Karnataka High Court
M/S Tvs Electronics Limited vs The State Of Karnataka Rep By The ... on 4 March, 2010
Bench: K.L.Manjunath, B.V.Nagarathna
This STRP is filed U/s.23 of the Act, against the
judgment and order dated 7.3.2006 passed in
S.T.A.Nos.2406 & 2407 of 2004 on the file of-.,_the
Kamataka Appellate Tribunal, Bangalore, dismissing
the appeais. "
This STRP coming on for hearing}:_lthis.::
MANJUNATH J ., made the following:
o RWWD I: 23 it
This revision petition by': the
challenging the legali'cy,V_Aand"eot1feoltr1_essitloftlie Order
passed by the Joint '_gfl:.Cotn_merCial Taxes
(Appeals), Ban;g3i'¢'laZ1'€. which has
been affirineldlll , Jgvheilfg V pellate Tribunal,
Bangalore O1:I'«7lh- Match» of 2004.
The dispute is regafd assessment year 1997-
petition was admitted to
v.:lll"eonsidei"--~t_he V_fo'lloiWling substantial questions of law,
A A T i}'=- ll Whether the Karnataka Appellate
V.:'j'»'Ilribiina1 was right in law in dismissing the
_ appeals holding that the exemption granted
to a 100% EOU Vide Notification No.FD 32
-"(ESL 96 {V} dated 15.11.1996 is applicable
3
.3
only to the extent of goods purchased and_..__
used in the manufacture of goods which are,
physicaily exported out of the country arid"..'"-_
not applicable to extent of goods sold .;.
DTA'?
ii] Whether the :iiite1pre'tatiori'V:v
Hon'b1e Kamataka Appeliatep...Tribunial' of
Condition No.[i) of the Notification No.1?!) -32 - " 1
CSL 96 (V) dated 15:'1-13.19916-._to Vthevttefiect
that the said Conditioro1.V"'~iproVides'aftir "them.
quantum or the nature_of'-incentive ~t.o_EOVUs
is correct in law, 1 " '
iii] Whether 'the' 5int.ei'~p'r~et'ation of
Hon'b1e Karnataka» -- Appeiiate; 'Fr'ibunai of
condition' 'N,q;'{iii)=:pf iiié Notification No.FD 32
CSL [V2Alj_V_d1ated__15.1--1*.1f996, to the effect
that {the »condition "is" only for the
purpvoseof' 'grant.irig the .. sstatus or Continuing
the stiatiis of1.4aii.4E{_3U as EOU, is correct in
law.__ _ V 1 .
,W"iiet11_er.:tiie expression "subject to
, relaxation permitted by Government of India
Kgfroiii tirne"--'to_____time" occurring in condition
A 'V No';'(iii'}i..of the notification No.FD 32 CSL 96
..V{V)V"~dated._ 15.11.1996 would not include
its.-v*a_inbit the UTA sates made by an
._ V} Whether the Tribunal was right in
law in not considering and giving any finding
{on the dispute as regards the correctness of
' -'the quantification of the tax demand?
vi} whether the Tribunal was right in
not considering and giving any finding on
the rate of turnover Tax applicable
whether the rate applicable to the se1liI.1g._4'_g»..'__'e-
dealer or to the purchasing dealer?
vii] Whether the 'I'ribun.fl*'was
not considering and not givirig alnyi. A
on the penalty imposed on thel'l?etitioner'?_' --. V _ ~ T
viii] Any other questiohof law t'n.at"thi~s""
Hon'ble Court deems fit in the faclisandg
circumstances of tli€~:._Cas.€I"';'e
the learned counsel appearing 'foif submit
that the a(:tu__a1 raised in this
petition
i] 'W71ethe}'.. _ l 'the ._gHon'ble Karnataka
Appellate pg TlfilOL£I1Cll..:'vLUiT'LS"'~.I7igl'lf in law in
dismissing-"e.._4 the appeals holding that the
exemption granted to E1 100% EOU wide
«ei.iVNoz:;;'s;:at:onV No§FD....___r3.3 CSL 96 (V) dated
_ '15.1"l.1'9'96":;s applicable only to the extent of
goodsg "._,4pili*chased and used in the
.l'of.v*'goods which are physically
exported out of the country and not applicable
to e"xten__t of goods sold in the DTA '?
the request, We have to consider question
fly': :
aggrieved by the same, the assessee filed an appeal
before the Joint Commissioner of Commercia.l"*'T_"axevs
._ 1
(Appeals), Bangalore, which appeal came seeps V'
dismissed. A second appeal Wa's"'prefeifred"
Karnataka Appellate Tribunal','.__ ff
dismissed by the Tribuna1,"'or"1'--l.thevh ground. the ''
assessee having contravened' jth'e'.._ clauses" of the
Notification was not entitled l'Vfor1'thevZ'blene_fit. Therefore.
the present revispion pe_titi(;r£ is'~fi1ed*.w.
he't§Un:te.r1tioI1-- the petitioner's counsel
before 'us "is the-Iliepartment has Committed a
serious error in not considering the case of the assessee
on aeeount of improper interpretation of
, dated 15*" November 1996, the relief
has"---be_en~,denied to the assessee, not only by the
pfjepartrrient, but also by the two appellate authorities.
_ Inthe circumstances, he contends that the assessee is
entitled for the relief of all the orders which are required
to be set aside.
4. Per contra, the learned"Govezfrimentfi'Advocate':
contends that in View of the Vio1atio_n'"o_t claas_eAs {ii
of the Notification, the reveri--u:e;t, ir1vokj.ng-m[v) of
the Notification, was j.:istifiedt'in"denVjfin'g th¢":+e1i'¢f to the
assessee and therefore, Court to
dismiss the
eoiinsel for the parties, the
onlypoint to us in this petition is:
_ _ there' any violation of any of
clauses "of"'the Notfication dated 15"
V' " .1996 by the assessee to enable the
"'.....'§*ei§eri'ae'toldeny the relief entitled to by the
'~..a3$e'ssee in terms of the aforesaid
Nottfication ?
in order to appreciate the contention of both the
parties, it would be proper for us to reproducwe."'-the
Notification as it is.
NOTIFICATION
No.1?!) 32 csx. 96 (V). Dated J.5th_Notfenibe'r,Vl.1£§lg,6 l
In exercise of the powers_ conferred by Section 8}«A"
of the Karnataka Sales T ax -V1957" {K__ai'na'taka"Aet" 25
of 1957), the Government of Kaifr1ataka'~herebyreduces
with immediate effect, the rate---oftaX._payable..under the
said Act to 'nil' on sales of raw" materials, component
parts, packing materials,'consinnables,' capital goods,
spares, materials handling' eqL1ip1*nent's«g" intermediate
and semi-finished._ goods' '~andvffsub'~assernblies by a
registered dealer ":1:-)6' 30%) per" cent Ei.{pei't Oriented Units
located in the'"S_tat.e]_s'ub_i.ec--t_to" following conditions and
restrictions". _ -:j__
(i) such"go'ods'aiteA:--jp1it"to"'Li'se by the 100 per cent
Export 0riente"d.__Unit in 't_he,i'naniifacture of goods for
export; " V'
liinit forwiise of such goods in the
Ina:iu.faC"t«ure__ ofivgoods for export shall be before the
expiry. of :'~the.j'v.-'accounting year immediately
dsucceeding yeai'V'iin.5which the goods are purchased;
(iii) tiiehg._¥()VO per cent Export Oriented Unit shall
its entire production of goods subject to
V *.__'rela:i:aiion'gpermitted by Government of India from time
to
(iv) Where for any reason, the 100 per cent Export
Oriented Unit fails to comply with the condition "{iii)
above. it shall forthwith cease to be eligible
benefit of this N otification;
(V) Where for any reason the .restri.cti--o11._ or"
condition stipulated under (i), {ii} i-and-:4 (ii,i4}'a'oo'vef,is~..
contravened or not complied '€gIith:,..gefitl'ier._W3r1o»lly_ .'
partly, the provisions of c1auses«V(a)_ "and"{b}=.,o.f
section(5] of Section 8~A of the__ saidiAct shail apply and
the 100 per cent Export Oriented» Unit..shalU:>e'*:1ial)le to
pay an amount equal to the payable' at the rates
prescribed under thesaid Act'; _:'or1"'--purchas*es" of raw
materials-, cornpor1ents=,, pacljng' materials, intermediate
and semi--finished goods and's'ub~ass--einblies in respect
of which such .contravcntion= or 'non1'c,o'rnpliance has
taken place. 'l'.he.._a'niou-tntgso.' payab_i.e_shal1 be deemed to
be amount due fo'r._V_purpo:sVes _._of§;Section 13 of the said
Act; - ._
[vi] Rcjgisteredvdealer.effecting the sales to 100 per
cent Export Oriented'-liriitl'-g.os'lia'll' produce before the
assessing authority,' t.he-..certificate prescribed hereunder
duly filled in and sigl11edi._b3r.._..'the said Export Oriented
Unit. -- " " '
is H' "CERTIFICATE
adclress of
100A per 'cent.__}3L:<:port -Oriented
Unit 'and_ ii.
(Narne address and K.S.T.R.C. No. of the
' registered dealer to whom certificate issued)
l"{:Ve'rtified that the goods, as per details below are
Vipurchased from you for use in the manufacture of goods
. for export out of the Territory of India.
rké 1 l
'm
£1
and Concessions as per Government Order No.C1 30
SPC 96, dated 1531 March, 1996.
Procedure- The 100 per cent Export Oriented_..Unit
seeking this facility shall produce before the assessing
authority: "
(i) Certificate issued by the Director H
and Commerce, Government of Karnataka or
Government of India certifying that it is '.registe'red as a}
100 per cent Export Oriented Unit'.
(ii) The said certificate'Gsh.a11 "proof
of its being valid, in each assessment-- .ye*ar'._= vvithin 60
days of commencement of the _assess_rnent year.
This Notification shall -to (318? March,
2001;" i=_ :~"-flj
It is not ravvflmaterials purchased by
the assesse'e_is "use by it in respect of the
rodticts mamifactured for the ur ose of ex ort since
1 P I3
a EOU. The learned Government
1 dispute this fact. There is no
_ violation" clause (ii) of the Notification since the
Drnayterial" purchased by the assessee has been utilized
v¢ithi'n the time stipulated in accordance with clause (ii).
G 'Therefore, what is required is, Whether there is any
considered excluding clause [iii], then, we haxze to
dismiss this petition, holding the question ",of"g:'1aw
framed, against the assessee and in faV'our,»ofc'ti1e'_'r it
revenue. According to us, ciauses Ii). to (i_ii)_flVare to:?be*:
read together as we have to '":give 'VEjai'm'o:oio'us"~.
constructions to the clauses of
the clauses of (i), (ii) Areadtin 'isolation.
The Joint E,__Ffé1X€S [Appeals]
as well as the T.r.ih'una_1 kzaije a serious error
in reading. izvith clause (iii) on
account (i) to [iii] separately,
and anhegrror hasA:.t,,hee1i_:':gCommitted by the authorities
below in deny1'-n_g'the 'relief to the assessee. According to
'usdif hasmheen granted by the Government, the
A t'assessAee.v'i's._enti1:i.ed to sell its products in the Domestic Tariff
m~ea..__ If_v'th.«e}assessee had sold in excess of the permission
' V"grantet1=1f3SI Government of India, in the Domestic Tariff mea,
_"in'--su»53h circumstances, the respondent would have been
., _g_j_uastified in denying the claim of the assessee. But, it is not 5 s 14 the case of the revenue that in excess 'of the relaxation permitted by the Government of India to the assessee'to_"'--«se1lA' its products in the Domestic Tariff Area, the a4ssess:ée.t:"ha?s'*' ' sold the goods manufactured by_i.t..__Sinee';tlie;'e'.V"is'_"_xnq V Violation, we are of the View that the orders ipasseci Karnataka Appellate Tribunal "as well has Joint 2 l' Commissioner of Comrrieroial ,?in§l./50 by the Deputy Commissioner are required to be set aside, answeringZthevihquestifieii favour of the assessee reiyrenuei this revision petition is alloweti:/,:__ b V Sd/-' JUDGE sssss M 331/.
JUDGE .. '~