IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 25706 of 2005(I)
1. M/S. SKILTEK APPLIANCES PVT.LTD.,
... Petitioner
Vs
1. GENERAL MANAGER,
... Respondent
2. STATE LEVEL COMMITTEE FOR SALES TAX
3. STATE OF KERALA, REPRESENTED BY
For Petitioner :SRI.P.M.PAREETH
For Respondent :GOVERNMENT PLEADER
The Hon'ble MR. Justice C.K.ABDUL REHIM
Dated :14/07/2009
O R D E R
C.K.ABDUL REHIM, J.
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W.P.(C)No. 25706 OF 2005
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Dated this the 14th day of July, 2009
J U D G M E N T
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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