MANGALORE CHEMICALS AND FERTILIZERS LIMITED BANGALORE Vs. DEPUTY COMMISSIONER OF COMMERCIAL TAXES MANGALORE

JUDGEMENT

(1.) The State Government issued a notification in June 1969 granting certain concessions to new industries for a period of five years; one of the incentives was to refund of all sales tax payable by the new industry on raw materials purchased by it for the first five years from the date the industry goes into production. In the year 1975 another Government order came to be issued permitting the adjustment of this refundable tax, towards the taxes payable by it in other respects under the Karnataka Sales Tax Act, 1957 ('the Act' for short) after obtaining permission for the adjustment. The petitioner obtained the new unit certificate; petitioner also applied for permission to adjust the tax refundable to it with the taxes payable by it There is no dispute that the 2nd respondent, after examining the petitioner's case recommended for granting the permission for adjustment There was also another Government order clarifying the earlier Government order. For the period May 1976 to March 1977, permission was accorded to the petitioner to adjust the taxes in terms of those three Government orders. For the subsequent period, also petitioner made similar applications for permission to adjust the taxes, which remained unattended to by the authorities. However, for the period 1-4-1978 to 31-12-1979 tax was demanded from the petitioner, which was challenged by it by filing W.P. No. 3476 of 1980. Again, there was another demand for payment of Rs. 1.07 crores being the tax for the period from 15-4-1976 to 31-3-1978 and 1-1-1980 to 14-3-1981; demand notice was dated 19-11-1986, which the petitioner challenged by filing the present writ petition on 13-1-1987. Petitioner sought stay of the demand and the learned single Judge, after hearing the State Government granted stay only to the extent of Rs. 47 lakhs. Petitioner approached the Appellate Bench by filing W.A. No. 379 of 1987. The writ appeal was partly allowed; it was ordered that the petitioner shall pay Rs. 45 lakhs towards the impugned demand and the recovery of balance was stayed; the Bench granted some time to the petitioner to make the said payment. This order is dated 9-3-1987.

(2.) There is no dispute that the petitioner complied with this order by paying thesum of Rs. 45 lakhs to the State Government.

(3.) On 14-8-1990, W.P. No. 3436 of 1980 was dismissed. It was held that petitioner was not entitled to adjust the taxes suo motu, without specific prior permission of the concerned authority. Petitioner went up in appeal to Supreme Court and the said appeal was allowed on 2-8-1991. Decision of the Supreme Court is reported in Mangalore Chemicals & Fertilizers Limited v Deputy Commissioner of Commercial Taxes and Others, 83 STC 234. At page 239, the Supreme Court noted the controversy involved thus: