MRF LTD Vs. ASSISTANT COMMISSIONER ASSESSMENT SALES TAX
LAWS(SC)-2006-9-72
SUPREME COURT OF INDIA (FROM: KERALA)
Decided on September 21,2006

MRF LTD., KOTTAYAM Appellant
VERSUS
ASSISTANT COMMISSIONER (ASSESSMENT) SALES TAX Respondents





Cited Judgements :-

K.B. TEA PRODUCT PVT. LTD VS. COMMERCIAL TAX OFFICER, SILIGURI [LAWS(SC)-2023-5-60] [REFERRED TO]
UNION OF INDIA VS. A. B. P. PVT. LTD [LAWS(SC)-2023-5-62] [REFERRED TO]
MAIDEN TRADING,CO.PVT.LTD. VS. STATER OF RAJASTHAN [LAWS(RAJ)-2012-11-64] [REFERRED TO]
BHANWAR SINGH AND ORS. VS. SECRETARY, MINISTRY OF TEXTILES, UNION OF INDIA, NEW DELHI AND ORS. [LAWS(RAJ)-2013-2-255] [REFERRED TO]
ASHTECH (INDIA) (P) LTD VS. INDIA CEMENTS LTD [LAWS(MAD)-2007-4-419] [REFERRED]
AMI PIGMENTS PVT LTD VS. STATE OF GUJARAT [LAWS(GJH)-2007-4-31] [REFERRED TO]
STATE OF MADHYA PRADESH AND THREE OTHERS VS. HIMALAYAN ALES PVT LTD [LAWS(MPH)-2016-1-76] [REFERRED]
RATHEESH K R S/O K R RADHAKRISHNAN NAIR VS. STATE OF KERALA [LAWS(KER)-2017-11-257] [REFERRED TO]
JAI PRAKASH ASSOCIATES LIMITED THRU RAHUL KUMAR VS. STATE OF U.P. THRU INSTITUTIONAL FINANCE AND ANR. [LAWS(ALL)-2010-3-330] [REFERRED TO]
ASHYANA SAHKARI AWAS SAMITI LTD VS. STATE OF U.P. [LAWS(ALL)-2014-5-243] [REFERRED TO]
JAI CHEMICAL INDUSTRIES VS. STATE OF ASSAM [LAWS(GAU)-2012-8-116] [REFERRED TO]
GANGOTRI IRON AND STEEL CO. LTD VS. STATE OF BIHAR [LAWS(PAT)-2020-8-47] [REFERRED TO]
AMRIT CEMENT INDUSTRIES LTD. AND ORS. VS. THE STATE OF MEGHALAYA AND ORS. [LAWS(MEGH)-2015-1-2] [REFERRED TO]
KUSHAL INDUSTRIES ASSOCIATION MANGALORE VS. DEPUTY COMMISSIONER OF COMMERCIAL TAXES ASSTS IV MANGALORE [LAWS(KAR)-2008-6-17] [REFERRED TO]
ASSISTANT COMMISSIONER, SPECIAL CIRCLE VS. NATIONAL ENGINEERING INDUSTRIES LIMITED AND ORS. [LAWS(RAJ)-2015-4-343] [REFERRED TO]
SECRETARY, SIDDHARTHA ACADEMY OF GENERAL AND TECHNICAL EDUCATION VS. APPELLATE AUTHORITY [LAWS(APH)-2012-9-54] [REFERRED TO]
JAIPRAKASH ASSOCIATES LIMITED VS. STATE OF MADHYA PRADESH [LAWS(MPH)-2012-2-15] [REFERRED TO]
BHUSHAN POWER AND STEEL LTD. (FORMERLY KNOWN AS BHUSHAN LTD.) AND ORS. VS. STATE OF ORISSA AND ANR. [LAWS(ORI)-2007-12-36] [REFERRED TO]
SATYAM DIAGNOSTICS CENTRE VS. STATE OF RAJASTHAN AND ORS. [LAWS(RAJ)-2015-6-24] [REFERRED TO]
BRAHMANAND HIMGHAR LTD VS. STATE OF WEST BENAGAL [LAWS(CAL)-2007-7-1] [REFERRED TO]
BRAHMBHATT GIRISHKUMAR JETHALAL VS. STATE OF GUJARAT [LAWS(GJH)-2008-9-185] [REFERRED TO]
ADHUNIK ALLOYS AND POWER LTD VS. UNION OF INDIA [LAWS(JHAR)-2007-4-26] [REFERRED TO]
SAL STEEL LTD. VS. UNION OF INDIA (UOI) [LAWS(GJH)-2010-3-170] [REFERRED TO]
GURDASPUR COOPERATIVE SUGAR MILLS LTD. VS. FOOD CORPORATION OF INDIA [LAWS(P&H)-2019-9-259] [REFERRED TO]
ADANI GAS LIMITED AND ORS. VS. UNION OF INDIA AND ORS. [LAWS(RAJ)-2015-4-126] [REFERRED TO]
STATE OF TAMIL NADU VS. J.VIBIN [LAWS(MAD)-2019-4-773] [REFERRED TO]
MAIHAR CEMENT VS. STATE OF MADHYA PRADESH [LAWS(MPH)-2012-2-14] [REFERRED TO]
UNION OF INDIA VS. HIMSHEEL INTERNATIONAL [LAWS(DLH)-2011-7-361] [REFERRED TO]
RAMESH GANPAT GAIKWAD VS. DILIP DATTU JADHAV [LAWS(BOM)-2023-6-552] [REFERRED TO]
KARTHIK ALLOYS LTD VS. STATE OF GOA [LAWS(BOM)-2011-7-231] [REFERRED TO]
SOUTHERN PETROCHEMICAL INDUSTRIES CORPORATION LTD. AND ORS. VS. UNION OF INDIA (UOI) [LAWS(DLH)-2009-11-309] [REFERRED TO]
BHARAT MOHANLAL TRIVEDI VS. UNION OF INDIA [LAWS(GJH)-2009-11-230] [REFERRED TO]
GUJARAT ORGANICS LIMITED VS. CHIEF CONTROLLING REVENUE AUTHORITY [LAWS(GJH)-2013-7-581] [REFERRED TO]
ASHISH MIDDHA VS. INSTITUTE OF COMPANY SECRETARIES OF INDIA [LAWS(DLH)-2011-2-16] [REFERRED TO]
TATA STEEL LTD VS. STATE OF JHARKHAND [LAWS(JHAR)-2007-1-19] [REFERRED TO]
BAJAJ AUTO LIMITED VS. UNION OF INDIA AND OTHERS [LAWS(UTN)-2010-6-353] [REFERRED TO]
RADHA FLOUR MILL (P) LTD. AND ANOTHER VS. THE STATE OF BIHAR [LAWS(PAT)-2017-11-273] [REFERRED TO]
GRASIM INDUSTRIES LTD VS. TAMIL NADU ELECTRICITY BOARD [LAWS(MAD)-2007-4-332] [REFERRED TO]
TITAN INDUSTRIES LTD. VS. JOINT SECRETARY TO GOVERNMENT OF INDIA. [LAWS(UTN)-2022-3-158] [REFERRED TO]
JAGDISH CHAND MEMORIAL TRUST VS. STATE OF H P [LAWS(HPH)-2017-12-119] [REFERRED TO]
AVINASH CHANDRA SRIVASTAVA VS. STATE OF U.P. [LAWS(ALL)-2021-9-95] [REFERRED TO]
THAKUR PRE-EXAMINATION COACHING-CUMTRAINING INSTITUTE (SOCIETY) NEHARN PUKHAR AND ANOTHER VS. STATE OF HIMACHAL PRADESH AND ANOTHER [LAWS(HPH)-2016-10-100] [REFERRED TO]
HERBO FOUNDATION PVT LTD VS. UNION OF INDIA [LAWS(GAU)-2009-6-19] [REFERRED TO]
SEVANTILAL & SONS AND ORS. VS. THE UNION OF INDIA AND ORS. [LAWS(BOM)-2015-1-124] [REFERRED TO]
AMI PIGMENTS PVT LTD VS. STATE OF GUJARAT THR SECRETARY [LAWS(GJH)-2010-2-366] [REFERRED TO]
LAKSHMI CEMENT VS. COMMERCIAL TAXES OFFICER [LAWS(RAJ)-2009-4-39] [REFERRED TO]
BELLARY STEEL AND ALLOYS LIMITED VS. STATE OF KARNATAKA [LAWS(KAR)-2007-9-47] [REFERRED TO]
STATE OF RAJASTHAN VS. BASANT AGROTECH (INDIA) LTD [LAWS(SC)-2013-12-8] [REFERRED TO]
UNION OF INDIA VS. COSMO FILMS LIMITED [LAWS(SC)-2023-4-134] [REFERRED TO]
M/S. SUMMIT ONLINE TRADE VS. UNION OF INDIA [LAWS(SIK)-2013-5-1] [REFERRED TO]
SHEELA FOAM PVT. LTD VS. STATE OF SIKKIM [LAWS(SIK)-2013-7-8] [REFERRED TO]
GUJARAT STATE ELECTRICITY CORPORATION LTD VS. UNION OF INDIA [LAWS(GJH)-2018-6-41] [REFERRED TO]
OM SIDDH VINAYAK IMPEX PVT. LTD. VS. UNION OF INDIA [LAWS(GJH)-2017-2-108] [REFERRED TO]
AUGUSTAN TEXTILE COLOURS LIMITED (NOW AUGUSTAN TEXTILE COLOURS PRIVATE LIMITED) VS. DIRECTOR OF INDUSTRIES [LAWS(SC)-2022-4-31] [REFERRED TO]
SOUTHERN PETROCHEMICAL INDUSTRIES CO LTD VS. ELECTRICITY INSPECTOR AND E T I O [LAWS(SC)-2007-5-192] [REFERRED TO]
STATE OF BIHAR VS. KALYANPUR CEMENTS LTD [LAWS(SC)-2010-1-96] [REFERRED TO]
RISHABH ELECTRICALS PVT LTD VS. STATE OF ORISSA [LAWS(ORI)-2007-12-13] [REFERRED TO]
PRISM CEMENT LIMITED VS. STATE OF MAHARASHTRA [LAWS(BOM)-2012-8-120] [REFERRED TO]
PRINCE SPINTEX PVT LTD VS. UNION OF INDIA [LAWS(GJH)-2020-2-385] [REFERRED TO]
DHARAMPAL SATYAPAL LIMITED VS. UNION OF INDIA [LAWS(GAU)-2010-12-18] [REFERRED TO]
LAFARGE UMIAM MINING PVT LTD VS. UNION OF INDIA [LAWS(GAU)-2010-8-81] [REFERRED TO]
THAKUR RUMAL SINGH MEMORIAL EDUCATION SOCIETY AND ANOTHER VS. STATE OF HIMACHAL PRADESH AND OTHERS [LAWS(HPH)-2018-4-86] [REFERRED TO]
VACMET INDIA LTD. AND ORS. VS. STATE OF U.P. AND ORS. [LAWS(ALL)-2015-11-99] [REFERRED TO]
BAJAJ HINDUSTAN LIMITED VS. STATE OF U P [LAWS(ALL)-2014-9-247] [REFERRED TO]
RAM CHAUDHARY VS. TECHNOLOGY PARK [LAWS(ALL)-2010-4-28] [REFERRED TO]
HIM ALLOYS AND STEELS (P) LTD VS. STATE OF H P & OTHERS [LAWS(HPH)-2017-3-130] [REFERRED TO]
J.K. LAKSHMI CEMENT LTD. VS. COMMERCIAL TAX OFFICER, PALI [LAWS(SC)-2016-9-21] [REFERRED TO]
M/S JANTA LAND PROMOTERS LIMITED VS. STATE OF PUNJAB AND OTHERS [LAWS(P&H)-2010-11-387] [REFERRED TO]
KIRTI INDUSTRIES (INDIA) LTD. VS. STATE OF M.P. [LAWS(MPH)-2022-4-121] [REFERRED TO]
J K ENTERPRISES VS. STATE OF M P AND THREE OTHERS [LAWS(MPH)-2016-1-72] [REFERRED]
HARSHENDU VINAYAK VS. CHEMBAR TROMBAY EDUCATION [LAWS(BOM)-2008-11-51] [REFERRED TO]
M/S. HERO MOTOCORP LTD. VS. UNION OF INDIA [LAWS(SC)-2022-10-37] [REFERRED TO]
V D SUVARNA, D/O C DASAPPA, VS. STATE OF KARNATAKA [LAWS(KAR)-2018-6-4] [REFERRED TO]
FINOLEX INDUSTRIES LIMITED VS. COMMISSIONER OF SALES TAX [LAWS(BOM)-2018-10-195] [REFERRED TO]
BHARAT FOODS CO OPERATIVE LTD VS. STATE OF GUJARAT [LAWS(GJH)-2008-6-53] [REFERRED TO]
HI TEK POWERCON PVT LTD VS. ASST COMMISSIONER [LAWS(ORI)-2007-2-4] [REFERRED TO]
KAMAKSHI LAMIPACK PRIVATE LIMITED VS. GOVERNMENT OF TAMIL NADU [LAWS(MAD)-2012-11-208] [REFERRED TO]
PADMAVATHI MODERN RICE MILL REP BY ITS PROPRIETOR B GANGATHARAN VS. GOVERNMENT OF PUDUCHERRY REP BY ITS JOINT SECRETARY [LAWS(MAD)-2012-7-129] [REFERRED TO]
DHARAMPAL PREMCHAND LIMITED (AGARTALA UNIT) AND ORS. VS. UNION OF INDIA AND ORS. [LAWS(TRIP)-2016-1-5] [REFERRED TO]
SANKHLA POLYMERS (P) LTD VS. INCOME TAX OFFICER [LAWS(KAR)-2013-1-96] [REFERRED TO]
GEETANJALIL WOOLLENS PVT. LTD. VS. UNION OF INDIA [LAWS(GJH)-2014-4-44] [REFERRED TO]
STATE OF UTTAR PRADESH VS. BIRLA CORPORATION LIMITED [LAWS(SC)-2019-11-74] [REFERRED TO]
HIMALAYAN ALES PVT LTD VS. STATE OF M P [LAWS(MPH)-2015-9-149] [REFERRED TO]
LINGARAJ PIPES PVT. LTD VS. SALES TAX OFFICER [LAWS(ORI)-2006-12-54] [REFERRED TO]
M/S FATEH COLD STORAGE (P) LTD. DISTT. LUDHIANA VS. STATE OF PUNJAB [LAWS(P&H)-2011-12-58] [REFERRED TO]
M/S. UNICORN INDUSTRIES VS. UNION OF INDIA [LAWS(SIK)-2012-5-3] [REFERRED TO]
UNION OF INDIA VS. SHRI HANUMAN INDUSTRIES [LAWS(SC)-2015-5-17] [REFERRED TO]
KAMALA AGENCIES VS. STATE OF ODISHA [LAWS(ORI)-2022-8-63] [REFERRED TO]
FERTILISER ASSOCIATION OF INDIA VS. UNION OF INDIA [LAWS(DLH)-2015-1-14] [REFERRED TO]
PARENTERAL DRUGS INDIA LIMITED VS. STATE OF H.P. [LAWS(HPH)-2007-8-73] [REFERRED TO]
ISNI ELECTRIC POWER COMPANY PVT LTD VS. UNION OF INDIA [LAWS(DLH)-2011-11-63] [REFERRED TO]
BAJRANG POWER AND ISPATE LIMITED VS. STATE OF CHHATTISGARH [LAWS(CHH)-2020-11-60] [REFERRED TO]
HAREKRISHNA DAS AND ORS. VS. STATE OF ASSAM AND ORS. [LAWS(GAU)-2015-3-71] [REFERRED TO]
KISHOR KUMAR PRABHUDAS TANNA VS. STATE OF GUJARAT [LAWS(GJH)-2008-12-170] [REFERRED TO]
R.SAKEELA VS. THE SECRETARY TO GOVERNMENT [LAWS(MAD)-2019-7-446] [REFERRED TO]
D FREEZO INDIA PVT LTD VS. U P STATE INDUSTRIAL DEVELOPMENT CORPORATIONLTD [LAWS(ALL)-2009-7-115] [REFERRED TO]
BHUPINDRA GRAM UDYOG SAMITI VS. STATE OF PUNJAB [LAWS(P&H)-2007-10-65] [REFERRED TO]
VENKATESH SURGICAL COTTON VS. STATE OF MADHYA PRADESH [LAWS(MPH)-2012-2-17] [REFERRED TO]
ADEITA PRASAD DAS VS. COMMISSIONER OF CONSOLIDATION, BHUBANESWAR AND OTHERS [LAWS(ORI)-2016-9-56] [REFERRED]
M/S BHUSHAN STEEL LIMITED VS. PARADIP PORT TRUST [LAWS(ORI)-2016-9-109] [REFERRED TO]
UNION OF INDIA VS. BHARTI AIRTEL LTD. [LAWS(SC)-2021-10-80] [REFERRED TO]
DSIPL CEPL JOINT VENTURE VS. BELGAUM URBAN DEVELOPMENT AUTHORITY [LAWS(KAR)-2009-6-78] [REFERRED TO]
SHREE CEMENT LTD. VS. STATE OF RAJASTHAN [LAWS(RAJ)-2011-10-57] [REFERRED TO]
BIHAR PRIVATE TECHNICAL VS. STATE OF BIHAR [LAWS(PAT)-2017-4-7] [REFERRED TO]
BIHAR DISTILLERS & BOTTLERS PVT. LTD. VS. STATE OF BIHAR [LAWS(PAT)-2017-5-15] [REFERRED TO]


JUDGEMENT

ASHOK BHAN, J. - (1.)THE writ petitioner in the High Court has filed this appeal against the order passed by the Division Bench of the High Court of Kerala. THE Division Bench by the impugned order has affirmed the decision of the Single Judge in dismissing the writ petition filed by the appellant herein (hereinafter referred to as the "MRF"). MRF is a company incorporated under the Companies Act, 1956 and its registered office is at 124, Greams Road, Chennai. One of its industrial units is located at Vadavathoor near Kottayam in the State of Kerala. MRF is engaged in the manufacture of automotive tyres, tubes, compound rubber, tread rubber, flaps, pre-cured tread rubber etc. at its industrial unit at Vadavathoor.
(2.)THE Government of Kerala has from time to time declared and introduced several incentives to promote industrial growth and expansion in the State of Kerala by granting exemptions, concessions or reduction in sales tax, electricity duty and electricity tariff etc. to new industries as well as to existing industrial units undertaking substantial expansion, diversification or modernization. Accordingly, the Government of Kerala has been issuing notifications from time to time to give effect to its declared policy for industrial promotion.
Acting on the incentives, concessions and benefits held out by the Government of Kerala, MRF approached the Government of Kerala with its proposal to make substantial expansion and diversification of its industrial unit at Vadavathoor. A Memorandum of Understanding was entered between MRF and the State of Kerala on 6.10.1993, which provided that the MRF had decided to make substantial investment of Rs.50 crores for expansion/diversification of its existing industrial unit at Kottayam for the manufacture of various products and that the immediate plan of MRF was to expand in the compound rubber manufacture and diversity into new products like tyres, pre-cured tread rubber, flaps etc. The said Memorandum of Understanding expressly provided that MRF shall be entitled to tax exemptions available for existing industries undertaking expansion/diversification.

On 3.11.1993 Government of Kerala issued a Notification SRO No. 1729/93 (relevant parts extracted below) in exercise of its powers under Section 10 of Kerala General Sales Tax Act. 1963 (for short "the Act") providing for tax exemption to industrial units going in for expansion/diversification/modernization in the State of Kerala:-

"(a) SRO No. 1729/93 - In exercise of the powers conferred by Section 10 of the Kerala General Sales Tax Act, 1968, (Act 15 of 1963) and in super session of the notifications mentioned in the Schedule the Government of Kerala having considered it necessary in public interest so to do hereby make the following tax exemption to industrial units and/or reduction in the rate of tax payable on the sale or purchase, as the case may be, of goods by such industrial units, subject to the conditions and restrictions specified herein namely:- (b)5. In the case of Existing Medium and Large Scale Industrial Units which undertake diversification, expansion or modernization on or after the 1st April, 1993, there shall be an exemption for a period of seven years from the date on which such diversification, expansion or modernization has been completed.

(a) In respect of the tax payable under the Kerala General Sales Tax Act, 1963- (i) On the turnover of sale of goods, manufactured in excess of full rated capacity of the unit prevailing immediately prior to such diversification, expansion or modernization, and sold by them within the State; and (ii) On the turnover of goods taxable at the point of last purchase in the State, which are used by such units for manufacturing the goods referred to in sub clause (i) above for sale within the State or inter-State; and

(c)10. Conditions and Restrictions - (iv) In the case of Existing, Medium and Large Scale Industrial Units, other than Public Sector undertakings, which undertake expansion, modernization or diversification, the aggregate exemption in respect of sales tax, purchase tax, surcharge and central sales tax shall not exceed 100% of the additional fixed capital investment made for such expansion, modernization or diversification.

10.(b) Eligibility certificate for medium and large scale industries assisted by the Kerala State Industrial Development Corporation or the Kerala Financial Corporation will be issued by the Corporation which render assistance and in other cases by the Director of Industries and Commerce, on application by such units, and orders of exemption will be issued by the Secretary, Board of Revenue (Taxes), Thiruvananthapuram. (c). Eligibility certificate and orders on exemption will be issued by the authorities mentioned in Sub-clause (b) above, if the unit is eligible for exemption or deferment of taxes and the unit satisfies the conditions for the exemptions or deferment of taxes. (d). The eligibility certificate referred to in Sub-Clause (b) above shall contain the date of commencement of commercial production and the monetary limit of exemption the unit is eligible for. The eligibility certificate issued in respect of existing medium and large-scale industrial units which undertake expansion, modernization or diversification shall also contain the date of commencement as well as the date of completion of such expansion, modernization or diversification.

(d) 11. Explanation - For the purposes of this notification, (ix) 'Manufacture' shall mean the use of raw materials and production of goods commercially different from the raw materials used but shall not include mere packing of goods, polishing, cleaning, grading, drying, blending or mixing different varieties of the same goods, sawing, garbling, processing one form of goods into another form of the same goods by mixing with chemicals or gas, fumigation or any other process applied for preserving the goods; in good condition or for easy transportation. The process of producing desiccated coconut out of coconut shall be deemed to be 'manufacture' for the purpose of this notification."

(3.)WITH the object to ensure that the State of Kerala would get the relevant proportion of excise duty, i.e., about 40% of the excise duty paid within the State, amended SRO No. 1729/93 by issuing SRO No. 271/96 dated 13.3.1996 requiring the manufacturer claiming tax exemption under SRO No. 1729/93 to pay central excise duty in the State of Kerala on its manufactured products.
On 10.4.1996 an addendum to the Memorandum of Understanding dated 6.10.1993 was executed between MRF and Government of Kerala which specifically confirmed that MRF Limited, a tyre manufacturing company within the State is entitled to tax incentives and exemptions provided under SRO No. 1729/93 dated 3.11.1993 as amended by SRO No. 271/96 dated 13.3.1996 in respect of rubber based goods like tyres, flaps, pre-cured tread rubber etc. manufactured under diversified facilities and rubber based goods manufactured pursuant to the expansion of the existing facility. Pursuant to the Memorandum of Understanding entered into between MRF and the State of Kerala and the SRO No. 1729/93 the MRF invested Rs.80 crores and carried out substantial expansion of its existing industrial unit and set up new unit for manufacture of diversified products.



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