IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON WEDNESDAY, THE 26TH MAY 2010 / 5TH JYAISHTA 1932 WP(C).No. 1455 of 2006(W) --------------------------------------- PETITIONER(S): ------------------------ METROLLA STEELS LIMITED, HAVING ITS ADMINISTRATIVE OFFICE AT MADAPARAMBIL CHAMBERS, MUVATTUPUZHA-686 661, REPRESENTED BY ITS MANAGING DIRECTOR V. KURIEN VARGHESE. BY ADV. SRI.S.ANIL KUMAR (TRIVANDRUM), SRI.K.S.HARIHARAN NAIR. RESPONDENT(S): ------------------------- 1. STATE OF KERALA, REPRESENTED BY SECRETARY, TAXES (B) DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. DY. COMMISSIONER (GENERAL), OFFICE OF THE COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM. R1 & R2 BY GOVT. PLEADER MR.V.K. SHAMSUDEEN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26/05/2010, ALONG WITH WPC NO. 16921 OF 2006, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 1455/2006-W APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE EXEMPTION CERTIFICATE NO.C4.7228/97/TX DATED 30/06/1998. EXT.P2: COPY OF THE NOTIFICATION SRO 1729/93. EXT.P3: COPY OF THE MANUAL OF TAX EXEMPTION SCHEME. EXT.P4: COPY OF THE LETTER ISSUED BY THE ASST. GENERAL MANAGER OF KSIDC DATED 15/07/2002 ALONGWITH ELIGIBILITY CERTIFICATE. EXT.P5: COPY OF THE NOTICE SENT BY DY. COMMISSIONER IN APRIL 2003. EXT.P6: COPY OF THE REPLY SENT BY PETITIONER ON 08/05/2003. EXT.P7: COPY OF THE G.O.MS.NO.149/93/ID DATED 26/11/1993. EXT.P8: COPY OF THE G.O.MS.NO.102/94/ID DATED 19/04/1994. EXT.P9: COPY OF THE GOVERNMENT ORDER GO(MS)NO.169/98/ID DATED 24/11/1998. EXT.P10: COPY OF THE REPRESENTATION SUBMITTED BY PETITIONER DATED 25/07/2005. EXT.P11: COPY OF THE COMMUNICATION DATED 15/10/2005 FROM SECRETARY, TAXES (B) DEPARTMENT. EXT.P12: COPY OF THE NOTICE DATED 10/11/2006 FOR THE ASSESSMENT YEAR 2001-2002. EXT.P13: COPY OF THE NOTICE DATED 10/11/2006 FOR THE ASSESSMENT YEAR 2002-2003. EXT.P14: COPY OF THE REPLY GIVEN TO EXHIBIT P.12 AND P.13 DATED 22/11/2006. EXT.P15: COPY OF THE NOTICE UNDER SECTION 45(A) OF KGST ACT. EXT.P16: COPY OF THE REPLY GIVEN TO EXHIBIT P.15 DATED 07/11/2006. RESPONDENT'S EXHIBITS: NIL //TRUE COPY// P.A. TO JUDGE rs. P.R.RAMACHANDRA MENON, J ------------------------------ W.P(C) No. 1455/2006 & 16921/2006 -------------------------------- Dated this the 26th day of May, 2010. J U D G M E N T The petitioner in both these cases is one and the same, even though the reliefs sought for are slightly different. The sequence of events as discernible from the pleadings raised in the Writ Petitions is that the petitioner Company, a Medium Scale Industry, which started commercial production on 24.12.1996, is entitled to have the benefit of tax exemption in terms of Ext.P2 notification (SRO 1729/93) issued under Section 10 of the KGST Act, for the period of seven years. Ext.P1 is the order of exemption dated 30.6.1998; as per which, the petitioner is entitled to have the benefit in respect of 100% capital investments. It is also brought to the notice of this Court that, subsequent to the starting of the business, the petitioner has effected some additional investments, which in fact were effected during the period of seven years of exemption provided under Ext.P1 and necessary applications were filed for exemption in respect of the additional investment as well. 2. Eligibility for exemption as to the extent of investment W.P(C) No. 1455/2006 & 16921/2006 2 has to be certified by the monitoring agency; namely the Kerala State Industrial Development Corporation, who examined the matter and issued Ext.P4 eligibility certificate in W.P.(C) No.16921 of 2006, which was forwarded to the second respondent for further steps. However, referring to Ext.P9 G.O dated 24.11.1998, notifying the 'negative list', Ext.P5 notice was issued by the second respondent proposing to reject the application. Even though the petitioner submitted Ext.P6 reply, there was no action or further response from the second respondent, which made the petitioner to approach the Government by filing Ext.P10. After considering Ext.P10, the Government issued Ext.P11 reply, stating that the matter was pending consideration before the Supreme Court and that the proper decision would be taken on the basis of the verdict of the Apex Court. The petitioner has approached this Court for directing the concerned respondent to grant the relief with regard to the claim for exemption in W.P(C) No.1455 of 2006. 3. The other case (W.P(C) No.16921 of 2006) is with regard to the subsequent additional investments made by the petitioner. The grievance is that the Kerala State Industrial Development Corporation, who is the monitoring agency, has not issued W.P(C) No. 1455/2006 & 16921/2006 3 necessary eligibility certificate (as in the case of Ext.P4 in W.P(C) No.1455 of 2006), which made the petitioner to approach this Court seeking for appropriate direction to be issued to the second respondent in W.P(C) No.16921 of 2006, after quashing Ext.P14 issued by the said respondent declining to grant the reliefs prayed for. 4. The learned counsel for the petitioner submits that certain reliefs have been provided to the industries as in the case of the petitioner as per Ext.P9 G.O; based on which necessary investments have already been effected by the petitioner and this being the position, it is not correct for the Government or other authority to take a 'U' turn to deny such benefit. The second respondent in the former case has filed a counter affidavit referring to the sequence of events and contending that, the proceedings will be completed in compliance with the final orders to be passed by the Supreme Court. The learned counsel for the petitioner submits with reference to the contentions of Ext.P2 and P9 that Ext.P9 cannot be stated as placing any hurdle with regard to the business of the petitioner, as the said G.O, whereby steel re-rolling units have been included in the negative list can only be treated as W.P(C) No. 1455/2006 & 16921/2006 4 'prospective' and not retrospective. 5. The learned Government Pleader, referring to the decision rendered by the Supreme Court (which case was stated as pending consideration as referred to the counter affidavit) in Secretary to Government V. Peekay Re-Rolling Mills (P) Ltd. (2007 (2) KLT 680) submits that the matter has become final by virtue of the verdict passed by the Supreme Court. As per the said decision, the case has already been remanded to be considered and decided by the Division Bench of this Court and that the same is still pending. Several issues are stated as involved in the above case. However, with regard to the nature of Ext.P9 notification ie. whether it is prospective or retrospective, some specific observations have been made by the Hon'ble Supreme Court, as borne by para 13, 14 and 15 of the above verdict; which prima facie, do not appear to be in favour of the petitioner. 6. However, since the cases dealt by the Apex Court including the case referred to Para 13 (referring to in Ext.P9 G.O dated 24.11.1998) have been remanded for fresh consideration by the Division Bench (W.A.No.1477 of 2003 with W.A.No.991, 1316 and 1561/2003) are stated as still pending and if it is held by the W.P(C) No. 1455/2006 & 16921/2006 5 Division Bench that the parties therein are entitled to have the benefit sought for, holding that the additional investments effected subsequent to Ext.P9 G.O are also to be reckoned for the purpose of tax exemption, the petitioner may also become eligible. The petitioner will be at liberty to bring up the matter as and when necessitated, depending upon the outcome of the above decision. It is made clear that, subject to the outcome of the Writ Appeals as above, factual position in the present case shall be examined by the second respondent and appropriate orders shall be passed thereon after giving an opportunity of hearing to the petitioner with regard to the claim of exemption and the liability of the petitioner, if any, will be subject to the outcome of the decision to be taken by the second respondent. 7. It is brought to the notice of this Court that the tax liability of the petitioner has already been cleared, availing the benefit of the 'Amnesty Scheme'. This being the position, the issue whether the petitioner will be entitled to have the benefit of tax exemption, if any, pursuant to the finalisation of the proceedings in the Writ Appeals is also left open. If any proceedings pursuant to Ext.P15 seeking to impose the 'penalty' upon the petitioner, are still W.P(C) No. 1455/2006 & 16921/2006 6 alive, it shall be kept in abeyance, till the expiry of a period of one month, after finalisation of the Writ Appeals by the Division Bench. Both the Writ Petitions are disposed of. Sd/- P.R.RAMACHANDRA MENON JUDGE //True Copy// P.A to Judge ab