Karnataka High Court
M/S Mangalore Chemical And Fertilizers ... vs The State Of Karnataka on 3 February, 2025
Author: Krishna S Dixit
Bench: Krishna S Dixit
-1-
NC: 2025:KHC:4768-DB
STA No. 23 of 2017
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 3RD DAY OF FEBRUARY, 2025
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE G BASAVARAJA
SALES TAX APPEAL NO. 23 OF 2017
BETWEEN:
M/S MANGALORE CHEMICAL AND FERTILIZERS LIMITED
UB TOWER, LEVEL 1, UB CITY
VITTAL MALLAYA ROAD, BENGALURU - 560 001.
(REPRESENTED BY ITS AUTHORIZED REPRESENTATIVE)
...APPELLANT
(BY SRI. RAVI RAGHAVAN.,ADVOCATE AND
MISS. MEGHANA LAL., ADVOCATE)
AND:
1. THE STATE OF KARNATAKA,
REPRESENTED BY THE COMMISSIONER OF COMMERCIAL
TAXES,
GANDHINAGAR, BANGALORE.
2. AUTHORITY FOR CLARIFICATION AND ADVANCE
Digitally signed RULINGS,
by SHARADA VANIJYA THERIGE KARYALAYA,GANDHINAGAR,
VANI B
KALIDASA ROAD, BENGALURU - 560 009.
Location: HIGH ...RESPONDENTS
COURT OF
(BY SRI.ADITYA VIKRAM BHAT.,AGA FOR R1;
KARNATAKA
V.C.O DATED 16/11/22
NO NOTICE IS REQUIRED TO AGAINST R2)
THIS STA FILED UNDER SECTION 66(1) OF THE
KARNATAKA VALUE ADDED TAX ACT 2003, PRAYING TO SET
ASIDE THE IMPUGNED ORDER DATED 27.03.2017 BEARING
NO. AR CLR CR 03/2012-13 DATED 27.03.2017 PASSED BY
THE RESPONDENT NO.2 AUTHORITY FOR CLARIFICATION AND
ADVANCE RULING.
THIS STA, COMING ON FOR FINAL HEARING, THIS DAY,
JUDGMENT WAS DELIVERED THEREIN AS UNDER:
NC: 2025:KHC:4768-DB
CORAM: HON'BLE MR JUSTICE KRISHNA S DIXIT
and
HON'BLE MR JUSTICE G BASAVARAJA
ORAL JUDGEMENT
(PER: HON'BLE MR JUSTICE KRISHNA S DIXIT)
This Appeal by the Assessee seeks to call in question
the order dated 27.03.2017 made by the second
Respondent who happens to be the Authority for
Clarification and Advance Ruling clarifying that the Waste
Heat Recovery Boilers purchased by the Appellant who
caused their entry in the local area falls under Sl.No.7 of
the table printed in the Notification No. FD 11 CET 2002
dated 30.03.2002 attracting entry tax at the rate of 2%.
2. A Coordinate Bench of this Court vide order
dated 10.06.2024 has admitted the Appeal for
consideration on the following questions of law:
"a) Whether i8n the facts and circumstances of the
case, Respondent Authority has acted within the
four corners of the KTEG Act read with KVAT Act by
passing the impugned order much beyond the time
limit prescribed therein;
b) Whether in the facts and circumstances of the
case, Respondent Authority was right in ignoring
S.No.6 of the Schedule Notification while framing
the issue to be determined in the advance ruling
NC: 2025:KHC:4768-DB
application, when the said entry reads 'Diesel
Captive Generating Sets' and the goods which are
to be classified are DG Sets;
c)Whether in the facts and circumstances of the
case, Respondent Authority was right in holding
that the DG Sets imported by the Appellant and its
auxiliaries procured indigenously are classifiable as
'machinery of all kinds and parts and accessories
thereof but excluding agricultural machinery' under
Entry 52 of the KTEG Act read with S.no.7 of the
Schedule Notification;
d) Whether on the facts and circumstances of the
case, the Respondent Authority was right in holding
that WHRB procured by the Appellant is classifiable
'machinery of all kinds and parts and accessories
thereof but excluding agricultural machinery' under
Entry 52 of the KTEG Act with S.no.7 of the
Schedule Notification."
3. Learned counsel for the Assessee drawing
attention of the Court to the Notification No. FD 147 CET
2004, Bangalore, dated 29.12.2004 seeks to falter the
impugned advance ruling contending that this Notification
being a piece of delegated legislation, absolutely exempts
commodities of the kind namely, diesel captive generation
sets from entry tax. Learned AGA appearing for the
Revenue resists the Appeal making submission in
justification of the impugned advanced ruling and the
reasons on which it is apparently constructed.
NC: 2025:KHC:4768-DB
4. Having heard the learned counsel for the parties
and having perused the Appeal papers, we are inclined to
grant indulgence in the matter broadly agreeing with the
submission made by the learned counsel appearing for the
Assessee. He is right in telling that the impugned advance
ruling is absolutely sustainable apart from being contrary
to law inasmuch as, it seeks to levy tax when exemption
avails.
5. The subject Notification dated 29.12.2004 that
has been published in the Karnataka Gazette,
extraordinary No.148 dated 29.12.2004 reads as under:
"In exercise of the powers conferred by sub-section
(1) of Section 11-A of the Karnataka Tax on Entry
of Goods Act, 1979 (Karnataka Act 27 of 1979), the
Government of Karnataka being of the opinion that
it is necessary in Public interest so to do, hereby
exempts, with effect from the First day of October,
2004, the tax payable by a dealer under the said
Act, on the entry of diesel captive generation sets."
The reasoning of the Advance Ruling Authority runs
counter to the intent & policy content of the Rule Maker as
has been expressed in the above Notification. This is a
case of misdirection in law attributable to the second
NC: 2025:KHC:4768-DB
Respondent. Therefore, the question of law (b) & (c) are
answered in favour of the Assessee and against the
Revenue to the net effect that Diesel Captive Generating
Sets are exempt from tax under Section 11-A of the
Karnataka Tax on Entry of Goods Act, 1979 r/w the
provisions of Karnataka Value Added Tax, 2003. The other
questions of law pale into insignificance.
In the above circumstances and with the above
observations, this Appeal is disposed off setting aside the
impugned order of the second Respondent. All logical
consequences would follow.
Costs made easy.
Sd/-
(KRISHNA S DIXIT)
JUDGE
Sd/-
(G BASAVARAJA)
JUDGE
Bsv
