The Karnataka High Court has held 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 division bench of Justice Krishna S Dixit and Justice G Basavaraja has observed 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.
Mangalore Chemical And Fertilizers Limited, the appellant/assessee questioned the order made by the Authority For Clarification And Advance Rulings 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%.
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The Assessee relied on the Notification No. FD 147 CET 2004, Bangalore, being a piece of delegated legislation, absolutely exempts commodities of the kind namely, diesel captive generation sets from entry tax.
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%.
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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. 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.
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.
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The court held that 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 Authority For Clarification And Advance Rulings.
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.
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