PAN POLYMERS Vs. STATE OF KERALA

JUDGEMENT

(1.) As the issue raised in these three connected cases is the same, the W.Ps. are heard together and disposed of by this common judgment. I heard counsel appearing for the petitioners and the Special Government Pleader appearing for the respondents.

(2.) All the three petitioners started their industry in the year 2001 and are granted sales tax exemption on the sale of their products for a period of seven years under Notification SRO 1729/1993 issued under, Section 10 of the Kerala General Sales Tax Act (hereinafter called ("the KGST Act"). The petitioners have been enjoying sales tax exemption ever since the commencement of commercial production based on certificate of exemption obtained and produced as Ext. P1 in all W.Ps. which were issued in terms of the above referred notification. While the petitioner in W.P. 15242/2005 is engaged in production of tread rubber, the petitioner in W.P. 15221/2005 is engaged in production of coir mattresses and the petitioner in W.P. 24807/2005 is engaged in production of ice blocks. The grievance of the petitioners is that before expiry of the period of exemption granted to them under the notification referred above the Kerala Value Added Tax Act, 2005 (hereinafter called the "VAT Act") came into force with effect from 1.4.2005. By virtue of Section 32 read with Section 98 of the VAT Act, the benefit of exemption granted to the petitioners and similar industries are modified whereunder petitioners and similar industries are entitled to avail only balance sales tax exemption in the form of a deferred loan to be repaid in five years in instalments with interest after the exemption period. According to the petitioners, the provisions of VAT Act, modifying exemption as loan is in violation of principle of promissorry estoppel and therefore, petitioners in W.P. Nos. 15242 and 15221/2005 are challenging the provisions of Section 32 as illegal and in violation of Rule of promissory estoppel. Even though the petitioner in W.P. 24807/2005 has not challenged the validity of Section 32 of the VAT Act, counsel sought permission to amend the W.P. However, since the said W.P. is grouped along with the other two connected cases, the petitioner in that W.P. was also allowed to challenge the statute by raising oral arguments without the requirement of any amendment of the W.P. Accordingly, challenge against Section 32 of the VAT Act was entertained in all the three cases.

(3.) Before proceeding to consider the contentions raised by the petitioners, the scope of Section under challenge of the VAT Act has to be gone into and for easy reference Section 32 of the said Act which now stands amended by the Kerala Finance Act, 2005 is extracted hereunder: