SMALL SCALE INDUSTRIAL UNITS

1. In the case of new Industrial Units under Small Scale Industry, there shall be an exemption, for a period of seven years from the date of commencement of commercial production;

(a) in respect of tax payable by such units under the Kerala General Sales Tax Act, 1963;

(i) on the turnover of sale of goods manufactured and sold by them within the State; and

(ii) on the turnover of goods taxable at the point of last purchase in the State which are used by such units for manufacturing other goods for sale within the State or interstate; and

(b) in respect of the surcharge payable under Section 3 of the Kerala Surcharge on Taxes Act, 1957, (Act 11 of 1957) in relation to the goods referred to in Sub-clause (a) above,

2. In the case of existing Industrial Units under small scale Industries, which effect diversification, expansion or modernisation on or after the 1st April, 1993 there shall be an exemption for a period of three years from the date of completion, as certified by the General Manager, District Industries Centre, of such diversification or expansion or modernisation;-

(a) in respect of the tax payable by such units under the Kerala Sales Tax Act, 1963 :-

(i) on the turnover of goods manufactured and sold by them within the State; and

(ii) on the turnover of goods taxable at the point of last purchase in the State which are used by such Units for manufacturing the goods referred to in Sub-clause (i) above, for sale within the State or inter state;

(b) in respect of the Surcharge payable by such units Section 3 of the Kerala Surcharged on Taxes Act, 1957 (Act 11 of 1957) in relation to the goods preferred to in Sub-clause (a) above.

3. Small Scale Industrial Units will have the option to deposit the tax with the Government in the "Tax for Growth Fund" constituted as per G.O. (Rt) No. 717/91/TD, dated the 1st November 1991. The Units which opt for "Tax for Growth Fund" shall not be eligible for exemption but will be permitted to collect sales tax as per rules.

MEDIUM AND LARGE UNITS

4. In the case of new Industrial Units under Medium and Large Scale Industries, there shall be an

Exemption for a period of seven years from the date of commencement of commercial production -

(a) in respect of the tax payable by such units under the Kerala General Sales Tax Act, 1963-

(i) on the turnover of sale of goods manufactured and sold by them within the State; and

(ii) on the turnover of goods, taxable at the point of last purchase in the State, which are used by such units for manufacturing other goods for sale within the State or inter-state; and (iii) On the turnover of purchase of raw rubber by tyre manufacturing companies within the State for use in the manufacture of rubber based goods within the State, whether or not the sale of such goods produced is effected within the State or inter-state, limiting the exemption to 100% of Fixed Capital Investment or for a period of seven years from the date of commencement of commercial production, whichever is earlier.

(b) in respect of the Surcharge payable under Section 3 of the Kerala Surcharge on Taxes Act, 1957 (Act 11 of 1957) in relation to the goods referred to sub-clause (a) above.

Provided that industrial units set up on or after 1-4-1993 and which are manufacturing cement using fly ash generated in the State as raw material, there shall be an exemption for a period of nine years from the date of commencement of commercial production or until full utilization of exemption of 500% of the fixed capital investment of unit, whichever is earlier

5. In the case of existing Medium and Large Scale Industrial Units which undertake diversification, expansion or modernisation on or after the 1st April 1993, there shall be an exemption for a period of seven years from the date on which such diversification, expansion or modernisation has been completed.

(a) in respect of tax payable under the Kerala General Sales Tax Act, 1963.

(i) on the turnover of sale of goods, manufactured and sold by them within the State; and

(ii) on the turnover of goods taxable at the point of last purchase in the State which are used by such Units for manufacturing the goods referred to in Sub-clause (i) above for sale within the State or inter state; and

(iii) On the turnover of purchase of raw rubber by tyre manufacturing companies within the State for use in the manufacture of rubber based goods within the State, whether or not the sale of such goods produced is effected within the State or inter-state subject to the maximum of 100% of Fixed Capital Investment or for a period of seven years form the date on which such diversification, expansion or modernisation has been completed, whichever is earlier.

(b) in respect of the Surcharge payable under section 3 of the Kerala Surcharge on Taxes Act, 1957 (Act 11 of 1957) in relation to the goods preferred to in Sub-clause (a) above.

6. The Medium and Large Scale Industrial Units referred to in Clauses 4 and 5, will have the option for deferred of taxes for a period of ten years from the date of commencement of commercial production or from the date on which diversification, expansion or modernisation has been completed. The unit which opts for deferment of taxes will not be permitted to avail of the exemption but will be permitted to collect taxes as per rules. The accumulated taxes so deferred shall be remitted to Government in equal monthly installments over a period of five years from the eleventh year of the date of commencement of commercial production or the date of completion of such diversification, expansion or modernisation, as the case may be, with simple interest at the rate of 15% per annuam. If any installment or installments are defaulted, penal interest at the rate of 2% per annum shall be charged for the amount so defaulted. There will be no interest on the tax accumulation for the first ten years from the date of commercial production or the date of completion of such diversification, expansion or modernisation, as the case may be.

6A. In the case of large scale industrial units started production after 23rd September 1991 and which purchase coconut or copra for producing coconut oil and coconut oil cake within the State, there shall be a reduction in respect of the tax payable by such unit under the Kerala General Sales Tax Act, 1963 on the turnover of coconut or copra purchased and used for production of coconut oil and coconut oil cake from 3% to 1% for period of seven years from the date of commencement of commercial production subject to the condition that the reduction in purchase tax shall be applicable to such quantity of oil produced by them that is sold outside the State of Kerala and that the total of such concession availed of by a unit shall not exceed 100% of the fixed capital investment of the unit.

SICK SMALL SCALE INDUSTRIAL UNITS

7. In respect of sick small scale industrial units, there shall be an exemption for a period of five years in the case of closed down sick units from the date of commencement of sale of such goods by the units after revival and in the case of running sick units from the date of disbursal of at least 25 per cent of rehabilitation assistance, or from the date from which the unit is declared as sick unit, whichever is earlier.

(a) in respect of the tax payable under the Kerala General Sales Tax Act 1963.

(i) on the turnover sale of goods manufactured and sold by such units within the State; and

(ii) on the turnover of goods taxable at the point of last purchase in the State which are used by such Units for manufacturing other goods for sale within the state of inter-state; and

(b) in respect of surcharge payable under Section 3 of the Kerala Surcharge on Taxes Act, 1957 (Act 11 of 1957) in relation to the goods referred to in Sub-clause (a) above.

8. In respect of Small Scale Industrial Units in the State which were set up on or after the 1st April 1990 and have availed of tax exemption granted in Notifications G.O. (P) No. 68/90/TD dated, the 31st March 1990 published as SRO No. 449/90 published as S.R. O. No. 502/90 in the Kerala Gazette Extraordinary No. 351 dated the 31st March 1990, and G.O. (P) No. 71/90/TD dated 31st March 1990, there shall be a reduction in the rate of tax payable on the sale of rubber products by such units to 4% for a period of two years from the date on which such units ceased to entire itself to the sales tax exemption in accordance with the terms of the said notifications.

9. In respect of Medium Scale Industrial Units other than Public Sector Undertakings which were set up on or after the 1st April, 1989 and have availed of tax concession granted in Notification G.O. (P) No. 94/89/TD dated the 27th April 1989, there shall be a reduction in the rate of tax payable on the sale of rubber products by such units to 4% for a period of two years from the date on which such units ceased to entitle itself to the sales tax exemption in accordance with the terms of the notification.

10. Conditions and Restrictions -

(i) In the case of new Industrial Units under Small Scale Industries, the aggregate exemption in respect of sale tax, purchase tax, surcharge and central sales tax payable together shall not exceed 100% of the capital investment of the unit.

(ii) in the case of existing Industrial Units under Small Scale Industries, which effect diversification, expansion or modernisation, the aggregate exemption in respect of sale tax, purchase tax, surcharge and central sales tax payable together shall not exceed the amount equal to the value of the new plant and machinery owned by the unit which are used for diversification, expansion or modernisation.

(iii) In the case of new Industrial Units other than Public Sector Undertakings, under medium and large scale industries the aggregate exemption in respect of sales tax, purchase tax, surcharge and central sales tax together shall not exceed 100% of the fixed capital movement of the unit.

(iv) In the case of existing Medium and Large Scale Industrial Units, other than Public Sector

Undertakings, which undertake expansion, modernisation or diversification, the aggregate exemption in respect of sales tax, purchase tax, surcharge shall not exceed 100% of the additional fixed capital investment made for such expansion, modernisation or diversification.

(v) In the case of Small Scale Industrial Units which opt to deposit the tax with the Government in the "Tax for Growth Fund", the exemption from sales tax, purchase tax, surcharge and central sales tax already available of by the units, if any, and the repayment of term loans from the "Tax for Growth Fund" together shall not exceed the maximum amount prescribed in Sub-clauses (i) or (ii) as the case may be.

(vi) In the case of Medium and Large Scale Industrial Units, other than Public Sector Undertakings, which opt for deferment of taxes, the aggregate of such taxes deferred shall not exceed 100% of the addtional investment made for such expansion, modernisation or diversification in the case of existing Units.

(vi-A) In the case of new industrial units in the information Technology Sector, whether under SSI sector or under the medium the medium and large scale sector, which are engaged in the manufacture of Hardware for Information Technology, the aggregate exemption shall be limited to 150% of the fixed capital investment. The conditions of this notification other than that relating to quantum, shall apply to such unit in the same manner as they to other industrial units.

(vi-B) The concessions referred to in terms (iii) of sub-clause (a) of clause (4) and 5 respectively shall be available only if duty of excise under the Central Excises and Salt Act, 1944 (Central Act I of 1944) is paid on such goods within the State and a certificate to that effect obtained from the competent authority is produced before the Assessing Authority.

(vii) In respect of the Sick Small Scale Industrial Units, the cumulative Sales tax exemption granted to a unit at any point of time within the period of eligibility shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit. If the unit claiming exemption from sales tax under Clause 7 above had already availed of exemption from sales tax under any other scheme, the quantum of exemption admissible under the said Clause shall be reduced by the quantum of sales tax exemption already availed of.

(viii) The Small Scale Industrial Units claiming such exemption shall procedure the proceedings of the District Level Committee consisting of the District Collector (Chairman), The Deputy Commissioner of Agricultural Income Tax and Sales Tax (Member) and the General Manager, District Industries Centre (Member Secretary) having jurisdiction over the District. The eligibility for the exemption will be decided by the Committee by not less than two members. The Committee shall dispose of the application within three months from the date of receipt of such application, provided the required details are furnished along with the application. The proceedings of the Committee shall indicate the maximum quantum of aggregate tax exemption for which the unit is eligible.

(b) Eligibility Certificate for Medium and Large Scale Industries assisted by the Kerala State Industrial Development Corporation or the Kerala Financial Corporation will be issued by the Corporation which render assistance and in other cases by the Director of Industries and Commerce, on application by such units, and orders of exemption will be issued by the Deputy Commissioner (General), Commercial Taxes, Thiruvananthapuram.

(c) Eligibility Certificate and orders on exemption will be issued by the authorities mentioned in Sub-clause (b) above, if the unit is eligible for exemption or deferment of taxes and the unit satisfies the conditions for the exemption or deferment of taxes.

(d) The eligibility Certificate referred to in Sub-clause (b) above shall contain the date of

commencement of commercial production and the monetary limit of exemption the unit is eligible for. The eligibility Certificate issued in respect of existing Medium and Large Scale Industrial Units which undertake expansion, modernisation or diversification shall also contain date of commencement as well as the date of completion of such expansion, modernisation or diversification.

(e) Sick Small Scale Industrial Units claiming such exemption shall produce the proceeding of the District Level Committee referred to in sub clause (a) above. The Certificate shall contain the monetary limit of exemption the unit is eligible for, the date of commencement of sale of goods in respect of which the Unit is eligible to claim exemption, and also the dates of revival in the case of closed down sick units and disbursal of 25 per cent of rehabiliation assistance in the case of running sick units.

(f) Appeals against the order of the District Level Committee shall lie to a State Level Committee consisting of Commissioner of Commercial Tax (Chairman), Deputy Commissioner (General), Commercial taxes, Managing Director, Kerala Financial Corporation, Managing Director, Kerala State Industrial Development Corporation and Director of Industries and Commerce (Member Secretary). Any of the three members of the Committee shall form quorum for its meeting. The above state Level Committee shall also be competent to issue clarifications wherever necessary, regarding the scheme of the tax exemption.

(g) Appeal against order of the Deputy Commissioner (General) Commercial Taxes shall lie to a State Level Committee consisting of the secretary to Government (Finance & Taxes) (Chairman), Commissioner of Commercial Taxes and the directors of Industries and Commerce (Member Secretary). Any of the two members of the Committee shall from quorum for its meeting.

(h) The State Level Committee mentioned in clause (f) or (g) can revise any order of the District Level Committee or the Deputy Commissioner (General), Commercial Taxes, as the case may be, after giving due notice to the Industrial unit if in the opinion of the Committee the order of the District Level Committee or the Deputy Commissioner (General), Commercial Taxes is not in accordance with this notification.

(i) Appeals referred to in clause (f) and (g) above, shall be in the form shown below and shall be filed within a period of 30 days from the date on which the order was served. The appeal shall be disposed of, as far as possible, within three months from the date of filing.

FORM

FORM OF APPEAL

(xi) The conditions set out in sub-clause (i) to (vii) above shall not be applicable to industrial units set up in "THECHNOPARK". In the case of these units exemption will be given for a period of seven years from the date of commencement of commercial production without any monetary limit.

(x) Industrial units in respect of which an offence of suppression of purchase or sales turnover is detected shall be debarred from availing of exemption under this notification form the date of detection of the offence. But industrial unit which admit the offence, compound the same and pay the Compounding fee under Section 47 of the Kerala General Sales Tax Act, 1963 and twice the tax on the suppressed turnover shall be permitted to continue to avail themselves of the exemption.

11. Explanation:- For the purpose of this notification-

(i) 'New Industrial Unit's shall mean Small Scale Medium or Large Scale Industrial Unit set up on or after the 1^st April 1993, and certified as such by the Director of Industries and Commerce in the case of Small Scale Industrial Units and by the Kerala State Industrial Development Corporation in the case of Medium or large Scale Industrial Units but shall not include all industrial unit closed down and reopened under a new banner and style of business after the 1^st April 1993.

Note:- Medium or Large Scale Industrial Units set up prior to the 1^st day of April, 1993 and governed by notification G.O. (P) 94/89/TD dated 27^th April, 1989 published as S.R.O. No.654/89 in the Kerala Gazette Extraordinary No.396 dated 27^th April, 1989 and those set up after the Ist day of April, 1993 and governed by notification G.O. (P) No.155/93/TD dated 3^rd November, 1993, published as S.R.O. No. 1729/93 in the Kerala Gazette Extraordinary No. 1122 dated 4^th November 1993 which were not able to avail of the concession contemplated therein for the reason that they were not registered with the Director of Industries and Commerce, the exemption shall be available for a period of 5 or 7 years as the case may be, with reference to the notification under which concession was/is to be granted, from the date of actual availment of the exemption, subject to the monetary limit applicable, The revised certificate in such cases shall be issued by the Deputy Commissioner (General), Commercial Taxes, Thiruvananthapuram, on application by the Units.

Sales Tax already collected from such units shall be paid over to Government, and any tax already paid over to Government shall not be refunded under any circumstances.

(ii) 'Expansion' shall mean a total additional investment in fixed assets of not less than 25% of the 'Gross Block' as on the last day of the financial year immediately preceding the year in which the expansion was started and a minimum 25% increase in installed capacity compared to that of the year immediately preceding the year in which the expansion was started.

(iii) 'Modernisation' shall mean a total additional investment of not less than 25% in fixed assets compared to the 'Gross Block' as on the last day of the financial year immediately preceding the year in which such modernization was started.

(iv) 'Diversification' shall mean production of at least one new product and a total additional investment of not less than 25% in fixed assets compared to the 'Gross Block' as on the last day of the financial year immediately preceding the year in which such diversification was started.

(v) 'Gross Block' in relation to a unit shall mean the total investment in fixed assets from the inception till date without deduction of any depreciation.

(vi) Machinery or plant purchased under hire purchase system or other installment system of payment of price shall be deemed to be the machinery or plant owned by the unit.

(vii) 'Fixed capital investment of a Unit' shall mean the total investment of land including land development cost, building, plant and machinery, power generating system, facilities and equipments for Research and development and quality control, standby equipments like standby generator, standby steam boiler, pollution contro system delivery vehicles and the like required for the industrial purpose.

Note - Existing units which had completed expansion, modernisation or diversification between 1-1-1994 and 30-7-1996, shall have the option to choose the provisions of notification S. R. O. No. 1729/93 as amended by notification S.R.O. No. 588/96, Such units shall exercise their option, in writing within three months from the date of publication of this notification in the Gazette. S.S.I. Units shall intimate their option to the General Manager of the District Industries Centre concerned and industrial units in the medium or large scale sector shall intimate their option to the agency authorised to issue eligibility certificate. Revised orders in each case shall be issued by the District Level Committee or the Deputy Commissioner (General) Commercial Taxes, as the case may be.

(viii) In computing the cumulative gross fixed capital investment of the sick Small Scale Industrial Units, second hand machinery and equipments procured within the State shall not be considered.

(ix) 'Manufacture' shall mean the use of raw materials and production of goods commercially different from the raw materials used but shall not include mere packing of goods, polishing, cleaning, grading, drying, blending or mixing different varieties of the same goods, sawing, garbling processing one other process applied for preserving the goods in good condition or for easy transportation. The process of production desiccated coconut out of coconut Chemical treatment of rubber wood and production of dressed or tanned hides out of raw hides shall be deemed to be 'manufacture' for the purpose of this notification.

The following process shall not be deemed to be 'manufacture' for the purpose of this notification :-

(a) Crushing copra and producing coconut oil and coconut oil cake.

(b) Converting timber logs into timber sizes.

(c) Crushing rubble into small metal pieces.

(d) Converting sodium silicate into liquid silicate.

(e) Tyre-retreading.

(f) Cutting granite or marble slabs into smaller pieces and polishing them.

(g) Such other process as may be notified by Government in this behalf.

(h) conversion of rubber latex into centrifugal latex, raw rubber sheet, ammoniated latex, crepe rubber, crumb rubber, or any other item falling under entry 110 of the First Schedule to the Kerala Generla Sales Tax Act, 1963 or treating the raw rubber in any form with chemicals to form a compound of rubber by whatever name called.

(x) Industrial units manufacturing the following items shall not be eligible for the concessions under this notification :-

(a) Biscuits

(b) Cement paints

(c) Packing cases, tea chests, plywoods, splints, veneers, wooden crates and wooden cable drums

(d) Bricks and tiles

Provided that, existing units manufacturing biscuits which undertook expansion, modernisation or diversification on or after 1st January 1994 but prior to 1st January 2000 shall be eligible for the concession under this notification.

12. The Industrial Units which have been set up prior to the 1st April 1993 pursuance of notifications mentioned in the Schedule, and as are entitled to claim any concession under any of them, shall continue to enjoy such concessions whichever is applicable in each case, notwithstanding that they have been supersede by this notification, and any proceedings pending or any application for concession to be filed in pursuance of such notifications, shall be deposed of in accordance with the provisions contained in such notifications.

SCHEDULE

This notification shall come into force on the 1st day of January 1994.