TaxTMI 
TaxTMI 
2001 (12) TMI 854
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.... exemption from payment of tax for certain industrial units known as the Rajasthan Sales Tax/Central Sales Tax Exemption Scheme for Industries, 1998 (hereinafter referred to as "the Scheme of 1998"). It envisages exemption to certain industrial units from payment of tax on the intra-State sales/inter-State sales of the goods manufactured by them within the State, including by-products and the waste items derived therefrom and the packing material used therein in the manner, to the extent and for the period as specified in the notification. 3.. The appellants-petitioners in these two set of appeals are two manufacturers of cement, who claim that the respective cement units owned by them are sick industrial units. One is J.K. Udaipur Udhyog Limited having its unit at Udaipur and another is J.K. Synthetics Ltd. having a white cement plant at Gotan and a grey cement plant at Nimbahera in Rajasthan. Both of them have not availed benefit of exemption from payment of tax or deferment of tax, previously. The petitions relate to successive financial years of assessment in respect of which claim of exemption from payment of tax/deferment of tax payable is laid by them under the scheme at ....
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....cial Taxes Department, assured that the recovery of this amount shall not be pressed till a final decision is arrived at about the applicability of the date of corrigendum." 6.. The notification, captioned as "Corrigendum under the Scheme dated 30th September, 1999", has not been published till that date but was published only on 7th January, 2000 after the decision of the State Level Screening Committee was made and communicated to the petitioner. 7.. In the other case of J.K. Synthetics Ltd., the application was made for sanctioning the exemption under the Scheme as a sick industrial unit in 1998. The J.K. Synthetics Ltd. company was declared as a sick company by Board for Industrial and Financial Reconstruction under the Sick Companies (Special Provisions) Act, 1975. The claim was in respect of one of its units manufacturing white cement and grey cement. The application for claiming benefit of Scheme as a sick unit was certified to be complete in all respects as on November 20, 1998. 8.. The State Level Screening Committee in the first instance was of the opinion that declaration of company as a sick company may not necessarily mean that it is also in respect of unit in....
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....including that of cement plants were treated as one class. For the purpose of extending exemption benefit the sick units were divided into two categories, viz., those which have availed exemptions previously and which have not availed such benefit. In end of these two categories, again all sick industries were treated as one class. 11. It will be apposite to reproduce here annexure "B" as existing before the notification dated 30th September, 1999 was made effective. Annexure B Eligibility extent of exemption from tax under the Exemption Scheme S. No. Type of units Extent of the percentage of exemption from total tax liability Maximum exemption in terms of percentage of eligible fixed capital investment (FCI) Maximum time-limit for availing exemption from tax 1 2 3 4 5 1. New units other than the units mentioned at items 2 and 3 and units going in for expansion or diversification 1st year 100% 2nd year 90% 3rd year 80% 4th year 70% 5th year 60% 6th year 50% 7th year 50% 8th year 40% 9th year 40% 10th year 30% 11th year 30% 100% of eligible fixed capital investment in cases where such investment exceeds Rs. 150.00 lacs, and 125% of eligible fixed capital investmen....
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....rned industrial unit is provided under column 3. This scheme would reveal the maximum extent up to which the exemption from payment of tax in terms of quantum can be availed by an industrial unit in respect of its turnover of goods manufactured by it, which are entitled to avail exemption is related to the Eligible fixed capital investment on percentage basis by availing exemption in the manner provided in column 3, viz., the rate at which the exemption can be claimed in the annual assessment from payment of tax which is otherwise payable by the industrial unit concerned. The amount of exemption availed every year is to be adjusted against the amount specified in column 4 with further limitation that such maximum limit has to be availed or exhausted within the period specified in column 5. After the expiry of that period, no further exemption can be availed by the industrial unit, even if the industrial unit has not been able to avail the exemption of maximum extent permissible. Likewise, even though the period specified in column 5 has not expired but an assessee has availed the maximum amount of exemption quantified in terms of column 4, he will still cease to draw any e....
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....er cent every year until it reaches 50 per cent for the 6th year of specified period. 15.. Thereafter for last 6 years of specified period for each succeeding couple of years the rate of availing exemption from tax is reduced by 10 per cent, that is to say, the rate at which exemption from payment of regular tax can be availed for 6th and 7th year is 50 per cent, for 8th and 9th year it can avail exemption at 40 per cent and for last two years at 30 per cent. Thus, at no stage exemption rate declines below 30 per cent of tax. 16.. In the like manner, for all sick units the manner, extent, and period were laid in clause (b) of item 4 of the annexure "B". It envisaged a uniform gradual declining rate for availing tax exemption up to 100 per cent of eligible fixed capital investment within 11 years. 17.. By notification dated 30th September, 1999, published on 7th January, 2000 in item 4(a) under columns 2 and 3 for the expression "New Units" at serial No. 1, the words "new units at serial Nos. 1, 2 and 3, as the case may be" have been substituted which makes item 4(a) read,"All sick units which have not availed of benefits of exemption from tax or deferment of tax previously....
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....three years of specified period will avail 30 per cent exemption from payment of tax payable. But it is to be noticed that a sick industry falling in the genre of item Nos. 1 and 2 would still avail the tax exemption at gradual declining rate only for the specified period as ordained, if it is a sick industry which has availed the benefit of tax exemption or tax deferment previously. In the case of sick industry falling in item 4(a) read with item 2 benefits have not been affected adversely. 20.. Coming to the case of item No. 3 which relates to the cement plants. It has prescribed 100 per cent of the eligible fixed capital investment as the extent of exemption that can be availed within the period of 11 years. This is at par with item No. 1 except to the extent where eligible fixed capital investment does not exceed 150 lakhs or 1.5 crores but instead of availing that benefit at a gradual declining rate from 100 per cent to 30 per cent during each year of eligible period stipulating higher rate of exemption during initial period, it has provided for availing exemption from payment of tax at a flat rate of 25 per cent throughout the period which is less than the minimum rate of ....
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....d for claiming exemption under the Scheme of 1998 prior to 30th September, 1999 and whose applications were complete in all respects prior to the date of notification and which have started availing such benefit in the terms of scheme under clause 4(h) with effect from the date their applications were complete in all respects as per certification by competent officer. In the case of M/s. J.K. Udaipur Udhyog Ltd., sanction had also been made prior to 7th January, 2000 the date on which the notification dated 30th September, 1999 was published. Both the petitioners have not availed benefit of tax exemption or deferment previously and fall in item 4(a) of annexure "B" of the scheme. 24.. They are precisely aggrieved with the condition imposed on them for availing only 25 per cent of exemption each year of their eligibility period to claim full extent of their benefit instead of graduated declining rate of availing exemption prescribed under item No. 1 in the table reproduced above which ensured much higher rate of availing exemption each year, in fact between 4 times to 2 times up to first 7 years of specified period, which makes them more potent in availing full benefit as in c....
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....on capacities in various areas particularly in industrial backward areas and rural areas. That encompasses new industrial units of all types, expansion and diversification. Another distinct object is not to provide incentive but is by way of rehabilitation programme of existing sick industries within the State, to save them from total decline. Benefits extended to any sick industry in the State are directly relatable to achieve the second objective stated above. For this reason the sick industrial units irrespective of their capital investment volume, have been dealt with as one single class irrespective of the commodity which they manufacture and irrespective of the area where they are situated. The two inhibitions attached with other class of eligible units to avail benefit of scheme as incentive and were treated distinctly for extending a general package of incentives. 28.. In short, the contentions on behalf of the petitioners are that since the petitioners became entitled to avail benefits of exemption under item 4(a) with effect from the date of their respective applications became complete in all respects, which were so certified by the Member-Secretary of the State Level....
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....proportionate exemption is availed by them during the later part of their period of sickness. This mode is uniform in respect of all the sick industries including cement industry which have already availed the benefit of exemption or deferment at an earlier point of time. 29.. It is contended by learned counsel that it is not open for the State to discriminate in extending benefits to a member of same class of persons/industry admitted to the benefit of exemption to avail the benefit in reduced or lesser proportion of exemption by amending substantive mode of availing the benefit for availing the full level, once it has been admitted to avail the benefit of exemption as a sick industry and not as an incentive for new capital investment or expanding existing production capacities for any specified commodity in any specified area. 30.. Moreover, a sick cement industry cannot be treated differently solely in the case, if it has not availed earlier benefit of exemption or deferment when it is otherwise similarly treated with all other sick industries if it has earlier availed the benefit of exemption/deferment. This classification has no rational nexus with the object sought to b....
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....y amending the scheme prospectively. Since the notification issued on 30th September, 1999 was published on January 7, 2000, the petitioners could avail the benefit under the scheme only in the manner provided as per the amendment with effect from the date of its publication, viz., 7th January, 2000. Aggrieved with the aforesaid judgment dated 27th March, 2001 passed in S.B. Civil Writ Petition No. 1141 of 2000 J.K. Udaipur Udyog Ltd. v. State of Rajasthan and followed in other writ petitions, these appeals have been preferred by the respective companies owning the industrial units in question and the State. 33.. To the extent the learned single Judge has held that the impugned notification is not a corrigendum but an amendment and that until the date of publication, the unit shall be entitled to avail benefit under unamended provision, the State Government has also filed appeals. Whether notification dated September 30, 1999 is a corrigendum or an amendment in the Scheme? 34.. The questions had been raised before learned single Judge, Whether the notification dated September 30, 1999 is merely a corrigendum as it purports to be or an amendment resulting in altering the....
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....ntion, the court held that the power to correct an accidental printing error in any notification is ancillary and incidental to the substantive power conferred upon the Government to issue notifications. The court further held rejecting the claim of the assessee and upholding the plea of the petitioner-Commissioner of Sales Tax, that every law must be reasonably interpreted. No interpretation should be adopted which tends to defeat the very purpose of the law. Even a taxation law must be reasonably construed and the same principle applies to a notification issued under the taxation statute. With these precincts, the court held that since it was a case of correction of the printing error, the notification dated 11th June, 1974 must be read in its correct form since the beginning, the corrigendum was only clerical in nature. 40.. In contrast, question had arisen before this Court in Kandoi Kabliwala v. Assistant Commercial Taxes Officer, Pali [1989] 75 STC 316. It was a case of two separate notifications issued in 1969 granting exemption to "desi sweetmeats" and "namkins" respectively. Exemption on "namkin" was withdrawn by notification dated April 26, 1972. A notification t....
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....cation in the public gazette. So also sub-section (5) of section 8 envisages the exercise of authority of the State Government under the said provision by notification in the official Gazette. Under section 21 of the General Clauses Act, 1897 and section 23 of the Rajasthan General Clauses Act, 1955, power to issue notification includes power to add, amend, vary or rescind the notification in the like manner and subject to like conditions. Being part of the same power to issue notification, the notification adding, amending, varying or rescinding earlier notification can also be exercised only in the like manner in which the power is ordained to be exercised under the concerned statute. Therefore, a notification having the effect of altering earlier notification issued under respective provisions can only be deemed to have come into existence when it was published in the manner envisaged under the rules. 45.. In this connection, attention may be drawn to Union of India v. Ganesh Das Bhojraj [2000] 119 STC 293 (SC); AIR 2000 SC 1102. The court said: "Section 25 of the Customs Act empowers the Central Government to exempt either absolutely or subject to such conditions, from th....
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.... or hampered by implication from the language employed in statute unless the Legislature distinctly and clearly authorises for doing of a thing which is physically inconsistent with and cutting across an existing right. The principles that have to be applied for interpretation of statutory amendments taking away substantive rights are well-settled. The first of these is that statutory provisions creating substantive rights are ordinarily prospective; they are retrospective only if by express words or by necessary implication the Legislature has made them retrospective. The retrospective operation will be limited only to the extent to which it has been so made by express words or necessary implication. The second rule is that the intention of Legislature has always to be gathered from the words used by it giving to the words their plain, normal grammatical meaning. Thirdly, if in any legislation, the general object of which is to benefit a particular class of persons, any provision is ambiguous so that it is capable of two meanings, one which would preserve the benefit and another which would take it away, the meaning which preserves it should be adopted. The fourth rule is that if ....
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....ights transactions are neither invalidated by reason of their failure to comply with formal requirements subsequently imposed, nor open to attack under powers of avoidance subsequently conferred." 55.. In Maharaja Chintamani Saran Nath Shahdeo v. State of Bihar AIR 1999 SC 3609 the apex Court reiterated that a statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits. The court was concerned with the determination of compensation payable to the appellant under the Bihar Land Reforms Act, 1950. By Act of 1974, compensation payable for mines and minerals was restricted to three times of net income. The appellant contended that the date on which he became entitled to compensation was prior to the amending Act, 1974 came into effect. The State contended that section 6 of the amending Act of 1974 was retrospective in its effect and woul....
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....ernment has been given authority to exempt fully or partially, whether prospectively or retrospectively, sale or purchase of any goods from tax, no such power has been conferred to grant exemption retrospectively under the Central Sales Tax Act. Section 8(5) of the Central Sales Tax Act, 1956 does not authorise the State Government to issue notification to have retrospective effect. In these circumstances, a legitimate question does arise whether in pursuit of common object any State Government, by issuing one composite notification both as a delegate of the State Legislature as well as the Parliament for conferring certain benefits vide notification dated April 7, 1978, can have power to modify the same retrospectively by issuing a composite notification subsequently under the very same powers or at any rate such notification can be read, without any clear expression to that effect, to have retrospective effect. 59.. A division Bench of the Rajasthan High Court in Union of India v. State of Rajasthan [1993] 91 STC 284 has held while considering the like provision of section 4(2) of the Rajasthan Sales Tax Act, 1954 that State Government can issue the notification granting exemp....
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....n. The learned Advocate-General has informed that the scheme itself had been abandoned vide notification dated January 19, 2001; however, it has protected the interest of the industrial units which had already been conferred benefits. It was within the competence of the State Government to alter/modify the same as required in public interest. Petitioner is held entitled for the relief as per the original scheme up to the date of amendment and subsequent thereto as provided in the corrigendum." 62.. It is apparent that the learned single Judge held that modification in the scheme has to be held prospective in operation so as not to affect the vested rights. He has upheld the power of the State Government to modify or alter the scheme and that the petitioner cannot claim to enjoy the benefits granted under the original scheme for the entire period as it is. With effect from the date of the publication of the notification the petitioner shall enjoy the benefits as per amended scheme. 63.. This is also now not seriously challenged before us that the notification is by way of amendment and is not retrospective in operation. 64. We recall what Lopes, C.J., tersely said wh....
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.... Before we examine the scheme to find answer to this question, it would be appropriate to consider the principle. 70.. The "vested right" has been explained in Law Lexicon as "a right is said to be vested when the right to enjoyment, present or prospective, has become the property of some particular person or persons as a present interest, independent of a contingency. It is a right which cannot be taken away without the consent of the owner. Vested rights can arise from contracts, from statute and from operation of law." 71.. This was the principle adopted by a Full Bench of this Court in R. Dayal v. State of Rajasthan 96 (3) WLC 513 while considering the question of an employee's right to be appointed on a post, the process of which has commenced. The court said: "The settled principle of service jurisprudence is that no person possesses any vested right for appointment to a published post. He only possess a right to be considered for appointment provided he fulfils and possesses the requisite eligibility and suitability on the date of appointment." 72.. The expression "vested right" has been explained in Black's Law Dictionary as under: Vested rights: In consti....
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...., the period for availing benefit of exemption was specified to be five years. By anther notification dated July 17, 1971, amendment was made in the notification dated November, 11, 1970. The amendments provided that the new industry shall not include industries set out in the table which included decorticating, expelling, crushing, roasting, parching, frying of oil seeds and colouring, decolouring and scenting of oil. This was founded on the satisfaction of the Government that oil industry is sufficiently dispersed in rural areas in respect of which the existing capacity of the existing industries was more than adequate. 75.. In these background, the appellant before the Supreme Court contended that notification dated July 17, 1971 would have no effect on the eligibility already acquired by them to claim exemption from payment of tax. As per the commencement certificate issued to the appellants, the assessee had commissioner the plants on May 17, 1970 that is to say prior to the exemption notification dated November 11, 1970 by which the period for availing benefit was prescribed as five years from the date of issue of eligibility certificate. The assessee sought the benefit....
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....quired a vested right under the notification issued by the Government on November 11, 1970, to claim exemption from payment of sales tax for a period of five years and consequently the Government had no right to take away the appellants' vested right. The contentions are untenable because of the fallacy contained in them, viz., the wrong assumption that the appellants had acquired a vested right. The High Court has rightly repelled the plea that the appellants had acquired a vested right and were, therefore, entitled to claim exemption from payment of tax for a period of five years notwithstanding the revocation of the exemption under the notification dated July 17, 1971. The High Court has further taken the view that the earlier notifications granting exemption of tax only created existing rights and such existing rights can always be withdrawn by means of a revocation notification and that is exactly what has happened in this case." 77.. The court also found that the notification was issued on April 29, 1970 and the plant was commissioned on May 17, 1970, the second notification would not apply because that was prospective in operation and in respect of the first notification ....
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....did not affect any existing rights. Any right to evict after the commencement of Act, the right to ejection which would come into existence after the Act came into force, would obviously be governed by the Act which is prospective in operation. It is in that context, the court referred to "future existing rights under a lease". 79.. The principle was applied by the Supreme Court in Govinddas v. Income-tax Officer [1976] 103 ITR 123; AIR 1977 SC 552. It was a case where the Income-tax Officer sought to apply the provisions of section 171 of the Income-tax Act, 1961 to the pending proceedings for the assessment years 1950-51 to 1956-57. The court applying the principle "unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure" and held that the Income-tax Officer was not entitled to avail of the provision enacted in sub-section (6) read with sub-section (7) of section 171 of the new Act for the purpose of recovering the tax or any part thereof personally from ....
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....ry. EFCI becomes the foundation of quantifying the maximum amount of exemption that can be availed by an industrial entity allowed entrance to the portals of the scheme. Such exemption from payment of tax up to a maximum amount of tax under the two enactments is to be availed for a specified period. The exemption from payment of tax up to the said amount is to be availed by way of being absolved from payment of tax at such per cent of total tax liability for each year of the specified period within which the exemption could be availed up to the maximum extent fixed with reference to EFCI. If that limit is exhausted by availing exemption in above manner before expiry of specified period, no further exemption from payment of tax can be availed for remainder of specified period. Likewise, even after availing the exemption from payment of tax in above manner for the specified period of exemption for such unit, the unit is not able to exhaust maximum permissible limit up to which he is entitled to avail exemption, it cannot avail any further exemption from payment thereafter. This is made clear firstly from the preamble of the scheme which provides "the State Government..................
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....der the scheme, but the sick industrial unit whether or not deemed to be a new industrial unit becomes entitled to avail benefit notwithstanding the fact that it is situated in a banned area or an industry enlisted in annexure "A" as ineligible industry. 89.. The industrial units which have been allowed entry into its operative field are classified under the category of (i) new industrial units, (ii) the industrial units going for expansion, (iii) the industrial units launching diversification, and (iv) the sick industrial units. 90.. The new industry has further been classified for the purposes of fixing extent of exemption commensurating with importance assigned to respective categories into (i) the pioneer unit which has special feature of being established in any Panchayat Samiti of the State during the period of scheme having a fixed capital investment exceeding Rs. 3 crores and minimum regular employment of 50 persons each. This benefit is available only to first 10 units established in the Panchayat Samiti, or (ii) a premier unit which envisages the industrial unit which has fixed capital investment exceeding 150 crores with a minimum regular employment of 500 p....
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....uction capacity is apparently not a necessary condition for it. 94.. In this connection we may notice clause 2(e) defining "eligible fixed capital investment". It reveals that generally for computing EFCI, the cost paid for land and cost incurred in constructing new buildings, or acquiring new plant and machinery or second hand plant and machinery imported form outside country or if purchased from existing unit within India on fulfilment of conditions detailed in aforesaid provision is to be taken into consideration. So also capitalised interest, technical know-how fees, drawing fees are also included in EFCI amongst other fixed assets. As against this, Explanations II and III appended to clause 2(e), which read as under, the EFCI for a sick industry, whether deemed to be a new industry as defined in clause k(ii), or otherwise, is the depreciated value of fixed assets. 95.. Explanations.- I........................ II. In case of a new industrial unit covered by clause (k)(ii) the depreciated value of the fixed assets on the date of its purchase or lease, as the case may be, shall be considered as eligible fixed capital investment. III. In case of sick units, followin....
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....ts provided under the Scheme. 2(h) "Ineligible industries" means the industries listed in annexure "A" to this notification, which shall not be eligible for the benefits under this scheme; however, this restriction shall not apply to sick industrial units as defined in this clause. 98.. The "sick industry" has been kept free from both inhibitions. 99.. From the aforesaid it is clear that for the purpose of applicability of exemption scheme, a sick industrial unit has been separately classified distinctly from "a new industrial unit", the industrial unit going for "expansion" and the industrial unit launching "diversification". As noticed by us above, the new industrial unit, in all its manifestation whether pioneering unit, premier unit, prestigious unit and very prestigious unit, are treated s one class for the purpose of clause 3(1). 100.. The above provisions lay the contours of area within which the exemption is made applicable and the classification for extending such exemptions. With the object of providing a recovery therapy, the sick industrial units have been classified in two classes, viz., (1) one which has not availed benefit of exemption from payment of tax....
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....date, (ii) which have been sanctioned benefits under this scheme before the said date, or (iii) which have already been availing of benefits under this scheme on such date, shall be entitled to avail full benefits in accordance with the provisions of this scheme. 102.. Clause 4 deals with sanction of benefits under the exemption scheme and issue of eligibility certificate, clause 5 deals with general terms and conditions for exemption from sales tax. A perusal of sub-clauses (g) and (h) of clause 4 makes it clear that the benefits under the scheme do not wait to be availed of by the unit until eligibility certificate is issued or sanction is ordered by the concerned screening committee but it becomes operative as soon as its application is complete in all respects. It is to be certified by the Member Secretary of the appropriate screening committee that the application filed by the applicant unit is complete in all respects. The date on which certification is made is not relevant. Relevant is what date is certified as the date on which application became complete. Certificate may be issued on a later date. 103.. The eligibility certificate issued under the scheme to rem....
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.... that can be availed comes into operation immediately. The amount of exemption so availed is to be adjusted against the extent to which the exemption is permissible under column (4) of annexure "B" as may be finalised by the Screening Committee. The volume ratio of availing benefit for each year of specified period for which such benefit could be availed to exhaust the limit to be quantified become known on the date of completion of the application and that right is crystallised. The quantum up to which benefit can be availed is too ex hypothesi is determined at the same time, though becomes known on being quantified by Screening Committee later on, and must find place in the eligibility certificate in terms of sub-clause 2(g) and (h) of clause 4. The eligibility certificate, obviously, will have to be issued in consonance with the scheme which was operative on the date the unit commences availing the benefit that is to say the date on which the application is said to be completed. 107.. This becomes further apparent from clause 5(g) which makes it clear that subsequent inhibition against grant of exemption after the application is completed and is pending consideration, is n....
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....rom BIFR, whether such declaration would apply to all units owned by the company or each unit has separately to be examined for being declared sick. The BIFR made it clear that when the company has been declared as a sick company it means whole company and no separate declaration or clarification for each unit is needed. On receiving this clarification the Screening Committee has deferred its decision. 111.. In the case of J.K. Udaipur Udhyog, the application was completed on July 26, 1999 and sanction has also been issued prior to the date the notification was published and became operative on completion of application on December 13, 1999. 112.. About the basic feature that all units which have applied for availing benefit start availing benefit of exemption from payment of tax with effect from the date of completion of application in all its aspects, and does not have to await sanction by the Screening Committee and issue of eligibility certificate, there is no contention. There is no option about the date from which exemption is to be availed. In fact, the scheme obligates the applicant not to collect and charge the tax with effect from the date of completion of applic....
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....the right to avail exemption up to extent in the mode envisaged stands ex hypothesi determined, when such person fulfils the condition for availing concession and enters the portals of concession scheme. 115.. This result can further be explained from within the scheme. Clause 1(a) of the scheme lays down the period during which scheme remains operative. The period of the scheme itself is 1st April, 1998 to 31st March, 2003. Thus, notwithstanding the notification under which scheme came into existence itself was issued only on April 7, 1998 but by specifically naming the earlier date of its operative period, brought to it into effect with an earlier date. Not only this, the application filed prior to April 1, 1998 but were still pending consideration under Incentive Scheme, 1987 or New Incentive Scheme, 1989 were too brought within its fold to the extent it was meant to be brought within it by making express provisions in that regard in sub-clauses (g) and (h) of clause 1. 116.. More importantly, the scheme read in its totality reveals unmistakably that notwithstanding the scheme shall cease to be operative on March 31, 2003, a unit which has made an application prior to Marc....
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....t which is quantified under column No. 4 of annexure B with reference to eligible fixed capital investment. The exemption from payment of tax is granted for specified period at the rate prescribed in clause 3 of the Schedule of annexure B for the purpose of availing exemption to that extent. Therefore, the rate at which the exemption can be availed during each year of the eligibility period specified in column 5 of annexure "B" is integrally connected with exhausting the benefits up to maximum limit which can be availed by the claimants within the specified period by claiming exemption every year at the rate prescribed in column 3. One cannot be severed from the other. It is not disputed before us, nor there is any alteration in the scheme in that regard that for a sick industry including the cement plant also, no change has been affected in the quantum subject to which benefit can be availed by the sick unit nor there is any change in the specified period during which the unit has opportunity to avail the maximum benefit under the scheme. Thus, by reducing the annual rate of exemption in the case of sick cement plant it has totally altered its right by substantially reducing th....
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....ithdrawing the benefit of scheme for oil industry under the Rajasthan Sales Tax Act so issued. The High Court had invoked the doctrine of promissory estoppel for giving relief to the claimant on the premise that it had started production prior to the issuance of notification of 1987. Therefore, it was not a case in which any vested right had accrued under the scheme. The claim was founded purely on the doctrine of promissory estoppel which was held to be not substantiated. Moreover, it was found by the court that the exemption in the case of oil industry under the State enactment has been withdrawn as a result of satisfaction about public interest in doing so and in that event doctrine of promissory estoppel cannot be invoked. 122.. Arvind Industries v. State of Gujarat [1995] 99 STC 333 (SC); (1995) 6 SCC 53 was too a case where no factual foundation was laid for having acquired any vested right. It was a usual exercise of modifying the rate structure which becomes operative with effect from the date such rates are introduced. In doing so, the duty was brought under the rate structure by withdrawing concession granted earlier. 123.. Likewise, reliance on State of Rajastha....
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....rt. Thus, the basic foundation for invoking promissory estoppel namely existence of a promise or an assurance to grant concession on imports was found lacking. Secondly, the court held that it is not possible to postpone the compulsions of public interest till after March 31, 1981 if the Government was satisfied as to the change in the circumstances before that date. Since the Government in that case was satisfied that the very public interest which had demanded a total exemption from payment of customs duty now demanded that the exemption should be withdrawn, it was free to act in the manner it did. Thus, the court found that the promise, even, if any existed, could be withdrawn because a case for withdrawal in public interest was made out by the State Government. 125.. In this connection, it will be apposite to notice a recent decision of the Supreme Court in Union of India v. Indian Charge Chrome (1999) 7 SCC 314. Under the scheme of notification extending exemption from payment of excise duty in the case of power projects, the court has found that merely making of an application for registration did not confer any right on the application. The application has to be decided i....
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....a scheme which is in the nature of the delegated legislation by issuing a notification, by publishing in the official gazette in exercise of authority conferred upon State Government under section 15 of the Rajasthan Sales Tax Act, 1994 and section 8(5) of the Central Sales Tax Act, 1956. The question is only whether under the existing law on a particular date any rights have come to be vested or accrued to the petitioners which gives rights not only to avail the benefits in present but also to avail such benefits in future up to a specified limit and within specified period? If such right has come into existence, whether as a result of any subsequent amendment, which is not retrospective in operation, can such right be truncated or altered? Such controversy as appears from the report was neither raised nor decided by the court in Kasinka Trading case (1995) 1 SCC 274. The question raised in the present case will have to be answered in the light of scheme of 1998. 129.. The rights which have vested in the petitioners as on the date of the completion of their application for availing benefit under the scheme is the composite right of availing the benefit in the manner, to the ext....
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....pplied for financial assistance from a regular financial institution, and (d) is expected to commence commercial production by December 31, 2000, will continue to be covered under the scheme for enjoying benefit of the scheme, notwithstanding the application completed in all fours may have been filed after April 30, 2000 or December 31, 2001. The notification rather allows entry to portals of such units, which become otherwise eligible under the scheme after April 30, 2000 the date the operative period of scheme, and but for such provision would not have become entitled to benefit. This supports petitioner-appellant rather than respondents, that the right to benefit accruing under the scheme in one compact form once having vested are not envisaged to be altered by subsequent amendment. Rather it assures that those industries who have taken some effective steps as envisaged under the scheme will still be allowed entry to benefits of the scheme. 133.. In these circumstances, we are of the opinion that the exemption from payment of tax to which the applicant becomes entitled physically as an eligible industry on the completion of application in the manner, up to total amount as qua....
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.... by seeking diversification of the existing industrial units in the State in other eligible products. 138.. On the other hand are sick industrial units which are necessarily existing industrial units within the State which have incurred cash losses, whose capital has been eroded and are likely to continue to incur cash losses in future. Tax exemption has been extended to such units not as an incentive but as a rehabilitation programme of such units which are considered to be potentially viable and are taken by a Central or State level financial institution or by a bank under programme of rehabilitation or are such industrial units which are declared sick during the operative period of this scheme by the Board for Industrial and Financial Reconstruction (BIFR) under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 or by the State Level Committee or the appropriate District Level Committee in the Industries Department in case of non-BIFR cases, or industrial unit which is taken over and sold during the operative period of the scheme to a new management by the State Government or RIICO or RFC. 139.. The definition of "sick industrial unit" in clause....
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....can avail the benefit, the industrial unit is entitled to avail exemption at a gradual reducing rate of tax. For the first year it can avail 100 per cent exemption from payment of tax whereas in the 10th and 11th year it can avail the benefit of exemption up to 30 per cent of tax. Item Nos. 2 to 5 all are in exception to item No. 1. 143.. It is pertinent to notice that item 1 does not include within its fold specially the premier, pioneer or prestigious units though unless otherwise specified they may fall in item No. 1 as a new industrial unit simpliciter. Item No. 2 on the one hand is extended to new units of specified commodities and also to very prestigious units for a greater volume of exemption for a longer period up to the extent of 125 per cent of eligible fixed capital investment. The special feature of item 2 is that for first two years of its existence the new units of the specified commodities and very prestigious units are allowed to avail 100 per cent exemption from payment of tax for that period and gradually declining rates from the third year at the same rate until it reaches 30 per cent. Item No. 2 does not extend to expansions or diversifications, even if they....
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.... but has not made mention of "sick unit" which is governed by item 3. 145.. A sick industrial unit has not been identified with any of the units which become eligible for exemption because of new fixed capital investment for establishing new production capacity within the State and has been treated as a separate class by itself of whatever genre to which it belongs. 146. The analysis of scheme reflects a distinction between object in extending exemption on the one hand to the new industrial units, the units going for expansion and the units launching diversification, is to provide incentives to fulfil the need of the State to achieve a balanced economic growth through new investment and addition of new production capacities in the State within eligible area in the industries other than ineligible industries. On the other hand, the sick industrial units have been extended benefits of the scheme to save the existing investment and production capacities within the State by providing timely assistance for staging recovery from the set back. This difference in object becomes very relevant for the present purpose. 147.. One belongs to realm of nurturing a new born for ....
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....ufacturing knitwears, gems and jeweller, textile, electronics and telecommunications, computer software, footwear and leather goods and glass and ceramic. 151.. In the package of exemption to sick industries which have availed benefits previously are still categorised as one class under item No. 4(b) without any distinction. 152.. The differentiation has been made only in the case of sick industry falling under item No. 4(a). 153.. The key question zeroes down to one whether there exists a rational nexus with object sought to be achieved in classifying sick cement unit as different from other sick industrial unit making amendment in the scheme vide notification dated September 30, 1999 on the basis that it has not availed the benefit of exemption from payment of tax or deferment of tax? 154.. With this premise, if one turns to the effect of change which is alleged to have been brought out by the notification dated 30th September, 1999, it reveals that it has sought to bring certain change in clause (a) of item 4 and clause (b) remain unchanged. 155.. As a result of amendment in question all sick industrial units, which have not availed the benefits previously, except....
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....0.. If that be so, there does not appear to be any reason having rational nexus to object sought to be achieved in singling out a sick cement plant which has not availed benefit of exemption from payment of tax and deferment of tax previously and otherwise fall in clause 4(a) to club it with other healthy cement plants to avail benefit of exemption at much slower pace of exemption each year of its eligibility period than other sick industry. Not only this, this placed a sick cement unit falling under item 4(a) in a position lower than a sick cement plant which had previously availed benefit of exemption. 161.. As noticed above, those sick industries which fall in category of item No. 2 read with clause 4(a) can avail higher maximum limit for longer period, and in the same manner of availing exemption from payment in each year during specified period at a gradual reducing rate, ensuring higher exemption in initial period and lesser exemption as the specified period passes on. It starts with 100 per cent in the first two years and does not go below 30 per cent in the last three years. So also no change is effected in any sick industries other than falling under item 1 read with cl....
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.... sick cement plant which has not availed previously such exemption, vide notification dated September 30, 1999 to offer reduced opportunities to avail the full rehabilitation dose within specified period? If not, what is its consequence? 164.. We are not impressed with contention that in no circumstance a statute governing tax concession can be treated as violative of article 14. No law whether made by primary legislative action or by subordinate legislation is immune from the constitutional constraints. Declaration under article 13 of the Constitution is unequivocal. It declares all existing laws in force at the commencement of Constitution inconsistent with Part III of the Constitution to be void to the extent of inconsistence. It ordains and prohibits State from making any law taking away or abridging rights conferred by Part III and declared law made in contravention to be void. Law for that purpose includes notification having force of law. The notification excepting something from the purview of tax in exercise of power conferred under section 15 of the Act of 1994 or section 8(5) of the Central Sales Tax Act, 1956 is a matter of subordinate legislation. Hence it cannot....
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....ication, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of 'wide range and flexibility' so that it can adjust its system of taxation in all proper and reasonable ways." 167.. Thus, though Legislature is free to select the objects and there is no violation of the equal protection clause merely because other objects could have been but are not taxed by the Legislature. The latitude is still greater in the matter of construing the provisions relating to exemption from tax. But such law does not enjoy any exception from scrutiny at the touchstone of article 14 in absolute. 168.. Such exemption from tax in any form, while relieves the burden of benefited tax-payer, correspondingly it increases burden on the persons who have not been so exempted. Therefore the exemption being a matter of legislative policy by way of exception to general rule, the court would not normally interfere to enlarge the field of exemptions. However, this does not postulate that any statute whether by parent legislation or by subordinate legislation is immune from constraints of constitutional provisions including Part III of the....
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....classification be made without having rational nexus to object sought to be achieved by extending the benefit of exemption to such class for differential treatment. In other words, whether in treating cement industry which is sick and falls in item 4(a) of annexure B, differently from other sick industry there exist any ground which can be said to have a rational nexus with such object sought to be achieved. 172.. If the cement industry as a class had been ruled out for exemption or as a class has been treated differently for devising a package of exemption different from other commodities, perhaps challenge on the ground of violation of article 14 would fail. The case of Aditya Cement v. Commercial Taxes Officer [2001] 123 STC 425 (SC) fell in that category and therefore, the court upheld the special treatment given to the cement industry as a whole in the matter of devising a separate package for extending benefit under the Incentive Scheme, 1987 or New Incentive Scheme, 1989. The question raised in the present case is entirely different and has been raised under a different scheme in a different context. We have already noticed while examining the contours of the scheme in de....
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....of the categories of sick industry. In case it is a cement industry which is "sick industry" and has availed benefit of exemption or deferment previously, it remains in the general fold of sick industry. But if the very same industry falls in category 4(a) because it has not availed benefit of such exemption previously, it is picked up singularly by extending benefit of availing exemption at the rate of 25 per cent of tax every year, which is less than the other sick industry generally avail even last two years of specified period to avail full benefit of the scheme as a rehabilitation programme and is even less than the benefit that can be availed during first six years of specified period if it falls in category 4(b). Industry which is a sick industrial unit within the meaning of the scheme, is classified as an independent while extending package to the sick industries which have not availed the benefit of exemptions earlier than the sick cement plant which has previously availed the benefits and this results in the later unit of the same genre availing the exemptions at a higher rate than the cement plant falling in the former category which not only results in classification....