Rajasekhara Murthy, J.
1. M/s. Maruthi Enterprises, the petitioner in this petition; was granted recognition by the Commissioner of Commercial Taxes in Karnataka, Bangalore (hereinafter referred to as the Commissioner), under entry 28 of the Fifth Schedule to the Karnataka Sales Tax Act, 1957 (hereinafter referred to as the Act), in respect of the petitioner's industry, namely 'wire-cut bricks', by Certificate No. 144/75-76 dated 23rd March, 1976, as per annexure B. It may be mentioned that though the date from which such recognition was given effect is stated as 6th January, 1976, in clause (vi) of the conditions annexed to the grant, the certificate is deemed to be valid from 28th February, 1975, till the date of cancellation.
2. On 12th May, 1978, a show cause notice was issued by the Commissioner as per annexure D calling upon the petitioner-firm to show cause why the recognition certificate issued on 23rd March, 1976, should not be cancelled. The first paragraph of the said notice is extracted below :
'Please take notice that you had been granted recognition certificate for the purpose of entry 28 of V Schedule to the K.S.T. Act, 1957, in respect of your bricks and tiles industry, vide this office R.C. No. RFC.SR.144/75-76 dated 23rd March, 1976. Entry 28 has since been amended by Act No. 78 of 1976 with effect from 7th December, 1976. Under the new rule 25-A of the K.S.T. Rules, 1957, framed under the amended entry 28 of V Schedule, the bricks and tiles industry has not been included among the village industries prescribed by it. As such certificate is liable for cancellation.'
Since no objections were filed within the time allowed, an order was passed by the Commissioner on 16th June, 1978, as per annexure E, cancelling the recognition certificate with effect from 15th February, 1978. It is this order that has been challenged by the petitioner in this petition.
3. In the course of arguments Sri K. Srinivasan, the learned counsel appearing for the petitioner-firm, submitted that he is not pressing reliefs (a), (c) and (d) in paragraph 19 of the writ petition and that he is confining to player (b) to quash the order of the Commissioner (annexure E).
4. In order to appreciate the contentions urged on behalf of the petitioner, it is necessary to give, chronologically, the various amendments and changes effected in the relevant entry in the Fifth Schedule to the Act and the Rules which have a bearing on the matter.
5. The Fifth Schedule to the Act contains the description of goods exempted from tax under section 8 of the Act. Entry 28 in that schedule reads :
'28. Products of village industries when sold by a bona fide producer recognised by the Commissioner, if necessary, after consultation with the Khadi and Village Industries Commission constituted under the Khadi and Village Industries Act, 1956.'
Explanation (1)(a) to the said schedule explains what is a 'village industry' for purposes of entry 28. According to the explanation, a village industry means a village industry as defined in the Karnataka Khadi and Village Industries Act, 1956, if the number of persons employed in, or the number of units of production of, each industry does not exceed such number as may be prescribed.
6. So far as entry 28 is concerned, at the time the recognition was granted by the Commissioner on 23rd March, 1976, the relevant rule which governed the issue of certificate was rule 25-A of the Karnataka Sales Tax Rules, 1957 (hereinafter referred to as the Rules). Annexed to the said rule is a list of industries prescribed as eligible for exemption under entry 28 of the Fifth Schedule. Serial No. 14 in the said list refers to 'pottery'. 7. While granting to the petitioner-firm the certificate of recognition for the purpose of entry 28 of the Fifth Schedule, the Commissioner has relied upon the said list enumerated in rule 25-A. This becomes clear by the mention of rule 25-A in the certificate dated 23rd March, 1976 (annexure B).
8. Entry 28 was substituted by section 7 of the Karnataka Sales Tax (Fourth Amendment) Act, 1976 (Karnataka Act 78 of 1976). Entry 28 as substituted by the said Act, reads as follows :
'28. Products of prescribed village industries which satisfy the prescribed conditions and limitations when sold by a bona fide producer recognised by the Commissioner.'
It is appropriate to mention here that the village industries enumerated in the list annexed to rule 25-A continued intact for the purpose of the Fifth Schedule even after the substitution of entry 28 by Act 78 of 1976.
9. Rule 25-A and rule 25-B of the Rules were substituted by a new rule, rule 25-A, by the Karnataka Sales Tax (Amendment) Rules, 1977, with effect from 15th February, 1978, and in the amended new rule a table of village industries was annexed for the purpose of entry 28 in the Fifth Schedule to the Act including six industries more to the said table. The relevant part of amended rule 25-A reads as follows :
'25-A. The village industries for purposes of serial number 28 of the Fifth Schedule shall be as specified in column (2) of the table below provided that the annual sales turnover thereof does not exceed one lakh rupees.
10. The main issue that arises for determination in this writ petition is whether 'brick making' industry can be classified as an industry falling under the category 'pottery' which is one of the village industries in the table annexed to rule 25-A of the Rules.
11. In his order granting certificate, the Commissioner has relied upon entry 28 in the Fifth Schedule to the Act as well as rule 25-A of the Rules. Entry 28 relates to 'products of village industries'. Explanation (1)(a) given to the Fifth Schedule states that the meaning of 'village industry' has to be gathered by its definition under the Karnataka Khadi and Village Industries Act, 1956. In the said Act, the expression 'village industry' means the khadi industry and any industry specified in the schedule to that Act. The schedule to the said Act enumerates 15 village industries, and 'pottery industry' is one of them. It is thus clear from the certificate (annexure B) issued by the Commissioner that he has relied upon entry 28 and rule 25-A in order to grant the certificate that the prescribed industry carried on by the petitioner-firm is a 'village industry'. Serial No. 14 in the list annexed to rule 25-A is 'pottery industry'. In the statement of objections filed on behalf of respondents Nos. 1 to 3, it is admitted that the petitioner-firm was granted recognition certificate on the basis that the brick-making industry came under pottery industry referred to in the list annexed to rule 25-A.
12. It is contended on behalf of the respondents that after substitution of rule 25-A by the Amendment Rules of 1977, the petitioner-firm loses the benefit of exemption, since the table annexed to Rule 25-A does not mention brick-making industry as one of the village industries for the purpose of entry 28 in the Fifth Schedule, and that therefore the Commissioner was justified in law in cancelling the certificate issued earlier. Smt. M. R. Vanaja, the learned High Court Government Pleader, also drew my attention to entry 28 as substituted by the Amendment Act of 1976. She has also pointed out to rules 25-A and 25-B as substituted by the Amendment Rules of 1977.
13. It is significant to note that 'pottery' continued to be a village industry in the table given to rule 25-A of the Amendment Rules of 1977. The only ground on which the show cause notice was issued by the Commissioner as per annexure D, was that entry 28 had been amended by Act 78 of 1976 with effect from 7th December, 1976, and in the table of village industries annexed to rule 25-A of the Amendment Rules of 1977, bricks and tile industry had not been included among the industries prescribed by it.
14. It is necessary to examine whether after substitution of entry 28 and rule 25-A subsequent to the grant of certificate, any change has been brought about vis-a-vis the list of village industries and whether the Commissioner was justified in cancelling the certificate relying on the said amendments. It becomes necessary to observe that if the Government wanted to effect any change in its view regarding brick-making industry for purposes of entry 28, and keeping in view how the Commissioner himself had treated it as a village industry, what one would expect in those circumstances was to clarify whether brick-making industry should continue to enjoy the exemption provided under entry 28. This should have been borne in mind while effecting changes both in entry 28 as well as in rule 25-A.
15. The Commissioner has now sought to rely upon amended entry 28 and rule 25-A and also on the lone circumstance that the brick-making is not one of the prescribed village industries in entry 28. As could be seen from the amended rule 25-A under the Amendment Rules of 1977, the only change brought about by that rule is to fix a ceiling on the annual sales to qualify for exemption. This being the position, the petitioner is right in his contention that the Commissioner was not justified, both on facts as well as in law, in changing his opinion as to whether brick making industry falls under serial No. 14 - pottery in the list of village industries annexed to rule 25-A.
16. There is some force in the submission made on behalf of the respondents by Smt. Vanaja that even in common parlance 'pottery' does not include 'brick-making' and it means 'earthenware' or 'earthen vessels'. I am unable to agree that the Commissioner was justified in withdrawing the recognition placing reliance on the amended entry 28 or rule 25-A, he having once held that 'pottery' includes and covers 'brick-making' and issuing the certificate of recognition therefor. Though the State had perhaps this object in view while amending entry 28 in the Fifth Schedule and inserting new rule, rule 25-A, it has not been made in the manner which was required to be done in the context of the confusion that prevailed and the view the authorities had taken earlier in that behalf; nor is there any other convincing reason given either in the show cause notice or in the order cancelling the certificate or in the statement of objections filed on behalf of the respondents, except relying upon entry 28 and the new rule, rule 25-A, which did not bring about any change or achieve the object of excluding 'brick-making' industry from 'pottery'.
17. In this context, the petitioner has relied upon the letter dated 8th June, 1979, which he has obtained from the Secretary, Karnataka State Khadi and Village Industries Board (produced as annexure A), clarifying that the brick-making and baking by the clamp process and by the brick bhatta process comes under pottery industry as per the pattern of Khadi and Village Industries Commission. It may not be out of place to rely on this letter, since in the Act itself at entry 28 of the Fifth Schedule an indication is given that the Khadi and Village Industries Commission could be consulted in the matter.
18. I am, therefore, of the view that the Commissioner was not justified in cancelling the certificate dated 23rd March, 1976 (annexure B) by his order dated 16th June, 1978 (annexure E).
19. In the result, this writ petition is allowed to the extent the relief is confined and the order of the Commissioner dated 16th June, 1978 (annexure E) is quashed. Rule issued is made absolute.
20. No costs.