TaxTMI 
TaxTMI 
2013 (10) TMI 256
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....lity Certificates given to them under the Package Incentive Scheme of 1979 do not contain any ceiling on the quantum of benefits / incentives envisaged thereunder. By the impugned amendment effected in the year 1995, that ceiling on quantum has been added retrospectively & taxes otherwise exempt with penalty are being claimed. 3. We have heard Shri M.G. Bhangde, learned Senior Advocate with Shri V.V. Bhangde, learned counsel for the petitioners and Mrs. Dangre, learned Additional Government Pleader for the respondents, on various dates. 4. During hearing, on 26.07.2013, affidavit has been filed on record by the petitioners to demonstrate that the Eligibility Certificates issued to them in terms of 1979 Scheme have not been affected, by the alleged modification or amendment made to it vide Government Resolution dated 05.07.1982. The facts stated in this additional affidavit have not been denied by the respondents during later hearings & till date.. 5. The provisions of Section 41C of the Act stipulate that Eligibility Certificates issued to units like the petitioners shall be deemed to be automatically cancelled on the date on which the cumulative quantum of benefits receiv....
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....87 STC (65) 191. Because of this litigation, the applications of the petitioners remained pending for no fault on their part and have been disposed of belatedly. They also point out that there was heavy rush of applicants in last two days before closing date and Development Corporation of Vidarbha Limited, could not process all those applications due to administrative difficulties. Few complaints were made to Anti Corruption Bureau and officers of that Bureau seized some records for investigation. Ultimately, the records were returned and applications submitted by the petitioners and other units were then looked into by Respondent No. 5. Same were then forwarded by Respondent No. 5 to Respondent No. 4 in 1990 for issuance of entitlement certificate. Respondent No. 4 then referred matters to Respondent No. 3 - Commissioner and as the office of the Commissioner did not take any steps, the petitioners approached their association. The said association by name "Udyog Manch" then submitted representations to various authorities including the Hon'ble Chief Minister. The entitlement certificates were then issued sometimes in 1991. The Industries Commissioner was directed to investigate in....
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....ce with this amendment to scheme and, therefore, the challenge to constitutionality of said section has to fail. 11. She has also invited our attention to Eligibility Certificates and Entitlement Certificates as issued to respective petitioners to urge that it contain stipulation about cost of unit and also a provision of review insofar as total period of eligibility is concerned. 12. The purpose of amendment to Section 41C of the Act is sought to be explained and justified by inviting our attention to reply filed in Writ Petition No. 853 of 1996. She contends that the petitioners were right from day one, subject to this quantum ceiling and hence challenge to validity of Section 41C of the Act at their instance is unsustainable. She has also attempted to point out that the judgment of this Court dated 25.09.2009 does not consider challenge to amendment. Similarly, judgment in Writ Petition No. 842 of 2000 is also sought to be distinguished. Our attention has also been invited to judgment dated 10 .6.2013 delivered in Writ Petition No. 313 of 2010 at in case of M/s. Jindal Poly Films vs. The State of Maharashtra & Others. 13. Shri Bhangde, learned Senior Advocate, in his re....
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....t during the period of 7 years. According to him in case of petitioners, even this restriction was never implemented. Mrs. Dangre, learned Additional Government Pleader at this stage pointed out that the petition does not contain any specific statement in this respect, and has been filed only with apprehension that in future petitioners may exceed the ceiling imposed by Section 41C of which validity has been assailed. Whether during eligibility period, the ceiling could have or has actually been exceeded, has not been pleaded and is not on record. In view of these arguments, we place the matters for further consideration on 25.07.2013." On 26.07.2013, an affidavit came to be filed by the Petitioners and matter was then adjourned to 29.7.2013, 31.7.2013,1.8.2013 & 6.8.2013. It could be heard further on 14.8.2013 & closed for judgment on 16.8.2013. 14. Shri Bhangde, learned Senior Advocate, in his further reply, has submitted that the Eligibility Certificates issued to the petitioners do not speak of any approved gross fixed capital investment and their certificates are under original or 1979 Scheme. It does not corelate the quantum of incentivesto be availed with the cap....
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....its application. Petitioner M/s Chandrapur Vidyut Conductor Pvt. Ltd. in WP 853 of 1996 has applied for eligibility certificate on 30.12.1982. B-- The eligibility certificate of M/s Vidarbha Winding Works is dated 27.9.89 & period of 7 years during which benefits of incentive scheme were available to it is from 16.11.1991 to 15.11.1998. Its capital cost noted therein is Rs. 3,40,000/ only. The eligibility certificates of M/s Kailash Poly Industries are dated 27.2.91 & 16.11.1992 for period of 9 years during which benefits of incentive scheme were available to it. The said period is from 25.7.1992 to 15.9.2000 & capital cost of Unit according to it is Rs. 44,828/only. The eligibility certificates of M/s Chandrapur Vidyut Conductor Pvt. Ltd. in WP 853 of 1996 is dated 9.10.1989 & for period of 7 years from 1.2.1990 to 31.1.1997 while capital cost of said Unit noted in it is Rs. 92,813/only. C--Petitioner M/s Vidarbha Winding Works in WP 846 of 1996 started production in March,1989. It is registered under Bombay Act wef 14.3.1989 & central sales tax wef 17.3.1989. Petitioner M/s Kailash Poly Industries in WP 854 of 1996 started production on 20.1.1985. It is registered under Bom....
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....giving 6 months notice but then the commitments already made can not be affected by such an amendment. 18. Provisions of 1979 Scheme as on 7.1.1983:-- According to Respondents, Scheme itself comprehends within itself the applicability of amendments made to original scheme from time to time. Thus, date on which incentives were applied for determines the provisions applicable to the Petitioner unit. The scheme seen in Clause 5.10 of original scheme in relation to Medium/Large Scale Units has been extended to the Small Scale Units like Petitioners as per resolution dated 5.7.1982 after expiry of period of 6 months therefrom ie after 6 months notice in terms of Clause 1.2 of the original scheme. Thus the scheme for monitoring of Gross Fixed Capital Investment of the SSI has been in force since 10.1.1983 and scrutiny to curb incentives enjoyed at par with Medium/Large Scale Units is permitted thereafter. This amendment also introduces Sales Tax Deferral Scheme in Part I of the original scheme but the same is not relevant in present matters. This procedure or control is definitely a new measure. The ceiling of 100% of "Gross Fixed Capital Investment" never existed for SSI & enjoyme....
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....n 5.7.1982 wef 10.1. 1983, also their entailment to continue could not have come into dispute. Thus, this amendment to Scheme & addition of S. 41C to Bombay Sales Tax Act are the grounds to justify denial of the full benefit period to them. Their eligibility has not been cancelled on any other ground & it is not the defence that it ceased to be a SSI unit due to huge or unauthorized expansion of plant/unit. Respondents do not urge that the Units of Petitioners got transformed into either Medium Scale or Large Scale Units during this benefit period because of such investments. 20. It is in this background that the word "commitment" in last part of Clause 1.2 above ie "commitments already made shall not be affected by any such amendment " needs to be construed. This part itself implies that the commitments not made till then can be varied ie the Scheme itself may be changed to alter the arrangement qua any particular matter prospectively. The Respondents have urged that the Scheme itself was changed on 5.7.1982 wef 10.1.1983. But then there is no argument that commitment made to Petitioner was not as per original scheme. It is not the contention that Scheme prevailing on the date ....
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....Court held: (SCC pp. 741-42, paras 32 & 34- 35) "32. The general principles with regard to construction of exemption notification are not of much dispute. Generally, an exemption notification is to be construed strictly, but once it is found that the entrepreneur fulfils the conditions laid down therein, liberal construction would be made.* * * 34. A question as to whether, in a given situation, an entrepreneur was entitled to the benefit under an exemption notification or not, thus, would depend upon the facts of each case. A bare perusal of the Notification dated 6-2-1992 issued by the first respondent would show that the purport and object thereof was to grant benefit of a concessional power tariff which came into force on and from 1-1-1992. The phraseology used in the said notification postulates that the benefit was to be granted in regard to the 'enhanced power tariff'. Thus, where the new units had started production between 1-1-1992 and 31-12-1996, such exemption was available to the entrepreneurs. 35. Evidently, except in a situation as might have been existing in Hitech Electrothermics 10 that any application filed by the entrepreneur had not been processed withi....
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....ed in the policy resolution would meet the ends of justice and we, accordingly, so direct. Be it stated that the appellant has been enjoying the concessional tariff on the basis of interim orders of the court and, therefore, that should be taken into account and due adjustment would be made in computing the period of three years, for which we are directing for grant of concessional tariff. The impugned judgment of the Kerala High Court is set aside and these appeals are allowed to the extent indicated above." Following judgment of Hon. Apex Court may be relied upon to gather how such provisions in the Scheme need to be considered. In CST v. Industrial Coal Enterprises, (1999) 2 SCC 607, at page 616 , Hon. Apex Court observes : "11. In CIT v. Straw Board Mfg. Co. Ltd. this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the ob....
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....reliefs in sales tax. Petitioner there was granted eligibility certificate on 19.9.82 for 7 years from 1.10.1982 to 30.9.1989 to avail the facility of deferral scheme of sales tax. Section 15A(1) of Bombay Sales Tax Act, 1959 on 1.4.59 was amended by State of Maharashtra providing for levy of Additional Tax in the case of dealers whose turnover exceeds Rs.10,00,000/- per year. Section 9 introduced from 13.7.1986 whereby turnover @ 1.25% in goods specified in schedule `C' thereof was payable by the dealer whose turnover on all sales exceeded Rs.12,00,000/- per year. Notice dated 8.3.88 was issued to petitioner by Sales Tax Officer for non payment of additional tax from 1.7.84 and turnover tax from 30.7.86 & a demand notice for additional tax for period from 1.7.86 to 31.7.86 and 1.12.86 to 30.7.87 and demand notice dated 21.4.88 for additional tax and turnover tax for period from 1.7.87 to 31.12.87. While quashing these notices & demands, the Division Bench observes that although the Scheme as modified by Government Resolution of 1982 speaks of sales tax, general sales tax and purchase tax, the same is deemed to be extended also to the additional tax and turnover tax as they are bas....
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....ss fixed capital investment of such unit at the time of grant of the Eligibility Certificate". It only mentions capital cost of project. Respondents have also not pointed out what this phraseology exactly implies. Perusal of original Scheme dated 5.1.1980, particularly its Clause 2.7 dealing with Gross Fixed Capital Investment shows how Gross Fixed Capital Investment is to be computed. It is Gross Fixed Capital Investment at the beginning of the year plus additions,if any, made to Gross Fixed Capital Investment during the year, less the original value to the unit of any Fixed Assets written off/disposed of/sold during the year. This Clause shows that in basic scheme of 1979, there is no provision for determining Gross Fixed Capital Investment at the commencement or on date of grant of Eligibility Certificate. It proves that it is an annually fluctuating norm with relation to which the entailment of Medium Scale or Large Scale Units may require computation qua that year & every year keeping in mind the ceiling imposed by the Scheme, where-ever same applies. Findings of this Court in Vinod s/o Ratilal Patira Vs. Commissioner of Sales Tax & ors. (supra) clinch this aspect. This also r....
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.... all other SSI Units completed their benefit period without any ceiling & got exemptions for full eligibility period by computing the Gross Fixed Capital Investment as per sub-clause III of Clause 2.7 of 1979 Scheme. If the incentives of Petitioners alone are now confined initial year, it would be unjust & treating them unequally. Most of the Units in all these three categories have already exhausted the full benefits for entire term as per original Scheme. SSI units like Petitioners enjoyed that benefit without any ceiling for whole period assured by the eligibility certificates. Petitioners are being subjected to ceiling only because of late processing of their applications by the Respondents though the same were moved well within time-limit . Their incentive period could not expire before the 1995 amendment for no fault on their part. S.41C(1)(a)(i)(A) therefore becomes a special legislation only for them. 25. Findings of this Court in Vinod s/o Ratilal Patira Vs. Commissioner of Sales Tax & ors. (supra) also show that for medium or large scale units, the incentive scheme does not provide for pegging down their entitlement to the initial year of grant of eligibility certifica....
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....sitated huge refunds to the units. State Government cured that lacuna of the absence of Rules prescribing the Ratio by the subsequent validating amendment. This has been upheld but then retrospective levy of penalty is found bad in M/s. Jindal Poly Films. Thus controversy addressed to was in relation to a remedial measure permitted by the legislature & its faulty execution. The fault was removed by the validating legislation. Facts at hand are entirely different & a liability not foreseen by the SSI units like Petitioners is being imposed retrospectively which upsets their calculations, proliferation, financial structuring & prospects etc. looked into by such units at thresh-hold while evaluating feasibility of putting their project in comparatively undeveloped or underdeveloped area as also impact of incentives under 1979 Scheme. In the light of law discussed above, it is apparent that an unequivocal offer contained in 1979 Scheme accepted by the Petitioners by seeking its benefit while moving applications after necessary steps prior to 10.1.1983 can not be allowed to be withdrawn. Non-imposition of any ceiling in 1979 Scheme for SSI units is not an inadvertent omission & its intr....
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....quently and, therefore, we are of the view that the impugned provision, namely, Section 26 deserves to be quashed by striking down the words "not being waste goods or scrap goods or by-products" occurring in the said Section 26 of Maharashtra Act 9 of 1989 and the authorities concerned shall rework assessments as if that law had not been passed and give appropriate benefits according to law to the parties concerned." In unreported judgment of Division Bench of this Court dated 08.06.2011 in Writ Petition No. 842 of 2000, retrospecyve operation of Rule 31AA of BST Rules divesting the units established under 1988 Scheme of vested rights was held bad. But the Division Bench noted that S.41B added in Bombay Sales Tax Act with effect from 1.5.1994 merely authorized the Commissioner to calculate CQB ( cumulative quantum benefit) from 1.1.1980 in manner prescribed for said period & Rule 31AA was repugnat to the industrial policy & not S.41B. Hence, we do not find it necessary to refer to this judgment in more details. 28. In present matters, the Government was aware of the alleged error in the 1979 Scheme since 1982 & took some steps to provide cure through 5.7.1982 modification. Bu....