. Ext.P12 is the order issued based on the decision of the 2nd respondent. The 2nd respondent allowed one of the appeals and corrected the period of eligibility for additional exemption from 30.12.94 to 29.12.97. But with respect to rejection of the claim based on purchase of delivery vehicle, it is found that in a case of expansion investment on goods vehicle purchased after expiry of original period of 5 years, are not eligible to be reckoned. The above finding of the State Level Committee is challenged in this writ petition. 2. Heard Sri.P.M. Pareeth learned counsel appearing for petitioner and Sri.K.P.Pradeep Government Pleader on behalf of the respondents. It is contended by the petitioner that in W.P.(C).25706/05 3 Ext.P15 clarification issued by the Board of Revenue it is stated that in view of amendments effected to SRO.499/90 by virtue of SRO.1729/93, small scale industrial units effecting expansion on or after 1.4.1993 are eligible to get exemption to the extent of an amount equal to fixed capital investment including delivery vehicles. According to the petitioner the findings in Ex.P12 in this regard is illegal and is contrary to the clarification issued by the Board of Revenue. 3. Clause 10 in SRO.1729/93 deals with the conditions and restrictions for grant of sales tax exemption. Clause 10(i) deals with new industrial units under small scale industries. There the aggregate exemption of tax allowable is prescribed as amount not exceeding 100% of the fixed capital investment of the unit. But in clause 10(ii) which deals with the existing industrial units which effected diversification, expansion or modernisation, the aggregate exemption of the tax amount allowable is fixed as the amount equal to the value of new “Plant & Machinery” owned by the units, which are used for diversification, expansion and modernisation. On the basis of the clear distinction between clause 10(i) and 10(ii), it is pointed out by the learned Government Pleader that, the investment on purchase of delivery vehicle cannot be reckoned with respect to existing units effecting expansion, the delivery vehicle no being W.P.(C).25706/05 4 part of Plant and Machinery used for such expansion. On a perusal of SRO.499/90, which is referred to in Ext.P15 letter of Board of Revenue, it is noticed that the expansion with respect to existing units is limited only to the investment on Plant & Machinery and not on any other investments. Therefore it is evident that the clarification issued in Ext.P15 is not applicable in the case of the petitioner. Further it is contended by the learned Government Pleader that as per the decision of this Court in M/s.Prima Industries Limited vs. Commissioner of Commercial Taxes (2008 KHC 6328 : ILR 2008(2) Ker.642) the Board of Revenue is not competent to issue any clarification with respect to matters relating to sales tax exemption. However in view of the clear provisions in the notifications, I am not inclined to hold that the clarification under Ext.P15, which is contrary to the notification will prevail. 4. The learned counsel appearing for petitioner made an attempt to put forth a contention that the delivery vehicle used exclusively for the purpose of the industrial unit also need be considered as Plant & Machinery, for the purpose of reckoning the investment made for expansion of the unit. According to him the delivery vehicle is fully used for incidental purposes of manufacturing activities carried on in the industry. Since the wording of the notification providing exemption and its literary W.P.(C).25706/05 5 meaning is clear and unambiguous, I am not inclined to agree with the above contention. In a literal sense as well as in normal parlance 'Plant & Machinery' cannot be construed as including 'delivery vehicles' used in the industry. Sales tax exemption, being a matter of concession, strict interpretation of the provision enabling such concession alone can be possible. Hence going by the provisions of SRO.1729/93 I am not inclined to accept the argument that the petitioner is eligible for exemption based on the investment on purchase of delivery vehicle. Hence I find no reason to interfere with Ext.P12. Accordingly the writ petition fails and dismissed. C.K.ABDUL REHIM, JUDGE. okb