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B.V. Nagarathna, J.—Entitlement certificate dated 19-6-2006 (Annexure-C), revised entitlement certificate dated 24-7-2006 (Annexure-D) and endorsement dated 3-8-2013 (Annexure-G) are assailed by the petitioner in this writ petition. It is the case of the petitioner that it is engaged in the manufacture of bakery products and sweets since the year 1996. Petitioner was registered as a dealer under the provisions of Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the KST Act"). It was categorised as a Tiny Industry located in Zone II, Industrial Area of Udupi District. According to the petitioner, it was entitled to sales tax exemption, under the State Government notification issued by the Department of Industries and Commerce dated 15-11-1996 (Annexure-F) and Government Order dated 15-3-1996. In terms of the above, petitioner was issued certificate dated 21-3-2001 granting exemption from payment of sales tax for a period of seven years commencing from 1-6-2000 and limiting the same to 80% of the investment made on the fixed assets, which worked out to Rs. 20,26,400/-. A copy of that certificate is produced at Annexure-A of the writ petition. It is the further case of the petitioner that it had availed the benefit of sales tax exemption, pursuant to that certificate with effect from 1-6-2000.
When the matter stood thus, KST Act was repealed and was substituted by Karnataka Value Added Tax Act, 2003 (hereinafter referred to as "the KVAT Act") with effect from 1-4-2005. In terms of the notification dated 18-4-2005, petitioner was required to obtain an entitlement certificate under the provisions of KVAT Act. Accordingly, petitioner made an application for the same. Initially certificate of entitlement dated 19-6-2006 was issued and later revised certificate dated 24-7-2006 was issued. The grievance of the petitioner is that these certificates have stated that the entitlement to tax exemption would be on the turnover exceeding Rs. 42,69,319/- (Annexure-C) and Rs. 46,29,319/- (Annexure-D). It is the case of the petitioner that, the condition that if the turnover of the petitioner exceeds the aforesaid amounts, then it would be entitled to sales tax exemption, otherwise not is contrary to the Government Order and Annexure-A which is the initial certificate issued under the provisions of Karnataka Sales Tax Act, 1957. In this regard, the petitioner had made an application for rectification of the certificate in response to which an endorsement, which is at Annexure-G has been issued. Therefore, the petitioner has filed this writ petition assailing the aforesaid annexures.
I have heard the learned Counsel for the petitioner and learned Additional Government Advocate for the respondent and perused the material on record.
While drawing my attention to various documents annexed to the writ petition as well as Section 5 of the Karnataka Value Added Tax Act, 2003 it was contended by the learned Counsel for the petitioner that while issuing a fresh entitlement certificate under the provisions of the KVAT Act, no condition of the earlier entitlement certificate at Annexure-A should have been altered. She submitted that the condition regarding turnover is not in accordance with the Government Order and notification, but contrary to the entitlement certificate dated 21-3-2001. Therefore, that certificates as well as the endorsement dated 3-8-2013, which is at Annexure-G would have to be quashed. It was also submitted that on account of the impugned Annexures herein, exemption for the period 2005-2006, 2006-2007 and 2007-2008 would not be made available to the petitioner.
Per contra, learned Additional Government Advocate appearing for respondents, with reference to the statement of objections filed by him contended that the impugned annexures are in accordance with law and would not call for any interference at the hands of this Court.
I have perused the entitlement certificate dated 21-3-2001. Clause 6 of that certificate reads as follows:
"6. Further the unit is eligible to avail sales tax exemption (both KST and CST) under Expansion programme, on sale of finished goods as per FD Notification cited at ref. (2) above for a period of 7 (Seven) years with effect from dated 1-6-2000 i.e., the date of commencement of commercial production as evidenced by the first sale invoice bearing No. 001, dated 1-6-2000 and limited to 80% (percentage) of investment made on fixed assets which works out of Rs. 20,26,400/- (Rupees Twenty lakhs twenty-six thousand four hundred only)".
The said certificate has been issued under the provisions of the KST Act following notification dated 15-11-1996 and Government Order dated 15-3-1996. The requirement of obtaining a fresh entitlement certificate was on account of the enforcement of the KVAT Act. When the petitioner made an application in that regard, Annexures-C and D were the entitlement certificates issued. There is no dispute with regard to the period for which the petitioner is entitled to the certificate of entitlement with regard to exemption of sales tax and also the tax amounts specified therein. But while stating about the balance carried forward period, the additional condition of the turnover exceeding a sum of Rs. 42,69,319/-, which has been stated is contrary to Clause 6 of Annexure-A extracted supra. The respondent-authority who has issued the certificate under the provisions of the KVAT Act, was not authorised or empowered to impose any fresh condition while issuing the certificate of entitlement, contrary to the Government Order under notification as well as the earlier certificate issued under the KST Act. In that view of the matter, Annexures-C and D are quashed.
A direction is issued to the respondent to re-issue a fresh certificate of entitlement in line with the earlier certificate dated 21-3-2001 (Annexure-A). As a consequence, the endorsement dated 3-8-2013 (Annexure-G) is also quashed. The said exercise shall be carried out within a period of two months. In the result, writ petition is allowed in the aforesaid terms.