MANGALORE CHEMICALS & FERTILISERS LIMITED versus DEPUTY COMMISSIONER OF COMMERCIAL TAXES AND ORS..

Citation: [1991] 3 S.C.R. 336 · Decided: 02-08-1991 · Supreme Court of India · Bench: M.N. VENKATACHALIAH, S.C. AGRAWAL · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

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MANGALORE CHEMICALS & FERTILISERS LIMITED 
v. 
DEPUTY COMMISSIONER OF COMMERCIAL 
TAXES AND ORS. 
AUGUST 2, 1991 
[M.N. VENKATACHALIAH AND S.C. AGRAWAL, JJ.) 
Karnataka Sales Tax Act, 1957-Section BA-Notifications dated 
30.6.1969 and 11.8.1975 issued under granting reliefs and incentives-
Filing of monthly returns adjusting refund of sales tax in anticipation of 
permission of Revenue-Initiation of proceedings u/s. 13 and demand 
notices for sales-tax payment, when assessee's application for permis-
sion to adjust sales tax not disposed of by the Revenue-lllegal. 
interpretation of Statutes--Taxing Statute-Provisions whether 
substantive or procedural character-Ascertainment-Need of-When 
interpretative process arises, indicated. 
On 30th June, 1969, State Government issued a notification under 
Section SA of the Karnataka Sal•~s Tax Act, 1957, providing a package 
of reliefs and incentives including one concerning relief from payment 
of sales tax. 
A further notification dated 11th August, 1975 was issued, 
envisaging certain modified procedures for effectuating the reliefs con-
templated by the exemption notification of 30th June, 1969. 
For the assessment year 1976-77, the appellant made an applica-
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ti on to the Respondent No. I on 10th November, 1976 for adjustment of 
the refunds against sales-tax due and permission was granted with 
retrospective effect from Isl May, 1976 validating the adjustments, 
which the appellant had made during the interregnum. 
For the three subsequent years, viz., 1977-78, 1978-79 and 1979· 
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80, similar applications, which were made on 29th March 1977, 20th 
March 1978 and 8th March 1979 respectively, remained undisposed of. 
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In anticipation of the permission, appellant adjusted the refund 
against tax payable for these years and filed its monthly returns setting 
out adjustments so effected. 
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CHEMICALS & FERTILISERS v. DY. COMMR. 
337 
There was no dispute that the appellant was entitled to the benefit 
of the notification dated 30th June, 1969 and that the refunds were 
eligible to be adjusted against sales-tax payable for respective years. 
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The respondent no. 1 in his letter dated 27.3.1979 informed the 
appellant that the orders on appellant's application for permission 
would be passed only on receipt of the clarification from the Govern-
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ment on the matters. 
On 9th January, 1980, the appellant was issued three demand 
notices by the Commercial Tax Officer.demanding payment of the sales-
tax, stating that as prior permission to adjust sales-tax had not been 
considered by the respondent no. 1, he was obliged to proceed to 
recover the taxes. Steps for recovery of the penalties were also 
initiated. 
The appellant moved the High Court for issue of writ of 
mandamus to quash the demand notices and the proceedings initiated 
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for recovery of penalty under section 13 of the Act. 
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The High Court dismissed the writ petition, against which the 
present appeal was filed. 
The appellant urged that indisputably the permission for the three 
years had been sought well before the commencement of the respective 
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years but had been withheld for reasons, which were demonstrably 
extraneous; that the basic eligibility was conditioned by the notification 
of 30th June, 1969, which required a certificate from the Department of 
Industries and Commerce; that the requirement of the annual permis-
sion for adjustment envisaged by the notification of llth August; 1975 
was merely procedural, as clause 3 of the notification stipulated; and 
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that if the conditions were satisfied, it was deemed that permission was 
given. 
The respondents cont.ended that it was not as if the right to the 
refund was denied or defeated by the inaction of the Deputy Commis-
sioner but only one mode of the refund by adjustment-became unav-
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ailable; that the benefit envisaged by the notification of llth August, 
1975 was in the nature of a concession and that the appellant in order to 
avail itself of its benefit had to sltow strict compliance with conditions 
subject to which it was available; that where exemptions were con-
cerned, the conditions thereof ought to be strictly construed and strict 
compliance with them exacted before a person could lay claim to the 
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338 
SUPREME COURT REPORTS 
[1991] 3 S.C.R. 
benefit of the ex~mptions; and tha1t if, in the meanwhile, the period itself 
expired, no relief was possible as quite obviously, the r

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