IN THE HIGH COURT OF KARNATAKA AT BENGALURU ON THE 5TH DAY OF APRIL, 2019 BEFORE THE HON'BLE MR. JUSTICE RAVI MALIMATH AND THE HON'BLE MR. JUSTICE S. G. PANDIT WRIT APPEAL NO.3106 OF 2011 (T-KST) BETWEEN:
M/S. BOLA RAGHAVENDRA KAMATH & SONS KUKKUNDOOR, KARKALA DAKSHINA KANNADA REPRESENTED BY ITS PARTNER SHRI JAYAWANTH KAMATH ... APPELLANT (BY SRI. K ARAVIND KAMATH, SENIOR COUNSEL FOR M/S. ALMT LEGAL, ADVOCATES) AND:
THE COMMISSIONER OF COMMERCIAL TAXES VTK-I, GANDHINAGAR BENGALURU-560 009.
(BY SRI. VIKRAM A HUILGOL, HCGP) ... RESPONDENT THIS APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETITION NO.3600/2010 (T-KST) DATED 02/02/2011.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR PRONOUNCEMENT THIS DAY, S.G. PANDIT J., DELIVERED THE FOLLOWING:
JUDGMENT Aggrieved by the order dated 02.02.2011 passed by the learned Single Judge in W.P.No.3600 of 2010, by which the writ petition was dismissed, the petitioner is in appeal.
2. The petitioner filed writ petition under Articles 226 and 227 of the Constitution of India questioning the endorsement dated 26.09.2009 vide Annexure-R and to declare that the petitioner is entitled for the refund of sales tax under the Government Order No.FD 171 CSL 93 dated 28.08.1993 and as a consequence thereof, direct the respondent to cause refund of sales tax to the petitioner as claimed in the applications dated 02.05.1996 and 27.08.1996.
3. The petitioner is a 100% Export Oriented Small Scale Industrial Unit which carries on business of manufacture, sale and exports of cashew kernels. It is stated that the respondent-State provided incentive of refund of sales tax to Export Oriented Units (for short ‘EOUs’) which satisfied certain conditions, stipulated under Government Order No.FD 171 CSL 93 dated 28.08.1993. The petitioner states that it being an EOU, for the assessment years 1993-94 and 1994-95, exported in excess of 50% of the value of goods manufactured by it and was eligible to claim refund of sales tax under Government Order dated 28.08.1993. The petitioner made two applications claiming refund of sales tax in respect of assessment years 1993-94 and 1994-95 dated 02.05.1996 and 27.08.1996 respectively. The respondent by its endorsement dated 24.09.1999 rejected petitioner’s claim for refund stating that the said benefit is available only to new industrial units under Government Order dated 12.07.1993. Aggrieved by the said endorsement the petitioner filed W.P.No.43297 of 1999. This Court, allowed the petition by order dated 05.03.2003 and directed the respondent to consider the petitioner’s application strictly in accordance with the Government Order dated 28.08.1993. It is stated that respondent preferred Writ Appeal No.5259 of 2003 against the said order, which came to be disposed off recording the learned Government Advocate’s submission that they would consider the petitioner’s application for refund. Thereafter, the petitioner filed representation dated 05.01.2005 to consider his application for refund of sales tax. The respondent issued endorsement dated 20.07.2005 holding that the petitioner is eligible for the incentives under the Government Order dated 31.03.1995 and not under Government Order dated 28.08.1993. The petitioner, on issuance of the said endorsement again made a representation reiterating that he would be entitled for refund of sales tax under Government Order dated 28.08.1993 and to consider the same. The respondent by endorsement dated 17.08.2006 held that the petitioner is not entitled for consideration of his request for refund of sales tax. Challenging the said endorsement petitioner filed W.P.No.12839 of 2006. This Court, by order dated 07.01.2009 disposed off the writ petition directing the authorities to pass a reasoned order. After remand, the petitioner was given personal hearing and orders were passed on 26.09.2009 rejecting petitioner’s claim. The respondents in their order stated that the Government Order dated 28.08.1993 is issued to implement the concessions announced under Government Order dated 12.07.1993 and is available only to new EOUs. Challenging the said order the petitioner filed writ petition No.3600 of 2010. The learned Single Judge dismissed the writ petition by his reasoned order observing that the benefit of Government Order dated 28.08.1993 would be available to only new EOUs and the petitioner-industry was an existing industry since the year 1956. Aggrieved by the said order, the petitioner is in appeal.
4. Heard the learned Senior counsel for the petitioner and learned High Court Government Pleader for respondent.
5. Learned Senior counsel would submit that the petitioner is a 100% EOU and is entitled for the benefit of incentives under Government Order dated 28.08.1993. It is his submission that under the said Government Order it is not only the new EOUs but also the existing EOUs are entitled for incentive of refund of sales tax. The eligibility for availing benefit of incentives under the scheme is that one should be a 100% Export Oriented Unit and an unit which exports more than 50% of value of goods manufactured/processed during the year. He invites the attention of this Court to Government Order dated 28.08.1993 produced at Annexure-A as also Government Order dated 12.07.1993 produced at Annexure-F. The learned Senior Counsel submits that the learned Single Judge committed an error in holding that the incentive is available only for those units established on or subsequent to 28.08.1993, to promote EOUs. It is his contention that the petitioner-Unit fulfills the conditions specified in the Government Order dated 28.08.1993 and the respondent was not right in rejecting petitioner’s request for refund of sales tax.
6. Per contra, learned High Court Government Pleader would submit that the learned Single Judge has rightly dismissed the writ petition holding that the incentives would not be available for the existing units and it is only for new EOUs. Further he submits that apart from new EOUs, if the existing EOUs make additional investment during the year, such Units would be entitled for the benefit. The petitioner is neither new EOU nor has made any additional investment during the relevant years. He invites the attention of this Court to Government Order dated 12.07.1993 in this regard. It is his further submission that the Government Order dated 28.08.1993 is issued for implementing the concessions provided under Government Order dated 12.07.1993. Hence, prays for dismissal of the writ appeal.
7. From the materials available on record it is seen that the petitioner-Unit is established in the year 1956 and is running the business of manufacture, sale and exports of Cashew kernels. It is an admitted fact that the petitioner is an Export Oriented Unit and it exports more than 50% of the value of goods manufactured/processed during the year. The respondent-State announced certain benefits to EOUs under the Government Orders dated 12.07.1993 and 28.08.1993. As per Government Order dated 28.08.1993, the Government took decision to refund sales tax paid by Export Oriented Industrial Units for a period of 5 years from the date of commencement of their commercial production or up to 11.07.1998 whichever is later. Under the Government Order, an Export Oriented Industrial Unit means which is registered as 100% Export Oriented Unit with the Government of India or an Unit which exports 50% of the value of goods manufactured/processed by it during the year. The order makes it abundantly clear that the benefit would be available only to Units for a period of five years from the date of commencement of their commercial production subsequent to the Government Order dated 28.08.1993. The preamble and relevant portion of the Government Order dated 28.08.1993 read as follows:
In the Government Order No.C & 1140 SPC 93, dated 12.07.1993, it has been declared that purchase of raw materials, components, intermediates, semi-finished goods and sub-assemblies, packing materials, consumables, capital goods, spares and material handling equipments from industrial units within the State by the Export Oriented Industrial Units would be exempted from tax to the extent of materials used in meeting their export turnover. The Finance Department considers it necessary to issue the following orders for implementation of the concession announced.
Government Order No.FD 171 CSL 93, BENGALURU DATED 28.08.1993 After careful consideration of all aspects, Government accord sanction for refund of sales tax paid under the Karnataka Sales Tax Act, 1957 by Export Oriented Industrial Units for a period five years from the date of commencement of their commercial production or upto 11.07.1998 whichever is later, on the purchase of raw materials, components intermediates, semi-finished goods and sub- assemblies, packing materials, consumables, capital goods, spares and materials handling equipments made from other industrial units situated within the State and used by such units in the manufacture, processing, handling and packing of goods exported outside the country.”
8. The Government Order dated 12.07.1993 would indicate that the incentives and concessions shall be applicable only to all new Industrial Units and the Units which make additional investments on or after issuance of Government Order, which means, the incentives are available only to new Units or the existing Units which make additional investment. Clause II (c) of Annexure-C to the Government Order dated 12.07.1993 reads as follows:
“The incentives and concessions as per this G.O shall be applicable only to all new and additional investments made on or after issue of this G.O.”
9. The petitioner’s Unit is established in the year 1956 as such, it was existing as on the date of issuance of the Government Order. Further the petitioner-Unit has also not made any additional investment so as to attract the benefit of Government Orders under which the incentive is claimed by the petitioner. The object of the Government Order is to encourage the new entrepreneurs who are in the field of EOUs and who have made additional investments. The respondent under the impugned endorsement has clearly held that the Government Order dated 28.08.1993 is to be read along with Government Order dated 12.07.1993 as the Government Order dated 28.08.1993 is issued to implement the concessions announced under Government Order dated 12.07.1993.
10. The learned Single Judge has rightly rejected the writ petition holding that the benefit of Government Order dated 28.08.1993 would be available only to new Industries and to the Industries which made additional investments. The Government Order dated 28.08.1993 cannot be read in isolation as contended by the learned Senior counsel for the petitioner.
11. The order under appeal is neither perverse nor erroneous. The petitioner has not made out any ground to interfere with the reasoned order of the learned Single Judge. Hence, writ appeal is dismissed.
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JUDGE JUDGE mpk/-* CT:bms