CENTUM ELECTRONICS LTD. Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) These are forty seven revision petitions filed by the assessee against the order of the Tribunal dated 13.8.2013, whereby the orders of the first appellate authority, as well as the Assessing Authority, have been confirmed. The brief facts of this case are that the petitioner is a company engaged in the business of manufacture and sale of 'Hybrid Micro Circuits' and is a dealer registered under the Karnataka Value Added Tax Act, 2003 (KVAT Act for short) and Central Sales Tax, 1956 (CST Act for short). Under the Information Technology Policy of the State Government, two notifications were issued, both dated 21.8.1997 - one under the Karnataka Sales Tax Act, 1957 (KST Act for short) and the other under the CST Act. Under the policy of the State Government, a tax holiday of ten years was to be granted to Information Technology Units from the date of commencement of commercial production. The petitioner company has admittedly been granted the eligibility certificate under the said Policy and thus, was governed by the said notifications dated 21.8.1997.

(2.) The procedure for grant of exemption had been provided for in the notifications issued under the KST Act, wherein it had been provided that 'if an Information Technology Industrial Unit exercising the option for tax exemption, collects any amount by way of tax, it shall forthwith become ineligible for tax exemption'. By virtue of Sec. 9(2) of the CST Act, the procedure under the KST Act was to be adopted for the CST Act also and thus, by the notification of the same date i.e., 21.8.1997 issued under the CST Act, petitioner company was entitled to exemption under the CST Act by following the procedure provided in the KST notification. There is no dispute that the petitioner company was subjected to Karnataka Sales Tax for sales within the State of Karnataka and for Inter -State sales, Central Sales Tax was leviable. The procedure adopted for implementation of the notifications for both the Acts was the same and the petitioner had been granted such exemption under both the Acts, with regard to which also there is no dispute.

(3.) With effect from 1.4.2005, the KVAT Act, 2003 came into force in place of the KST Act. For continuing the exemption of tax to new industrial units, such as the Unit of the petitioner, two fresh notifications, both dated 18.4.2005, were issued - one under the KVAT Act and the other under CST Act. By the notification issued under the KVAT Act, the net tax payable was to be paid to the State Government and thereafter refunded to the Unit. From the same, it is clear that the output tax had to be first collected by the assessee and after deducting the input tax paid by the assessee, the net tax was to be deposited by the assessee with the Government, which was to be refunded. This would clearly mean that the provision in the earlier notification dated 21.8.1997 providing for ineligibility of a Unit from exemption in case tax was collected by it, would not be applicable after the issuance of the notifications dated 18.4.2005.