S. ABDUL NAZEER, J.

( 1 ) IN all these cases since the question of law and fact are common they are taken up together and disposed of by this common order.

( 2 ) IN all these cases petitioners are the Assessees under the Karnataka Sales Tax Act (for short 'kst Act') and Central Sales Tax Act (for short 'cst Act' ).

( 3 ) THE Government of Karnataka has issued Industrial Policy 1996-2001 in GO. No. CI 30 SPC 96, dated 15-3-1996 offering tax concessions and incentives to new industrial units and also to the existing units making investment in expansion/modernisation/ diversification. Eligible industrial units were extended the option availing incentives in the form of sales tax exemption (KST/cst) or in the form of sales tax deferral (KST/cst ). The said Policy was implemented by notification under Section 19-C of the KST Act in FD 32 CSL 96 (I) dated 15-11-1996 and under Section 9 (2) of the CST Act read with Section 19-C of the KST Act in No. FD 32 CSL 96 (II) dated 15-11-1996. Petitioners had applied and were granted sales tax exemption certificate. As per the said certificates of exemption, the petitioners were entitled for sales tax exemption both KST and CST under the expansion programme of sale of finished products for a period of five years and limited to 80% of the investment made on fixed assets. The quantum of exemption from the tax was granted in terms of Industrial Policy to the Industrial Units concerned. In each assessment year, the taxable sales coming under the purview of the KST Act, 1957 and taxable sales coming under the purview of the CST Act, 1957 and the amount of tax payable thereon was computed. The total amount thus arrived at is set off against the total quantum of exemption granted to the industrial unit and the balance is carried forward to the next year and so on, until the exemption to the full extent is availed or until expiration of the period of eligibility.

( 4 ) THERE was no tax so leviable on stock transfer to own branches in other States or to consignment agents appointed in the other States. There is nothing in the Industrial Policy express or implied, that the total amount of tax exemption granted to an Industrial unit would include any notional tax to be calculated on the value relating to stock transfer. No such condition is either contemplated by the implementation of the Notification dated 15-11-1996.

( 5 ) THE Government of Karnataka amended Rule 20-C of the KST Rules by Notification No. FD 63 CSL 98 dated 1 -8-1998 with effect from 10-8-1998 titling it as 'procedures and conditions for granting deferred payment of tax or exemption of tax of new industry'. Clause (c) of sub-Rule (1) of Rule 20-C prescribes that amounts of tax that should be computed for the purposes of quantifying the eligibility to exemption from tax of eligible industrial units. According to Clause (a) of Sub-Rule (1), it is the aggregate amount of tax leviable on the taxable sales under CST Act, 1956. Clause (c) of Sub-Rule (1) prescribes that in addition a notional tax or an imaginary tax at the rate of 4% should also be calculated on the price of the goods stock transferred and the amount so calculated together with the amounts of KST and CST calculated under Clauses (a) and (b) should be computed as the total amount of incentive and set off against the total quantum of tax exemption granted to an industrial unit. The petitioners are aggrieved by clause (c) of Sub-Rule (1) of Rule 20-C in these petitions. Consequently, they have also sought for quashing of the Assessment/reassessment notices or the orders of assessments wherein tax has been levied in terms of the impugned Rule.

( 6 ) I have heard the Learned Counsel for the parties.

( 7 ) SRI G Sarangan, Learned Senior Counsel appearing for the petitioners submits that the industrial Policy of 1996-2001 was approved by the State Cabinet. As per the Industrial Policy and the eligibility certificate issued by the Department of Industries and Commerce, exempt

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