SOUTHER REFINERIES LTD. v. STATE OF KERALA

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.R.RAMACHANDRA MENON** **WEDNESDAY, THE 14TH DAY OF MARCH 2012/24TH PHALGUNA 1933** ## **WP(C).No. 5226 of 2010 (C)** **--------------------------** ## **PETITIONER(S):** **-------------** **SOUTHER REFINERIES LTD.,T.C.3/1557(4),** **IST FLOOR,KESAVADASAPURAM,M.G.COLLEGE HOSTEL ROAD PATTOM,THIRUVANANTHAPURAM-695 003,REPRESENTED BY ITS GROUP MANAGER(MIS. & FINANCE), MR.SREEKUMAR.J.** **BY ADVS.SRI.E.K.NANDAKUMAR** **SRI.A.K.JAYASANKAR NAMBIAR SRI.P.BENNY THOMAS SRI.P.GOPINATH SRI.RAJA KANNAN** **RESPONDENT(S):** - **--------------** **1. STATE OF KERALA REPRESENTED BY THE CHIEF SECRETARY TO GOVERNMENT,SECRETARIAT THIRUVANANTHAPURAM.** **2. SECRETARY TO GOVERNMENT,TAXES DEPARTMENT SECRETARIAT,THIRUVANANTHAPURAM.** **3. COMMISSIONER OF COMMERCIAL TAXES, THIRUVANANTHAPURAM.** **4. ASSISTANT COMMISSIONER OF COMMERCIAL TAXES,(ASSMT.)-II,SPECIAL CIRCLE THIRUVANANTHAPURAM.** **5. BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (BIFR),GOVERNMENT OF INDIA MINISTRY OF FINANCE,DEPARTMENT OF ECONOMIC AFFAIRS JAWAHAR VYAPAR BHAVAN,1,TOLSTOY MARG NEW DELHI.** **BY ADV. SRI.T.P.M.IBRAHIM KHAN,ASST.S.G OF INDI BY ADV. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA BY ADV. SPECIAL GOVERNMENT PLEADER, SRI.SOJAN JAMES** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14-03-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **SU/-** **WP(C).No. 5226 of 2010 (C)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1: COPY OF THE ORDER NO.C4-30129/94/TX DATED 24-11-1995 OF THE BOARD OF REVENUE, GOVERNMENT OF KERALA.** - **P2: COPYOF THE ORDER OF THE BIFR, DATED 10-6-1997.** - **P3: COPY OF THE DRAFT REHABILITATION SCHEME, ISSUED ALONG WITH ORDER DATED 26-2-2001.** - **P4: COPY OF THE INTERIM ORDER OF THIS HONOURABLE COURT IN CMP.NO.16280/01 IN O.P.NO.10157 OF 2001 DATED 23-3-2001.** - **P5: COPY OF THE JUDGMENT OF THIS HONOURABLE COURT IN O.P.NO.10157 OF 2001 DATED 5-6-2006.** - **P6: COPY OF THE SANCTIONED SCHEME ISSUED ON 24-7-2001.** - **P7: COPY OF THE ORDER OF THE BIFR, DATED 20-6-2005.** - **P8: COPY OF THE ORDER OF THE BIFR, DATED 20-6-2006.** - **P9: COPY OF THE COMMUNICATION DATED 7-4-2008 OF THE STATE GOVERNMENT.** - **P10: COPY OF THE REPRESENTATION SUBMITTED BEFORE THE HONOURABLE MINISTER FOR FINANCE, GOVERNMENT OF KERALA, DATED 16-1-2010.** - **P11: COPY OF THE PRE-ASSESSMENT NOTICE UNDER KGST ACT, FOR THE YEAR 2000-01 DATED 13-1-2010.** - **P12: COPY OF THE TRUE COPY OF THE PRE-ASSESSMENT NOTICE UNDER CST ACT, FOR THE YEAR 2000-01 DAED 18-1-2010.** - **P13: COPY OF THE PRE-ASSESSMENT NOTICE UNDER KGST ACT, FOR THE YEAR 2001-02 DATED 15-1-2010.** - **P14: COPY OF THE PRE-ASSESSMENT NOTICE UNDER CST ACT, FOR THE YEAR 2001-02 DATED 15-1-2010.** - **P15: COPY OF THE PRE-ASSESSEMENT NOTICE UNDER KGST ACT, FOR THE YEAR 2002-03 DATED 28-1-2010.** - **P16: COPY OF THE PRE-ASSESSMENT NOTICE UNDER CST ACT, FOR THE YEAR 2002-03 DATED 28-1-2010.** **RESPONDENTS' EXHIBITS:** **NIL.** **/TRUE COPY/** **P.A TO JUDGE** **SU/-** ## **P.R.RAMACHANDRA MENON,J.** ========= = = = = = = = = **W.P.(C) No.5226 of 2010** = = = = = = = == = = = = = Dated this the 14th day of March, 2012 ## J U D G M E N T The petitioner, a Medium Scale Industrial Undertaking, is before this Court being aggrieved of Ex.P9 order passed by the Government on 7/4/2008, turning down the request to consider the extention of exemption from the KGST Act and the concessional rate of Central Sales Tax till 31-3-2006, without any ceiling and also being aggrieved of Ext.P11 to P16 notices in respect of the assessment proposed under Section 17D of the Kerala General Sales Tax Act and Rule 6(5) of the CST (Kerala) Rules , 1957 in respect of the assessment years 2000-01 till 2005-06. 2. The petitioner Industry was set up as a joint concern promoted by the Kerala State Industrial Development Corporation and it started commercial production on 1-9-1993. As stated in paragraph 3 of the writ petition, the petitioner was eligible for exemption of sales tax (KGST) and concessional CST as per Government ## **W.P.(C) No.5226 of 2010** 2 notification issued as SRO No. 520/92 and 521/92 for a period of 'seven years' from the date of commercial production, i.e, from 1-9-1993 to 31-8-2000. By virtue of Ext.P1 order passed by the Government, exemption was granted for the said period, quantifying the extent of benefit as '366.44 lakhs'; out of which, the petitioner could utilise only a portion of the same and the balance to an extent of Rs.209.2 lakhs was remaining unutilised for some or other reasons. Meanwhile, in view of various adverse circumstances, the Company became sick and it was referred to 5[th] respondent/BIFR for revival. 3. After considering the facts and circumstances, the Board for Industrial and Financial Reconstruction issued Ext.P3 Scheme, for re-habitation, whereby a provision was incorporated under paragraph 13.8(a) causing extention of sales tax exemption (KGST) and concessional CST till 31-3-2006 without any ceiling. It is stated that the said Scheme did not work out for some or other reason, as a result of which, a 'fresh Scheme' as borne by Ext.P6 was promulgated on 24-7-2001. There also, a similar provision ## **W.P.(C) No.5226 of 2010** 3 was incorporated by way of clause no. 13.9, which reads as follows. “13.9. Government of Kerala (GOK) To consider- (a) Extension of sales tax exemption and concessional Central Sales Tax vide Government notification No. SRO/520/92 and SRO/521/92 till March 31,2006 without any ceiling. (b) Concessional power tariff and exemption from payment of electricity duty vide Government notification No.MS/4/92/PD dated February 6,1992 till March 31, 2006.” 4. Later, Ext. P7 order was issued on 20-6-2005, whereby the clause stipulating to have the benefit provided till 31-3-2006 was modified, confining the same to '31-3-2005'. It is also borne out by the records that the petitioner Company, by virtue of the rehabitation steps and such other measures, came out from the purview of the BIFR and Ext.P8 order was passed; the operative portion of which reads as follows: “ As the company M/s SRL ceases to be a sick industrial company , within the meaning of Section 3(1) (o) of the Act, the Bench hereby discharges the company M/s Southern Refineries Ltd. (SRL) from the purview of SICA and issues the following directions:i) The SBI is hereby relieved from the responsibility as the MA ii) The un-implemented provision(s) of the SS/01 and /or the unimplemented portion of the subsequent directions issued by the Board, vide its order dt. 20-6- ## **W.P.(C) No.5226 of 2010** 4 2005, in this regard, as may be there would continue to remain in full force and would continue to be monitored by the company. iii) The 'Special Director' appointed by the BIFR on the company's 'Board of Directors' (BOD), if any, would stand discharged with immediate effect. iv) The company would complete necessary formalities with the 'Registrar of Companies'(ROC), as may be required. 5. In the meanwhile, contending that the petitioner was entitled to have further extension of the benefits conferred as per Ext.P1; O.P No. 10157/2001 was filed before this Court with the following prayers: “i) To issue a writ of mandamus directing the first respondent to consider and grant extension of time to the petitioner for availing the sales tax exemption granted under Ext.P1 upto 31-3-2006 as recommended by BIFR in Ext.P7 and ii) To issue a writ of certiorari quashing Exts. P8,P9 and P10 and all proceedings for recovery of sales tax from the petitioner pending implementation of Ext.P7 scheme for rehabilitation and iii) To issue a writ of prohibition against respondents 1,3 and 4 from enforcing any demand of 'sales tax against the petitioner without prior approval from the BIFR” The said writ petition was disposed of as per Ext.P5 judgment dated 5-6-2006, without passing any order on merit, but relegating the petitioner to approach the Government, if the petitioner was aggrieved in any manner. 6. It is stated by the petitioner that, eventhough the ## **W.P.(C) No.5226 of 2010** 5 petitioner approached the Government, no positive orders were passed. Later, the petitioner was served with Ext.P9 order dated 7-4-2008, stating that the request to consider the extension could not be agreed upon and hence was rejected, however adding that the Government had reduced the rate of tax of 'recycled waste lubricating oil' (which is the product of the petitioner Company) to 4%, with effect from 1-4-2005. The pleadings and proceedings reveal that the petitioner has been effecting the tax payment in terms of the reduced rate with effect from 1-4-2005. 7. In the meanwhile, the petitioner was served with Ext.P11 to P16 notices of various dates, issued in January 2010. The petitoner approached this Court seeking to quash the said notices and Ext.P9, also seeking for the benefit of Ext.P6 Scheme formulated by the BIFR, contenting that the same is binding upon the Government. 8. A counter affidavit has been filed by the respondents 1 to 4, stating that the petitioner is not eligible to have any further extention of exemption and that the eligible extent of benefits in terms of the relevant SRO has already been ## **W.P.(C) No.5226 of 2010** 6 provided to the petitioner. Paragraph 5 of the counter affidavit, which is relevant in the context reads as follows. “ It is submitted that the BIFR has declared the unit of the petitioner as sick industrial company and the petitioner company was preferred to BIFR in July 1996. The revival scheme was approved by BIFR on 16-1-1998. In the draft scheme, there was a provision under clause 13.8(a) for sales tax exemption and concessional CST vide SRO 520/92 and 521/92 till March 2006 without any ceiling. But this revival package was failed. Subsequently, another scheme was approved by BIFR on 13-7-2001. On 20-6-2005, the BIFR has issued the following direction for the compliance of the concerned authorities. With regard to the sales tax matter, the following is the direction “Sales tax authorities, the Government of Kerala, in order to ensure long term viability of the company would consider granting reliefs as envisaged in Para 13.9(a) -page 30 of the sanctioned scheme for the period from 1-10-2000 to 31-3-2005 (instead of upto 31-3-2006) and would also not raise any further demand /claim on the company for the said period. The company would however, to continue to pay the new value added tax from 1-4-2005 onwards.” The para 13.9(a) preferred in the above said order with regard to the sales tax matter is follows: “ 13.9 Government of Kerala To consider a) Extension of sales tax exemption and concessional CST vide Government notification No. SRO 520/92 and 521/92 till March 31-3-2006” The first respondent had already considered the above said claim of sales tax exemption and concessional CST and intimated the petitioner that extension of sales tax exemption and concessional CST is not allowable to the petitioner vide letter dated 12-12-2000 and clarification dated 27-6-2003. Again the Government of ## **W.P.(C) No.5226 of 2010** 7 Kerala vide Ext.P9 letter informed the petitioner that the request for extension of exemption and concessional rate of CST without any ceiling till 31-3-2006 is not liable to be considered and rejected the said request. Therefore, the contrary contentions raised in the writ petition that binding order of the BIFR is not considered by the respondent is not correct. Since the petitioner is not entitled for tax exemption under the KGST Act and concessional rate of tax under the CST Act from 1-9-2000 onwards, the challenge against Exhibit P11 to P16 notices are also not sustainable under law and are only liable to be rejected.” 9. The learned counsel for the petitioner submits that the consideration made by the Government while passing Ext.P9 is only with regard to the extension in terms of the relevant provisions and SROs issued by the Government and that it does not pertain to the exemption directed to be considered as per Ext.P5 Scheme/ Order issued by the BIFR. As mentioned hereinbefore, the concerned Scheme passed by the BIFR only directs the Government to have the matter considered and there is no positive order to provide any exemption as a matter of right. That apart, the said direction itself is with specific reference to the benefit extendable under SRO 520 and 521 and nothing more than that. This infact has been considered and rejected by the Government as early as on 7/4/2008 by passing Ext.P9 ## **W.P.(C) No.5226 of 2010** 8 order. It also remains a fact that the petitioner had approached this Court earlier by filing O.P. No.10157/2001, which culminated in Ext.P5 judgment passed on 5-6-2006, where by the petitioner was relegated to approach the Government. In fact, the petitioner has approached this Court challenging Ext.P8, after 'two years' of passing the same, that too, when Exts.P11 to P16 notices were issued in January 2010, pertaining to the assessment concerned. 10. During the course of hearing, it is brought to the notice of this Court that, pursuant to Ext.P11 to P16 notices, the proceedings have been finalised and final assessment orders have been passed by the concerned authority, fixing the liability . The learned Counsel for the petitioner submits that the petitioner is pursuing further steps to have the same challenged by resorting to appropriate remedy. In the above circumstance, this Court finds that the present writ petition does not deserve to be considered at all. It is also to be noted that, the question whether the claim for exemption as sought for could be granted, had come up for consideration before this Court earlier and as per the **W.P.(C) No.5226 of 2010** 9 judgment rendered by a Division Bench of this Court reported in **Prima Industries Ltd., vs. State of Kerala (2005 (4) KLT 253** ), the same stands answered against the persons like the petitioner. The writ petition fails and the same is dismissed accordingly . smm **P.R.RAMACHANDRA MENON** . JUDGE **W.P.(C) No.5226 of 2010** 10