SOLAMAN P MATHEWS Vs. STATE OF KERALA

JUDGEMENT

(1.) THE petitioner is a small -scale industrial unit with the name and style Mekha Timbers and Saw Mills, Podiyadi. A partnership firm was formed with the petitioner as the Managing partner in the year 1987. The unit is registered with the Department of Industries and Commerce, Government of Kerala and is allotted the number 09/13/01226/99/PMT/SSI. The petitioner is engaged in the manufacture of sized timber and job work in timber sawing using timber logs. The second respondent, namely, the General Manager, District Industries Centre, Pathanamthitta granted a permanent registration as a small -scale industrial unit.

(2.) IT is the case of the petitioner that the Government granted various reliefs to the small -scale industrial units by issuing various Government orders. One such relief is granting sales tax exemption to small -scale industries for a period of 5 years from the date of commencement of commercial production. The petitioner's unit started functioning on June 1, 1987. The petitioner started the unit relying on the promise of the first respondent that his unit will also get sales tax exemption for a period of 5 years from the date of commencement of commercial production. On the basis of the promise by the first respondent, the petitioner took up the venture of starting the saw mill. The petitioner also applied for sales tax exemption for his unit for a period of five years. The second respondent after satisfying himself the nature of manufacture made by the petitioner's industrial unit and relying on the various Government orders, by an order dated November 1, 1989 granted sales tax exemption to the petitioner's unit for a period from June 1, 1987 to May 31, 1992.

(3.) ON behalf of the respondents, a counter -affidavit has been filed by the second respondent. The facts as set out in the original petition by the petitioner has not been disputed in the counter -affidavit. In paragraph 8 of the counter -affidavit, it is stated that the petitioner failed to submit reply to the show cause notice issued by the second respondent and hence the second respondent took up the matter with the District Level Committee for sales tax exemption constituted as per G.O. (P) No. 95/91/TD dated May 10, 1991 and the District Level Committee, at its meeting held on October 10, 1991, resolved to cancel the order of the second respondent and accordingly the same was cancelled by order dated November 16, 1991. It is further stated in the counter -affidavit that the action of the second respondent is legal and proper and is in pursuance of the Government directions issued from time to time. It is further claimed stated that when the Government is empowered to grant sales tax exemption, equally it has the power to cancel the exemption if it is found that the exemption was erroneously granted. The stand of the Government has been further justified in the counter -affidavit by stating that the second respondent took steps to cancel the exemption granted to the petitioner only in conformity with the rulings of the apex Court in [1985] 60 STC 213 (State of Orissa v. Titaghur Paper Mills Co. Ltd.) and (1987) 66 STC 100 (Ker) [Deputy Commissioner of Sales Tax (Law) v. Kunhalavi & Co.], wherein the apex Court ruled that when the timber is sized there is no manufacture and hence no question of exemption arises.