TaxTMI 
TaxTMI 
2014 (11) TMI 877
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....ndustries Commissioner and Member Secretary of the State Level Committee of the State of Gujarat. The petitioner has prayed for an appropriate writ, direction and order directing the respondent to extend the benefits of the scheme to the petitioner and not to recover any amount by way of sales tax from the petitioner which had fallen due between January 1999 and January 2004. 2.0. That the facts leading to the present petition in nutshell are as under: 2.1. That the Government of Gujarat, Industries and Mines Department issued Resolution No. No.INC1095/ 2000(1) (I) inter alia, announcing Capital Investment Incentive (Central) Scheme (hereinafter referred to the as the "Scheme"). It appears that said scheme intended to provide capital investment subsidy and sales tax incentives as measures to attract investments into such backward areas with a view to generate greater employment in less industrially developed areas. The operative period of said scheme was 16th August 1995 to 15th August 2000. The scheme also offered capital investment and subsidy to the industrial units eligible under the scheme. The scheme also offered sales tax incentives in the form of exemption from payment o....
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....the eligible period of incentive. However, in case the production is discontinued due to reason beyond the control of the management of the unit, the State Level Committee may consider representation in individual cases and condone the period of discontinuation of production. (c). The industrial undertaking availing incentive for its industrial unit having the project cost more than Rs. 10 crores shall have to contribute 2% of sales tax incentives availed in case of exemption and 3% of deferred amount in case of sales tax deferment every year to the "Gokul Gram Yojana". This contribution will be applicable during the period of incentive. A detailed procedure for such contribution will be laid down separately by the Government. (d). The industrial unit shall furnish details regarding production, employment or any other information which the State Government may require from it from time to time. (e). The unit which avails of incentive under the scheme shall have to employ local persons to the extent of 85% of all employees and 60%^ of managerial and supervisory staff as per the employment policy of the Government of Gujarat. The unit will be required to produce a list of persons ....
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....of which will be final and binding on the applicant unit. 2.4. That it appears that petitioner setup Oxygen Gas Plant in village Mamsa in Bhavnagar District, which was an area covered under the scheme. It appears that area in which, the unit was setup by the petitioner was categoryII of list Annexure A to the scheme. That the plant was setup by the petitioner during the operative period of the scheme and commercial production was commenced by the petitioner on 20.1.1999. That as the petitioner was considered to be eligible unit, the Industries Department of Government of Gujarat granted sales tax incentives registration and capital investment subsidy registration to the petitioner on 23.08.1999. That the Industries Department, Government of Gujarat also granted subsidy registration certificate to the petitioner in the month of August 2000. That the respondent no.3 informed the petitioner vide communication dated 6.7.2001 that for the reasons set out in the said letter, the petitioner's application for subsidy cannot be entertained. From the communication dated 6.7.2001, it appears that the said subsidy was denied on the ground that the plant and machinery have been procured by....
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....r 13 months i.e. during July 2000 to August 2001 and even thereafter also since February 2004 the unit is out of operation till April 2004. To the aforesaid, it was submitted on behalf of the petitioner that the petitioner was not in a position to operate the industries for few months, for which the petitioner is prepared to tender the explanation before the State Level Committee and the petitioner will also apply for condonation of such breaks. In view of the above, Division Bench of this Court observed that let the issue be considered by the State Level Committee. The Division Bench disposed of the aforesaid Special Civil Application by relegating the petitioner to make an application / representation setting out all relevant details and documents thereof regarding the new building and the new plant and machinery as well as break in manufacturing / production activity. It appears that thereafter the petitioner made detailed representation before the State Level Committee with a request for condonation of breaks. That the said representation was placed before the State Level Committee and same came to be considered by the State Level Committee in light of the direction issued and ....
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....er for condonation of the break is rejected. By way of draft amendment, the petitioner has also challenged the said decision of the State Level Committee dated 28.6.2006. 2.8. Feeling aggrieved and dissatisfied with the aforesaid order / decision of the State Level Committee in not condoning the break and consequently not granting the benefit of sales tax incentives etc. as provided under the scheme, the petitioner has preferred Special Civil Application under Article 226 of the Constitution of India. At this stage, it is required to be noted and so stated in the petition that as such against the assessment order under the Sales Tax Act, the petitioner had preferred appeal / appeals before the Appellate Authority which at the relevant time when the petition was filed, was pending. 3.0. Shri R.S. Sanjanawala, learned Senior Advocate for the petitioner has vehemently submitted that the impugned decision of the State Level Committee / concerned respondent in not granting the benefit under the scheme to the petitioner is absolutely illegal and most arbitrary. It is submitted that the State Level Committee has materially erred in refusing to condone the break and consequently denying ....
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....er the Scheme and therefore, the petitioner is entitled to sales tax incentives under the scheme for a period of five years i.e. upto 31.1.2004. 3.4. Shri R.S. Sanjanwala, learned Senior Advocate for the petitioner has further submitted that as such five years period expired on 31.1.2004 and therefore, the petitioner was not under obligation to run the unit thereafter. It is submitted that therefore, the findings that on 16.8.2004 when this Court has passed its first order and thereafter on 3.9.2004 when the petitioner made a representation, the petitioner was not undertaking' the production, is erroneous. It is submitted that on the ground that subsequently i.e. after 31.1.2004, the petitioner stopped the production, the prayer of the petitioner for condonation of break could not have been rejected. It is therefore, submitted that post five years period ought not to have considered by the Committee while considering the case of the petitioner for condonation of break in production at the relevant time. Shri R.S. Sanjanwala, learned senior advocate for the petitioner has heavily relied upon the following decision of the Hon'ble Supreme Court in the case of Mangalore Chemic....
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....ry and dehors the scheme. 4.1. Making above submissions, it is requested to dismiss the present petition. 5.0. Heard the learned advocates for the respective parties at length. At the outset, it is required to be noted that under the scheme, the State Government intended to provide capital investment subsidy and sales tax incentives as measures to attract investments into such backward areas with a view to generate greater employment in less industrially developed areas. It cannot be disputed that the benefit under the scheme was provided on fulfilling the conditions by the eligible industrial unit as provided under the said scheme. One of the condition was that the Industrial unit shall have to remain in production continuously at least till expiry of eligible period of incentives. In the present case, the eligible period of incentives was upto 30.1.2004. The scheme also provide that in case the production is discontinued due to reasons beyond the control of the management of the of the unit, the State Level Committee may consider representation in cases and condone the period of discontinuation of production. It is required to be noted that the State Level Committee was consist....
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....plication of the petitioner for condonation of break in production is rejected, cannot be said to be arbitrary or perverse, which calls for the interference of this Court under Article 226 of the Constitution of India. When it has been found by the State Level Committee that by condoning the break in production to the petitioner, the purpose and object of the scheme is not likely to be achieved i.e. generating employment in the backward area and thereafter when the application of the petitioner for condonation of break in production has been rejected, the same is not required to be interfered with in exercise of power under Article 226 of the Constitution of India. 6.0. Now, so far as the contention on behalf of the petitioner that impugned decision / communication dated 28.6.2006 is contrary to the interim direction issued by this Court issued in its order dated 5.5.2006 is concerned, the aforesaid has no substance. It is the case on behalf of the petitioner that while directing the State Level Committee to reconsider its earlier decision, the Division Bench in its interim direction / order dated 5.5.2006 specifically directed the State Level Committee not to consider the factum ....