- (1.) By this petition, Messrs Mangalore Chemicals and Fertilisers Limited, a registered dealer under the Karnataka Sales Tax Act, 1957, ("Act") seeks special leave to appeal to this Court from the judgment and order dated 14th August, 1990 of the High Court of Karnataka in W.P. No. 3436 of 1980. We have heard Shri Harish Salve, learned counsel for the petitioner and Shr R. N. Narasimhamurthy, learned senior counsel for the respondent-Revenue. Special leave granted.
(2.) On 30th June, 1969, State Government issued a notification- in exercise of powers referable to S. 8A of the Act providing certain incentives to entrepreneurs starting new industries in the State, pursuant to States policy for "rapid industrialisation". The notification contains a package of reliefs and incentives including one concerning relief from payment of sales tax with which this appeal is concerned. The clause in the said notification of 1969 relevant for the present purpose reads: "(1). Sales tax: A cash refund will be allowed, on all sales tax paid by a new industry on raw materials purchased by it for the first five (5) years from the date of the industry goes into production, eligibility to the concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce." This was followed by a further notification dated 1lth August, 1975 envisaging certain modified procedures for effectuating the reliefs contemplated by the earlier exemption notification of 30th June, 1969. The relevant portions of the Preamble and the body of the notification say: Preamble: "....... The Commissioner of Commercial Taxes has suggested that New Industries covered by the above scheme might be permitted to adjust the refunds to which they would be eligible against the sales tax payable by them., Order In partial modification of the Government order cited (2) above, Government are pleased to prescribe the following procedure for claiming refund of sales tax by new industries. 2. The new industries intending to take advantage of the system of adjustment shall apply to the Deputy Commissioner of Commercial Taxes (Administration) of the Divislon concerned through the assessing authrity. The application must contain the following particulars: i) Name and address of the new industry; ii) Date of commencement of the industry; iii) Reference number of the certificate issued by the Director of Industries and Commerce, Bangalore; iv) Year for which the permission to withhold tax amount is related; v) The description of finished products in which the materials are used. 3. The Deputy Commissioner of Commercial Taxes (Administration) of the concerned Division, after scrutinising the application filed by the new industry and after satisfying himself that the industry is covered by the scheme sanctioned in G.O.No. OI 58 FMI 69 dated 30-6-1969 will permit the industry to withhold the amount of tax payable on raw materials purchased and used in the manufacture of goods. 4. Omitted as unnecessary. 5. The new industry may apply for permission at any time during the year subject to its renewal every subsequent year. Until permission of renewal is granted by the Deputy Commissioner of Commercial Taxes, the new industry should not be allowed to adjust the refunds. At the end of the assessment year, particulars should be formulated in the annual return of the total amount adjusted during the entire year. Along with the return, details prescribed in Government Order No.FD428 CSL70 dated 1-2-1971. should be furnished. 6 to 8 .... Omitted as unnecessary."
(3.) Appellant, it is not in dispute, had the necessary eligibility under the original exemption notification of 1969. The controversy is confined only to the question of the manner of effectuating the refund of sales tax that appellant, admittedly, was entitled to. Some particulars as to the application made by the appellant for grant of permission might, perhaps, be necessary here. For the assessment year 1976-77, the appellant made such an application to the Deputy Commissioner of Sales Tax (Administration) on 10th November, 1976 for adjustment of the refunds against sales tax due. This permission was granted with retrospective effect from 1st May, 1976, validating the adjustments which the appellant had made during the interregnum. However, for the three subsequent years viz., 1977-78, 1978-79 and 1979-80, similar applications which were made on 29th March, 1977, 20th March, 1978 and 8th March, 1979, respectively, remained undisposed of. In the meanwhile, in anticipation of the permission appellant adjusted the refund against tax payable for these years and filed its monthly returns setting out adjustments so effected.;