IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN FRIDAY, THE 4TH FEBRUARY 2011 / 15TH MAGHA 1932 WA.No. 776 of 2006(M) --------------------- (AGAINST THE JUDGEMENT/ORDER IN OP.20439/2002 Dated 14/12/2005) .................... APPELLANT: ------------------ M/S. PREMIER AGRO PRODUCTS PVT.LIMITED, KINASSERY P.O., PALAKKAD, REPRESENTED BY M.SAINULABDEEN, MANAGING DIRECTOR. BY ADVS. SRI.HARIHARAN NAIR SRI.MANU MOHAN RESPONDENTS: --------------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, INDUSTRIES DEPARTMENT, SECRETARIAT, TRIVANDRUM. 2. THE STATE LEVEL COMMITTEE ON SALES TAX EXEMPTION, REPRESENTED BY THE DIRECTOR OF INDUSTRIES AND COMMERCE, TRIVANDRUM. 3. THE DISTRICT LEVEL COMMITTEE ON SALE TAX EXEMPTION, REPRESENTED BY THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, PALAKKAD. 4. THE GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, PALAKKAD. 5. THE SALES TAX OFFICER, 1ST CIRCLE, PALAKKAD. R1 TO 5 BY GOVERNMENT PLEADER , SRI.VINOD CHANDRAN THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 23.12.2010, THE COURT ON 04/02/2011 DELIVERED THE FOLLOWING: VK THOTTATHIL B. RADHAKRISHNAN & P. BHAVADASAN, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - W.A. No. 776 of 2006 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 4th day of February, 2011. JUDGMENT Bhavadasan, J, Aggrieved by the judgment in O.P. 20439 of 2002, whereby a learned Single Judge of this court declined to grant relief to the petitioner against Ext.P17 order issued by the State Level Committee, the petitioner has come up in appeal. 2. The petitioner runs a Roller Flour Mill engaged in production of atta, suji, maida etc. It got its SSI provisional registration on 30.1.1992 as per Ext.P1 and permanent registration on 22.7.1993 as per Ext.P2. The unit was granted sales tax exemption for a period of seven years from 9.6.1993 to 8.6.2000. The petitioner claims that he had made additional investment and that he is entitled to exemption in terms of S.R.O. 1729/1993. He had submitted three applications, Exts.P4, P5 and P5 dated 14.5.1997, 16.1.1997 and 14.11.1997 claiming exemption pointing out that the additional investment to the tune of Rs.62,80,956/- was W.A.776/2006. 2 made. Exemption was declined to the petitioner on the ground that his unit fell within the negative list as per Ext.P13 notification and that he is not eligible for tax exemption. An appeal to the State Level Committee did not succeed. It was then that the petitioner approached this court. 3. The learned Single Judge found that the stand of the State that the petitioner is not entitled to sales tax exemption is correct. The industry run by the petitioner fell within the negative list and since the petitioner has not challenged that notification, he is not entitled to any relief. Then went on to find that the additional investment should be within the cut off date, i.e., 31.12.1993 and the petitioner having failed to establish the said fact, he is not entitled to any relief. Accordingly, the Original Petition was dismissed. 4. In this Writ Appeal the petitioner raised only one contention for consideration. It was pointed out that the view taken by the learned Single Judge is incorrect and so also the view taken by the Sales Tax Authorities and the State Level committee. Petitioner claimed exemption towards the additional capital W.A.776/2006. 3 investment and not as part of expansion, diversification or modernisation. There is no justification declining the relief to the petitioner. 5. There seems to be considerable merit in the contention of the appellant/petitioner. The rejection of the application filed by the petitioner by Exts.P11, P12 and P17 does not appear to be correct. S.R.O. No.1729/93 may be referred to in this context. In the said notification Clause 11 defines expansion, diversification and modernisation as follows: “(ii) 'Expansion' shall mean a total additional investment in fixed assets of not less than 25% of the 'Gross Block' as on the last day of the financial year immediately preceding the year in which the expansion was started and a minimum 25% increase in installed capacity compared to that the year immediately preceding the year in which the expansion was started. (iii) 'Modernisation' shall mean a total additional investment of not less than 25% in fixed assets compared to the 'Gross Block' as on the last day of the financial year immediately preceding the year in which such modernisation was started. W.A.776/2006. 4 (iv) 'Diversification' shall mean production of at least one new product and a total additional investment of not less than 25% in fixed assets compared to the 'Gross Block' as on the last day of the financial year immediately preceding the year in which such diversification was started.” 6. The petitioner has contended that the additional investment is towards capital investment and does not involve expansion, diversification or modernisation. The investment so made does not fall within the ambit of these three items. 7. The petitioner seems to be justified in his contention. There is nothing in Ext.P11 and P12 and P17 orders to show that the capital investment, which the petitioner is entitled to make to enhance the capacity of the unit, may fall within the three terms made mention of above. However, this is essentially a question of fact. This aspect has not been gone into by the authorities below. They have simply proceeded on the basis that since the petitioner's unit falls within the negative list, it is not entitled to tax exemption benefit. That approach does not appear to be correct. W.A.776/2006. 5 In the result, this Writ Appeal is allowed, Exts.P11, P12 and P17 are quashed and the second respondent is directed to consider the matter afresh in accordance with law and in the light of what is stated above. Thottathil B. Radhakrishnan, Judge P. Bhavadasan, Judge sb.