SOUMYA POLYMERS Vs. PRINCIPAL SECRETARY TO GOVERNMENT OF KARNATAKA COMMERCE AND INDUSTRIES DEPT AND ORS

JUDGEMENT

(1.) This is the second round of litigation by the petitioner, who in the earlier round in W.P. Nos.20250- 20251/2010, having questioned the order dated 03.03.2010, of the State Government informing the petitioner of not being eligible for sales tax exemption, this Court, by order dated 27.01.2011 Annexure 'D' quashed the order and remitted the proceeding for a consideration afresh recording a specific finding that the exemption from sales tax was applicable to the petitioner, since it had commenced production before the cut off date mentioned in the letter Annexure Rs. A1'. On remand, the State Government by order dated 07.05.2012 Annexure 'FRs. , rejected the claim of the petitioner for sales tax exemption, in terms of the Government orders in force. Hence this petition.

(2.) There is no dispute that petitioner, a partnership firm secured a certificate of provisional registration as a Small Scale Industry, from the Department of Industries and Commerce, on 13.01.1999, and obtained a loan of Rs. .50,00,000/- on 31.08.1999 and an additional loan of Rs. .5,00,000/- on 02.02.2001 from the Karnataka State Financial Corporation (for short, 'KSFC'), to set up the plant and machinery on the industrial plot No.199 at Hebbal Industrial Area, Mysore, possession of which was taken on lease on 07.01.1999, for a period of 10 years under the lease deed dated 16.02.2000 Annexure 'C'. Petitioner commenced commercial production of High Density Polythene packets on 24.05.2001. Yet another fact not in dispute is that commencing from 20.04.2000, invoices were raised for procurement to set up the industry.

(3.) There is no dispute that the State of Karnataka formulated a new Industrial Policy 1996 and Package Of Incentives & Concessions available for Small Scale Industries for the period from 1996 to 2001 under Government orders dated 15.03.1996 and 31.05.1996 for short, "Policy 1996-2001". Sales tax exemption, thereunder, for Small Scale Industries is 100% of value of fixed assets for a period of six years from the date of commercial production in "Developing areas" falling within 'Zone-II', defined as, all the remaining parts of State-173 Talukas while 'Zone-I: Developed area' is classified as those falling within Bangalore South and North Talukas and Bangalore Urban agglomeration areas as per 1991 census. In Annexure III to the said "Policy 1996-2001", a 'Small Scale Industry' is defined as an Industrial Undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms or on lease or by hire purchase does not exceed Rs. .60,00,000/- while the limit of investment in fixed assets in plant and machinery is Rs. .75,00,000/- provided the unit undertakes to export atleast 25% of the annual production by the end of the third year from the date of its commencing production. 'Fixed asset' is defined as the total investment made on land, building and plant and machinery and such other productive assets like tools, jigs and fixtures, dies, utilities like boilers, compressors, diesel generating sets, cranes, material handling equipments and such other equipments directly related to production purposes.