2013 (12) TMI 1440 - HC - VAT and Sales Tax

Court dismisses writ petition, petitioner not entitled to relief under SIPI Act 2000, Central Sales Tax exemption not applicable.

Sheela Foam Pvt. Ltd. Versus The State of Sikkim and Others

The court dismissed the writ petition, ruling that the petitioner was not entitled to any relief sought. The petitioner's industry was established under ... Exemption from Central sales tax - Exemption notification 2000 - Petitioner claims that even after the amendment Act, 2003, the exemption under the Central Sales Tax Act, 1956 which was granted to the industries by way of the Incentive Act, 2000 read with Exemption Notification, 2000 and State Scheme of Incentives for Industries, 2003 continued to be in operation - Enforcement of promissory estoppel - After perusing the Industrial Policy of 1996 of the Government of Sikkim notified in the web-site of the Department of Commerce and Industries, under the caption “Concession on State and Central Sales Tax” wherein it was provided that “Central and State sales tax shall be exempted for a period of 9 (nine) years, from the date of commencement of actual commercial production” - Held that:- The Lease Deed produced by the petitioner itself supports the contention of the Government that the petitioner’s industry was established only on 21.09.2001. Annexure P-6 Certificate dated 06.07.2004 produced by the petitioner itself will show that the petitioner-company started commercial production from 09.10.2003. We do not find any difficulty to accept the argument of learned Additional Advocate General as the petitioner’s industry was established after the repeal of Industrial Policy, 1996 and during the currency of the SIPI Act, 2000. The petitioner-company cannot aspire for the benefit and concession extended to the entrepreneurs under the policy of 1996. Under the notification dated 03.10.2000 concessions of State Excise Duty has been granted for 3 (three) years and for State Sales Tax for 5 (five) years for both existing and new industrial units as classified in paragraph 1 of the above notification. The argument of the learned Addl. Advocate General that the petitioner-company will be entitled only benefits and concessions granted under Annexure R-3 notification is sound and only to be accepted. On a plain reading of the clauses it is clear that the exemption and benefit in the above notification is provided only in respect of State Excise Duty and State Sales Tax. If Sales Tax is interpreted to mean to include Central Sales Tax then the rate of exemption would be much higher than the CST levied. The rate of CST is only 4% whereas, exemption under Clause 3 for Sales Tax is given at 15% and 10%. The position, therefore, is quite clear that the word “Excise Duty and Sales Tax” used in the above notification mean only the State Excise Duty and State Sales Tax. According to us the position is re-clarified by the provisions contained in sub-section (3) of Section 12 (a) of the SIPI Act, 2000, wherein it is provided that the exemption of Central Sales Tax and Central Excise Duty will be governed by various notifications /orders issued by the Government of India in this regard. It is clear from the materials placed on record before us that the three industries were established prior to 06.07.2000 and during the currency of 1996 Industrial Policy. True, the commencing of commercial production by some of these units may have been later and during the currency of SIPI Act, 2000. What is relevant for getting eligibility is establishment of the unit and unlike the petitioner’s unit, all the three units were established during the currency of Industrial Policy, 1996. Thus, the allegation that the petitioner has discriminated against vis-a-vis the three companies is without basis. Petitioner has efficacious alternative remedy available in the form of appeal as provided under Section 20 of the CST Act, 1956, the petitioner is not entitled to seek the above relief under Article 226 of the Constitution of India. We also notice in this context that the petitioner-company has already filed a petition for review before the assessing authority and therefore the petitioner cannot aspire for any order of quashment of the assessment order - Decided against assessee. Issues Involved:1. Constitutionality of Section 12(A) of the Sikkim Industrial Promotion and Incentive Act, 2000 as amended by the 2007 Act.2. Validity of the Assessment Order dated 08.02.2011.3. Validity of the Review Order dated 25.04.2011.4. Validity of the Notice of Demand dated 04.07.2011.5. Validity of the Revised Assessment Order dated 16.07.2011.6. Validity of the Letter seeking recovery of Central Sales Tax.7. Request for Central Sales Tax exemption notification under Section 8(5) of the Central Sales Tax Act, 1956.Analysis:1. Constitutionality of Section 12(A) of the Sikkim Industrial Promotion and Incentive Act, 2000 as amended by the 2007 Act:The petitioner argued that the amendment to Section 12(A) was ultra vires Articles 14 and 19(1)(g) of the Constitution of India and violated the doctrine of promissory estoppel. The court found that the petitioner's industry was established after the repeal of the Industrial Policy of 1996 and during the currency of the Sikkim Industrial Promotion and Incentive Act, 2000 (SIPI Act, 2000). The court held that the petitioner could not claim benefits under the 1996 policy and was only entitled to benefits under the SIPI Act, 2000, which did not include Central Sales Tax exemption.2. Validity of the Assessment Order dated 08.02.2011:The petitioner contended that the assessment order was illegal as it demanded Central Sales Tax, which the petitioner claimed was exempted. The court noted that the petitioner had not been granted any Central Sales Tax exemption under the SIPI Act, 2000, and therefore, the assessment order was valid.3. Validity of the Review Order dated 25.04.2011:The petitioner sought to quash the review order which upheld the assessment order. The court found that the petitioner had subjected itself to the jurisdiction of the statutory authority by filing the review petition and thus could not seek quashment of the review order under Article 226 of the Constitution.4. Validity of the Notice of Demand dated 04.07.2011:The petitioner challenged the notice of demand for payment of Rs. 46,00,657/- towards Central Sales Tax and penalty. The court upheld the notice of demand, reiterating that the petitioner was not entitled to Central Sales Tax exemption.5. Validity of the Revised Assessment Order dated 16.07.2011:The petitioner argued that the revised assessment order was illegal. The court found that the petitioner had not been granted Central Sales Tax exemption and thus, the revised assessment order demanding Central Sales Tax was valid.6. Validity of the Letter seeking recovery of Central Sales Tax:The petitioner contested the letter seeking recovery of Central Sales Tax. The court held that since the petitioner was not entitled to Central Sales Tax exemption, the letter seeking recovery was valid.7. Request for Central Sales Tax exemption notification under Section 8(5) of the Central Sales Tax Act, 1956:The petitioner sought a direction to the State to issue a Central Sales Tax exemption notification. The court found that the petitioner was aware that Central Sales Tax exemption required a notification from the Government of India and that no such notification had been issued. Therefore, the petitioner was not entitled to the exemption.Conclusion:The court dismissed the writ petition, holding that the petitioner was not entitled to any of the reliefs sought. The court found that the petitioner's industry was established under the SIPI Act, 2000, which did not provide for Central Sales Tax exemption, and thus, all assessment orders, notices, and demands for Central Sales Tax were valid. The court also noted that the petitioner had an efficacious alternative remedy available under Section 20 of the Central Sales Tax Act, 1956.