Court upholds differentiation in Package Scheme of Incentives, dismisses challenge to Rule amendments.

The Court dismissed the Writ Petition challenging the discrimination in the amendment of Rule 31B and Rule 31AA, as well as the validity of Notifications dated 1st November 2004. The Court held that the differentiation between units opting for exemption and those opting for deferral under the Package Scheme of Incentives, 1993 was based on intelligible differentia and did not violate Article 14 of the Constitution of India. The Petitioners' request for mandamus to amend Rule 31B or a declaration that the Notifications were ultra vires was denied. The Court upheld the differentiation between the two schemes and upheld the validity of the impugned Notifications.

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Issues Involved:
1. Discrimination in the amendment of Rule 31B and Rule 31AA.
2. Validity of Notifications dated 1st November 2004 under Article 14 of the Constitution of India.
3. Entitlement to benefits under the Package Scheme of Incentives, 1993.
4. Deferral of tax on Duty Entitlement Pass Book (DEPB) licenses.

Issue-wise Detailed Analysis:

1. Discrimination in the amendment of Rule 31B and Rule 31AA:
The Petitioners sought a direction to the State Government to amend Rule 31B in the same manner as Rule 31AA to remove discrimination between similarly situated industrial units. They argued that both units dealing with DEPB should be treated equally, whether they opted for exemption or deferral of tax. The Petitioners claimed that treating DEPB as a "finished product" exempted in the hands of units opting for exemption but taxable for those opting for deferral was arbitrary and discriminatory.

2. Validity of Notifications dated 1st November 2004 under Article 14 of the Constitution of India:
The Petitioners alternatively prayed that the Notifications dated 1st November 2004 be declared ultra-vires Article 14 of the Constitution of India. They contended that the differentiation between units opting for exemption and those opting for deferral had no nexus with the object sought to be achieved, which was to encourage industries to set up units in backward areas. The Respondents argued that the Notifications were based on intelligible differentia and had a rational nexus with the object sought to be achieved, thus not violating Article 14.

3. Entitlement to benefits under the Package Scheme of Incentives, 1993:
The Petitioners, a public limited company engaged in the manufacture and sale of Graphite Electrodes, held an Eligibility Certificate under the Package Scheme of Incentives, 1993. They opted for deferral of tax under Rule 31B of the Bombay Sales Tax Rules, 1959. The Petitioners argued that they were entitled to the same benefits as those who opted for exemption, including the deferral of tax on DEPB licenses.

4. Deferral of tax on Duty Entitlement Pass Book (DEPB) licenses:
The Petitioners sold DEPB licenses as incentives for exporting Electrodes and claimed deferral of tax on these sales. However, the Assessing Officer did not allow deferral of tax on DEPB sales and issued a notice of demand. The Petitioners argued that the DEPB should be treated as a "finished product" and exempted from tax, similar to units opting for exemption. The Respondents contended that the classification between exemption and deferral units was reasonable and rational, and the deferral of tax on DEPB licenses was not warranted.

Judgment Analysis:
The Court dismissed the Writ Petition, noting that Rule 31B and Rule 31AA are not comparable. Rule 31B specifically pertains to deferral of tax for eligible industrial units, while Rule 31AA deals with the calculation of cumulative quantum of benefits. The Court found that the differentiation between exemption and deferral units was based on intelligible differentia and had a rational nexus with the object sought to be achieved. The Court held that the Notifications dated 1st November 2004 did not violate Article 14 of the Constitution of India. The Petitioners' request for a writ of mandamus to amend Rule 31B or a declaration that the Notifications were ultra-vires was denied. The Court concluded that the fundamental difference between the two schemes justified the distinction in treatment, and there was no basis to interfere with the impugned Notifications.

Conclusion:
The Writ Petition was dismissed without any order as to costs, upholding the validity of the Notifications dated 1st November 2004 and the differentiation between units opting for exemption and those opting for deferral under the Package Scheme of Incentives, 1993.

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