TaxTMI 
TaxTMI 
1998 (11) TMI 530
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....ely, whether the petitioners are entitled to the benefit envisaged under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993, announced by the Government of Bihar and published in the official gazette on July 16, 1993. In other words, the sole question which arises for consideration is whether the petitioner-units, which were established before April 1, 1993, with investments on plant and machinery not exceeding rupees 15.00 crores, and had also come into production before that date, are entitled to the benefit of sales tax exemption on the purchase of raw material for a period of seven years from April 1, 1993. The case of the petitioners is that under paragraph 10.4(i)(b) the old industrial units referred to are those which answer the description in that sub- paragraph, but regardless of the date on which they went into production. The industrial policy does not lay down any other condition regarding their having taken benefit of any earlier scheme. On the other hand, the learned Advocate-General appearing for the State submits that on a proper appreciation of the said policy it would be apparent that no benefit whatsoever was sought to be extended to such units which ....
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....ion from payment of tax on purchase of raw materials as well as interest-free sales tax loan on the sale of finished products enumerated in clause 9 of the said policy Since the Government was not satisfied with the pace of progress and development achieved under the old policy, it decided to grant further incentives to accelerate industrial growth It was in this background that the State Government announced its Industrial Incentive Policy in 1993 for the rapid growth of industry in the State of Bihar The resolution incorporating the policy mentions in the opening paragraph that with the objective of accelerating the industrial progress in the State the industrial incentive policy was announced by the State Government on September 1, 1986, the period of which was extended up to March 31, 1993 under different resolutions issued from time to time It had been experienced that desired industrial progress had not been achieved in all the districts of the State It was also felt that in the context of new Industrial Policy, 1991 of the Centre, and with the withdrawal of freight equalisation policy, these industrial incentives require new dimensions to achieve balanced industrial growth i....
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.... goods. This benefit is not claimed by the petitioners. Paragraph 10.2 of the policy provides for facility of sales tax exemption/deferment on finished products, and provides that the facility of exemption from payment of sales tax on finished products in lieu of deferment shall be admissible only to the industrial units mentioned in annexure VI of the policy. Certain conditions have been laid down which must be fulfilled before the benefit can be claimed. Paragraph 10.3 provides for the manner in which the amount involved in sales tax deferment will be repayable. 6.. Then comes paragraph 10.4, which is the crucial paragraph so far as the dispute in these writ petitions is concerned. For the sake of convenience the same is reproduced below: "10.4. Sales tax exemption on the purchase of raw material.-(i) This facility will be admissible to the industrial units mentioned in annexure V in the following manner: (a) Industrial units coming into production between April 1, 1993 to March 31, 1998 whose investment on plant and machinery does not exceed Rs. 15.00 crores shall be entitled for this facility for a period of seven years from the date of production. (b) Such old industrial u....
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....d industrial units under the Industrial Incentive Policy of 1993. Under paragraph 10.5 of the policy, the conditions with regard to grant of exemption could be specified by Commercial Taxes Department, and this could relate to details of the utilisation of raw materials and other things, but a condition could not be imposed, whereby the exemption could be denied to old industrial units. Under the earlier industrial incentive policy in exercise of similar power, the department had prescribed the form for application, grant of certificates, account of raw material purchased, goods manufactured, etc., with a view to ensure that the incentive was not misutilised or was not extended to undeserving units. By issuance of the notification dated April 4, 1994, the benefit itself has been withdrawn contrary to the Industrial Incentive Policy. The notification issued by the Commercial Taxes Department is, therefore, in conflict with the industrial incentive policy of 1993. The petitioners had made purchases of raw materials within the State of Bihar relying upon the representation made in the industrial incentive policy. 9.. A counter-affidavit has been filed on behalf of Commissioner, Comme....
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....ed result, as it is always open to the industry concerned not to avail of the benefit if the same is not beneficial. It has further been submitted that the petitioners are bound to purchase raw material to keep their industries running and, therefore, there is no question of the application of any principle of estoppel even if the petitioners had purchased the raw materials within the State of Bihar. 10.. In its rejoinder the petitioner has reiterated its assertions in the writ petition. It has, however, filed a supplementary affidavit stating that in view of the Industrial Incentive Policy of 1993, the petitioner has altered its position by purchasing raw materials within the State of Bihar on the assumption that the exemption shall be made available to the petitioner on purchase of raw materials. In other neighbouring States exemption is being provided to the manufacturer of the raw materials of the petitioner's industry. When the petitioner purchases raw materials in the State of Bihar it has to pay taxes twice, if this exemption is not granted, firstly to the seller of the raw material which buys goods from other States and are paying taxes there, and again taxes are being cha....
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....lature is interpreted, in the sense that the technical rules of interpretation may not be applied with equal rigour. The policy decision must be read as a whole. If the language employed is clear and unequivocal, it must be given meaning and effect. No doubt, in the opening paragraphs of the policy it has been stated that the Industrial Incentive Policy shall be applicable to those industrial units, which would come into production from April 1, 1993 to March 31, 1998. This is obviously so because the main emphasis in the policy was to provide incentives to industries which went into production or even came into existence after April 1, 1993. But, this does not mean that it was not open to the State Government to confer some small benefit on older units as well, while considering the grant of larger incentives and benefits to new units. I have, therefore, no hesitation in coming to the conclusion that the Industrial Incentive Policy of 1993 must be read as a whole with a view to understand its scope and import. If on a reading of the policy as a whole it appears that some benefit was sought to be conferred on older units as well, such benefits cannot be denied to older units only o....
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....Government. This was objected to by the petitioners, and they challenged the State to produce material to show that the Government had consciously changed its policy by incorporating such a condition. However, ultimately the learned Advocate-General did not proceed on the basis that the Government had changed its policy, and submitted that the notification dated April 4, 1994 was not inconsistent with the policy decision. 15.. I have considerable difficulty in accepting the submission urged by the learned Advocate-General that sub-paragraph (b) which refers to old industrial units must mean old industrial units which were established before April 1, 1993, but had not gone into production before that date. He, therefore, submitted that the old industrial units, to which sub-paragraph (b) refers, are such old industrial units which, though established before April 1, 1993 went into production later. It is not disputed that those industries which went into production between April 1, 1993 and March 31, 1998 are entitled to all the facilities and incentives under the Policy of 1993. It is also not disputed that the industrial units which came into production before April 1, 1993 are e....
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....uction between April 1, 1993 and March 31, 1998, and also such old industrial units whose investment on plant and machinery did not exceed Rs. 15 crores on April 1, 1993. To the extent of this facility alone a facility was sought to be conferred even on old industrial units. So far as the policy goes, there is no other condition attached to the grant of this facility except that the investment on plant and machinery as on April 1, 1993 must not exceed Rs. 15 crores. The clear and unequivocal words employed in the said paragraph of the policy decision permit of no other meaning being given to the policy. 17.. If I am right in coming to the conclusion that the facility of sales tax exemption on the purchase of raw material was extended to old industrial units also fulfilling the condition laid down in the policy, the notification of April 4, 1994 imposing the condition that such old industrial units must not have taken advantage or benefit under any other industrial policy, appears to deprive the old industrial units of the benefits under the Industrial Incentive Policy of 1993. As has been urged on behalf of the petitioners, industrial units which had come into production earlier ....
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....d take advantage of the incentives announced by the Government. They have also made heavy investment on the basis of the promise held in the Industrial Incentive Policy, 1993, that they shall be given the facility of sales tax exemption on the purchase of raw material. Having done all these, they cannot be deprived of the facility which they were promised under the Industrial Incentive Policy, 1993, and that too by the issuance of notification which is inconsistent with the policy decision, and seeks to modify the same without authority of law. In exercise of his power under the Bihar Finance Act, the Commissioner should have issued appropriate notification granting exemption in the matter of payment of sales tax consistent with the Industrial Incentive Policy decision of 1993, which bound the State. 18.. The learned Advocate-General did not urge that the principle of estoppel does not apply in the instant case, and in my view, rightly. The impugned notification has been issued with a view to give effect to the policy announced. It does not proceed on the basis that old industrial units which came into production before April 1, 1993 are not entitled to any benefit under the schem....
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....entitled to the facilities of sales tax exemption on the purchase of raw material for a period of seven years from April 1, 1993 in accordance with clause 10.4(i)(b) of the Industrial Incentive Policy, 1993 (hereinafter referred to as "the Industrial Policy") and whether the notification issued by the Government of Bihar dated April 2, 1994, in exercise of power under section 7 of the Bihar Finance Act, 1981, to the extent it indicates "who has not availed of any facility or benefit under any industrial promotion policy" is invalid as being contrary to the Policy Resolution of 1993. The High Court by the impugned judgment came to the conclusion that the old industrial units whose investment oh plant and machinery did not exceed Rs. 15 crores on April 1. 1993 would be entitled to the sales tax exemption on the purchase of raw material for a period of seven years from April 1, 1993 as provided under clause 10.4(i)(b) of the Industrial Policy of 1993. Examining the notification dated April 2, 1994, issued by the Government of Bihar in exercise of power conferred by clause (b) of sub-section (3) of section 7 of the Bihar Finance Act, 1981, the High Court further came to the conclusion ....
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....ons having been allowed, as stated earlier, the State has preferred these appeals. 4.. Mr. Rakesh Dwivedi, learned Senior Counsel, appearing for the appellant- State, contends that the! Policy Resolution of 1993 having been made applicable to those industrial units which came into production from April 1, 1993 to March 31, 1998 as provided in clause 1(a) and to those entrepreneurs who have invested capital for the establishment of industry on the basis of previously announced incentives before April 1, 1993 but could not begin production till March 31, 1993 subject to exercising their option within 30 days from the date of the issue of the 1993 Policy Resolution, indicating whether they would avail of the benefits under the previous incentive policy or the benefit of the new industrial policy, the respondents being the old industrial units who have started production prior to April 1, 1993 would not be entitled to the benefit of the exemption from sales tax on the purchase of raw material, even if their investment on plant and machinery did not exceed Rs. 15 crores on April 1, 1993 as indicated in clause 10.4(i)(b) of the policy. According to Mr. Dwivedi, said clause 10.4(i)(b) mu....
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.... to those industrial units which would come into production from April 1, 1993 to March 31, 1998. But in enumerating the benefits which would be available under the policy, the policy makers have indicated different heads of the benefit dealing with subsidy, financial assistance, exemption in sales tax/ deferment? facility so on and so forth. Clause 10 deals with facility of sales tax deferment. Clause 10.4 deals with the heading "Sales tax exemption on the purchase of raw material". It would be appropriate to extract clause 10.4 in extenso since the interpretation of this clause is involved in these appeals. "10.4. Sales tax exemption on the purchase of raw material.--(i) This facility will be admissible to the industrial units mentioned in annexure V in the following manner: (a) Industrial units coming into production between April 1, 1993 to March 31, 1998 whose investment on plant and machinery does not exceed Rs. 15.00 crores shall be entitled for this facility for a period of seven years from the date of production. (b) Such old industrial units whose investment on plant and machinery do not exceed Rs. 15.00 crores on April 1, 1993 shall be entitled for this facility for a....
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....High Court in granting the benefits of the said clause 10.4(i)(b) of the policy to the respondents' industrial units. We accordingly have no hesitation to affirm the conclusion of the High Court on this score and reject the submission of Mr. Dwivedi, the learned Senior Counsel, appearing for the appellant. 7.. Coming to the second question, namely, the issuance of notification by the State Government in exercise of power under section 7 of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy. But in exercise of such power it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the incentive policy itself. The Industrial Incentive Policy is issued by the State Government after such policy is approved by the Cabinet itself The issuance of the notification under section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions taken in the industrial po....