KANORIA INDUSTRIES LIMITED Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THE short question that arises for consideration in this writ appeal is whether the prescribed authority could refuse to issue for failure to pay the arrears of tax due the declaration Form. No. 40 to a sick industrial company under Sub-section (4) of Section 3 of the Karnataka Tax on entry of Goods Act, 1979 (hereinafter called the Entry Tax Act) and the Rules framed thereunder having regard to the provisions of Section 22 (1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short the 1985 Act ). The learned single judge dismissed writ petition No. 43142 of 2003 and declined to issue a mandamus to the fourth respondent to issue form No. 40 to the appellant under the Entry Tax Act.

(2.) SECTION 3 of the Entry Tax Act provides for the levy and collection of tax on entry of goods specified in the first schedule into a local area for consumption, use or sale therein at such rates not exceeding 5 per cent of the value of the goods. This tax is payable by every registered dealer or a dealer liable to get himself registered under the Entry Tax Act who brings or causes to be brought into a local area the goods whether on his own account or on account of his principal or any other person. No such tax is, however, levied or collected from a dealer who brings or causes to be brought into a local area any goods in respect of which tax has been paid or has become payable in any other local area. This exemption is not granted to a dealer unless he furnishes to the assessing authority a declaration in the prescribed form obtained from the prescribed authority and duly filled and signed by the dealer who is liable to pay tax on such goods under the Entry Tax Act, Rule 9e of the Karnataka Tax on Entry of Goods Rules 1979 provides that the declaration to claim exemption under Section 3 shall be in Form No. 40. It further provides that the declaration issued in Form No. 40 shall be serially machine numbered for each year and the dealer issuing the same shall maintain day-today account in a register in Form No. 41.

(3.) THE appellant is a public limited company which has set up a cement manufacturing unit at bagalkot in the State of Karnataka where it is engaged in the manufacture of portland cement. The cement unit has a work force of about 600 employees and the financial institutions and bankers have financed the projects of the company including the cement unit. The appellant suffered heavy losses in the recent past and its accumulated losses exceeded its net worth as per the accounts for the year ending June 30, 1999 and, therefore, it made a reference to the Board for Industrial and Financial Reconstruction (hereinafter referred to as 'the Board') under Section 15 (1) of the 1985 Act. The reference was considered by a Bench of the Board on several dates and the appellant was declared 'a sick industrial company'. The Industrial Development Bank of india has been appointed the operating agency to formulate a scheme for its revival under section 17 (3) of the 1985 Act and the said scheme is under preparation.