Fiscal policy cut-off date and classification upheld where the later scheme was treated as a new sales tax regime.

A cut-off date repeated in the industrial policy and the corresponding sales tax notification was held to be a deliberate policy choice, not a drafting mistake. The later policy was treated as a new scheme rather than a mere continuation of the earlier one, so the principle in Nakara did not apply. The exclusion of continuing units that had entered production before 1 April 1986 from deferment or exemption benefits was upheld as a valid fiscal classification with a rational nexus to the policy objective. Extraordinary relief under Article 142 was also declined.

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Issues: (i) whether the cut-off date in the 1989 industrial policy was a drafting mistake; (ii) whether the challenge based on the principle in Nakara v. Union of India could succeed on the footing that the 1989 policy was a continuation of the 1980 policy; (iii) whether the classification denying deferment or exemption of sales tax to continuing units of the 1980 policy that had gone into production before 1 April 1986 violated Article 14 of the Constitution of India; and (iv) whether relief could be granted under Article 142 of the Constitution of India.

Issue (i): whether the cut-off date in the 1989 industrial policy was a drafting mistake.

Analysis: The cutoff date of 1 April 1986 was repeated in the policy itself, in the provision dealing with expansion units, and in the Gazette notification issued under section 7 of the Orissa Sales Tax Act, 1947. The repeated use of the same date in the policy and notification negatived any suggestion of clerical or drafting error.

Conclusion: The contention of drafting mistake was rejected.

Issue (ii): whether the challenge based on the principle in Nakara v. Union of India could succeed on the footing that the 1989 policy was a continuation of the 1980 policy.

Analysis: The 1989 policy was treated as a new scheme, not a mere revision of the 1980 policy. The earlier policy granted an interest-free sales tax loan, while the later policy introduced deferment or exemption of sales tax on different terms and required surrender of earlier benefits before a unit could come under the new scheme. The principle governing revision of an existing benefit could not therefore be invoked.

Conclusion: The challenge based on Nakara failed.

Issue (iii): whether the classification denying deferment or exemption of sales tax to continuing units of the 1980 policy that had gone into production before 1 April 1986 violated Article 14 of the Constitution of India.

Analysis: The Court upheld the classification between units that had gone into production before 1 April 1986 and those that had gone into production on or after that date. The 1989 policy sought to extend a uniform deferment or exemption regime to similarly situated units, while excluding older units that had already commenced production before the relevant date. In fiscal matters, the State has wide latitude, and a cut-off date is valid if it has a rational nexus with the object of the policy. The exclusion of units like the appellant was held to rest on a valid policy basis.

Conclusion: The classification was held valid and not violative of Article 14.

Issue (iv): whether relief could be granted under Article 142 of the Constitution of India.

Analysis: The Court found no merit in the appellant's case on the substantive issues and held that the matter did not justify extraordinary relief under Article 142.

Conclusion: Relief under Article 142 was refused.

Final Conclusion: The challenge to the 1989 sales tax policy failed in full, and the impugned classification excluding the appellant from the benefit of deferment or exemption was upheld.

Ratio Decidendi: In fiscal policy, a cut-off date and classification will be sustained if they are part of a new scheme and have a rational nexus with the policy objective, because the State enjoys wide latitude in taxation matters.

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