New Delhi, Monday 05 Jan 2009: The Supreme court on Monday admitted a petition filed by Pepsico India Holding challenging the Kerala High Court judgement that denied sales tax exemption to the soft drinks major.

A bench headed by Justice S B Sinha while admitting the plea posted the matter for final hearing on March 3. It also directed the state government not to take any coercive measure till then. Earlier, the court had ordered a status quo till today.

The Kerala Government had issued notification in 1993 giving sales tax exemption to new small-, medium- and large-scale industrial units for seven years from the date of starting commercial production.

However, the state government withdrew the exemption except for those that had taken steps to set up industrial units prior to January 1, 2000, or which had commenced commercial production on or before December 31, 2001.

According to Pepsico, the High Court had upheld the Deputy Commissioner of Commercial Tax’s order though it started production much before the scheduled date.
It further contended that the High Court failed to appreciate its genuine exemption claim.

The company said that sales tax exemption is given as an incentive for promoting industrialisation, and economic growth and development, and that any subsequent notification should further the objective.