AI Drafter 
TaxTMI 
TaxTMI 
2007 (2) TMI 601
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....that the petitioner-industry being a priority industry is entitled to sales tax exemption. The case of the petitioner, as projected in the writ petition, briefly stated, is as follows: The petitioner-company is a beneficiary under the Industrial Policy Resolution, 1996 ("IPR, 1996" hereinafter) issued by the State Government, which provided for certain incentives to different categories of industries as indicated therein. As per the said IPR, 1996, the Industries Department is the Nodal Department. In the year 1999 the petitioner, after having satisfied the terms and condition stipulated in the IPR, 1996, established an industry in village Saura in the district of Khurda for manufacture of aluminium conductors with a project cost of more than Rs. 1 crore in order to become a "priority industry". The petitioner's industry commenced its commercial production on and from November 2, 2000. The Industries Department by letter dated January 27, 1999 addressed to the Managing Director of the petitioner-company, vide annexure 9, made a clarification on the grant of sales tax concession and on the definition of "technical entrepreneur" under the provisions of the IPR, 1996 ....
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....ercial production, provided the unit should have fulfilled the criteria mentioned in the Finance Department Notification No. 7352-CTA/5/99/F dated February 17, 2000 read with SRO No. 141/2000. The Director of Industries issued the certificate of eligibility in favour of the petitioner-unit for sales tax concession on raw materials, machinery, spare parts, packing materials and finished products under IPR, 1996 for eight years from the date of commercial production, i.e., from November 2, 2000 to November 1, 2008. The Director of Industries also issued a certificate in favour of the petitioner declaring the petitioner-industry as a priority industry eligible to avail the sales tax incentives. The aforesaid certificates have been annexed as annexure 3 series. By the letter dated October 1, 2002, annexure 4, the Sales Tax Officer, Bhubaneswar II Circle, Bhubaneswar, intimated the petitioner that the petitioner-industry was entitled to sales tax exemption under the IPR, 1996 during the period, i.e., from November 2, 2000 to November 1, 2008. The petitioner while enjoying the aforesaid tax exemption, O.P. No. 6 National Aluminium Company Ltd., (NALCO) by letter dated October 31/ Novembe....
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....ts with an annual capacity of 3400 MT per annum. The commercial production of the unit commenced on November 2, 2000. Therefore, the unit is entitled to the benefit under the Industrial Policy of 1996. 4.. That as per the IPR, 1996 the unit is entitled to sales tax exemption benefit as incentive for establishment of the industrial unit of the date of commercial production for a period of six years. Subsequently the said period was extended for a further period of two years as the unit comes within the priority sector. So in toto the unit is entitled to avail sales tax exemption for a period of 8 years commencing from November 2, 2000 to November 1, 2008. According to clause 5.6 Part-II of I.P R. 1996 the SSI unit will be eligible for exemption of sales tax on purchase of machinery, spare parts of machinery, raw materials, stocking materials and finished product for a period of six years when the industrial unit situated in Zone-B. This industrial unit comes within the Zone-B of the State. But so far as the materials procured prior to the date of eligibility, i.e., the commercial production, i.e., November 2, 2000 any materials supplied by NALCO the petitioner is liable to pay....
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....fore considering the aforesaid question, the bare facts that should be kept in mind are that the eligibility certificate issued by the Director of Industries for sales tax exemption to the petitioner industry still remains in force and has not been cancelled at any point of time and that the counteraffidavit filed initially by the Industries Department supports the case of the petitioner, though after insistence of the court the Finance Department filed an affidavit taking the view as indicated in the foregoing paragraph. In order to resolve the issue that has been raised in this case, let us now have a look at IPR, 1996. Clause 2.4 in Part II of the IPR, 1996 defines "Fixed Capital Investment" thus:- "Fixed Capital Investment" means investment in land, building, plant and machinery and other equipments of permanent nature." Sales Tax exemptions have been provided under the head "Sales tax" in paragraph 5. Paragraphs 5.1 and 5.6, which are relevant for the present purpose, read: "5.1 Subject to operational guidelines instructions and procedure, sales tax incentives shall be allowed after the unit has gone into commercial production and from the date of commercial productio....
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....reating the priority industries primarily as medium and large industrial unit was erroneous and not in conformity with the IPR, 1996. It was further argued that the petitioner industry being a priority industry having a project cost of more than Rs. 1 crore is to be treated as medium industrial unit for the purpose of entry 43A only because, as per the counter-affidavit filed by the finance Department, all priority industries having project cost of more than Rs. 1 crore have been treated as medium and large scale industries/units and as such have been included in entry 43A. Learned counsel for the petitioner in this regard placed reliance on the decision rendered in Vadilal Chemicals Ltd. v. State of Andhra Pradesh [2005] 142 STC 76 (SC); [2005] 6 SCC 292; AIR 2005 SC 3073, wherein the apex court observed that ". . . under the incentive scheme in question, there was only one method of verifying the eligibility for the various incentives granted including sales tax exemption. The procedure was for the matter to be scrutinised and recommended by the State Level Committee and District Level Committee and the certification by the Department of Industries & Commerce by issuing an eligib....
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....tatutory implementation and the Industries Department are charged with the responsibility of issuance of operational guidelines for administrative implementation. Thus, the petitioner would not be entitled to any sales tax incentive merely on the basis of the IPR, 1996, which would be clear from para 23(1) of the said IPR. He further submitted that the subordinate legislation made by the notification is also law. In order to fortify his arguments, Shri Mohanty relied upon a decision of the apex court in Video Electronic Pvt. Ltd. v. State of Punjab [1990] 77 STC 82; AIR 1990 SC 820. According to Shri Mohanty, the notification having been made in accordance with the powers conferred by the Statute has the statutory force and validity. He also submitted that the decision of the apex court in Suprabhat Steel case [1999] 112 STC 258; [1999] 1 SCC 31 is not applicable to the facts and circumstances of the present case because in Suprabhat Steel [1999] 112 STC 258; [1999] 1 SCC 31 it was found that the Industrial Policy approved by the cabinet did not contain the condition that the industrial units could avail the benefits, only if they had not availed any facility or benefits under a....