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2016 (8) TMI 922
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....ive and in the event this court were to uphold the constitutional validity of the above provisions, then, they ought to be read down so as not to affect the sales tax incentives by way of deferral as availed by the petitioners. They would pray that this court should, therefore hold that the availment of the petitioners is in accordance with Package Scheme of Incentives, 1983, the agreements entered into pursuant thereto, the eligibility certificate and the certificate of entitlement issued thereunder. This court, therefore, should call for the records and proceedings of the petitioners' case and to quash and set aside the notice Annexure 'S' to the petition. There are other prayers and writs which claim a restraint and prohibition against the respondents so as to prevent them from enforcing the notice. 4. Before we proceed further, we would prefer to reproduce a copy of this notice. This notice Annexure 'S' at page 221 of the paper book is in the following terms:- "FORM 40 "Tilak Bhavan" 14-A, Navi Peth, Pune - 411 030 Notice to a person when it is proposed to pass an order which affects him adversely under section 55 or 57 of the Bombay Sales Tax....
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.... jelly filled telephone cables to 10,00,000 CKM at the petitioners' unit at Village Urse, Taluka Maval, District Pune. The Government of India, Ministry of Industry, Department of Industries Development, Secretariat for Industrial Approvals, by their letter dated 7th February, 1991 re-endorsed the capacity of the petitioners' industrial undertaking at village Urse, Taluka Maval, District Pune, for the manufacture of jelly filled telephone cables from 19(Tan) lakh CKM to 12(Twelve) lakh CKM. 9. Respondent no. 1 in continuation of past policies, formulated a scheme popularly known as the Package Scheme of Incentives, 1983. The said scheme was introduced under its Resolution No. IDL-1082/(4077) IND-8 dated 4th May, 1983. The purpose of the scheme was to achieve dispersal of industries outside the Bombay-Thane-Pune belt. Applications were invited from eligible units. 10. The petitioners made an application to the State Industrial and Investment Corporation of Maharashtra in the prescribed form for eligibility under Part I of the Package Scheme of Incentives, 1983 for a proposed new unit for manufacturing five lakh CKM jelly filled telephone cables at village Urse, Taluka ....
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....me of Incentives, 1983. The petitioners' unit fell in Group 'C'. The incentives available under the Package Scheme of Incentives, 1983 were that the petitioners were entitled to sales tax incentives by way of deferral of Rs. 1338.32 lakhs. The period of eligibility was five years from 1st April, 1990 to 30th April, 1995. The petitioners have since been manufacturing and selling their goods and have availed the sales tax incentives available under the Packaged Scheme of Incentives, 1983, the agreements entered into pursuant thereto, eligibility certificate and certificate of entitlement issued thereunder. 15. The petitioners have filed their returns and for the period 1st April, 1991 to 31st March, 1992, which forms the subject matter of the instant petition, have already been assessed by order of assessment dated 31st March, 1995 passed under section 33(3) of the Act. The claim of the petitioners towards sales tax incentives in view of the Package Scheme of Incentives, 1983, eligibility certificate and certificate of entitlement was examined and allowed by the assessing officer. Likewise, assessment under section 9(2) of the CST Act was finalised. 16. The petition....
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.... issue of EC 1983 Scheme, which is shown as Exhibit 'K' to the writ petition at page 143. Relying upon page 4 para 1 at page 146 of the petition that the petitioners had agreed for maximum production in their unit for manufacture of jelly filled telephone cables not exceeding 5 lakh CKMs per annum and the petitioner being aware the stipulations that the incentives under the scheme are relating only and exclusive to the eligible unit and only for the products and for maximum production at the eligible unit as considered admissible under the eligible certificate to be issued to the petitioners, it is not open to the petitioners to argue otherwise. The eligibility certificate is then referred in para 4 and it is stated that the petitioners were aware that they are eligible for sales tax incentives to the extent of 5 lakhs CKMs per annum only. It is stated that the Additional Commissioner of Sales Tax, Pune Zone, on scrutiny of the assessment and appeal record of the petitioners for the period from 1st April, 1991 to 31st March, 1992, observed that the petitioners' total sale of jelly filled telephone cable products for value of Rs. 75, 75, 47, 016/- were allowed for deferr....
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....aw benefits. 7. I say and submit that the Rules under Section 41 D of the B. S. T. Act, 1959 have since been framed and published on 31st May, 1996. During the time, the 1979 Scheme 1983 Scheme and 1988 Scheme were inforce, certain restrictions were specified by the Government of India under the Industrial Development and Regulation Act. These restrictions inter alia provided that no unit will produce more than the capacity prescribed for such unit under the industrial Licence issued to it. In other words production in excess of licenced capacity was prohibited. This was a law inforce as passed by the parliament. It will not be proper for the State Government to grant incentive to production in excess of the licenced capacity as such grant would be contrary to the spirit and letter of the Industrial Development and Regulation Act. It was necessary that such incentive should be related to the licenced capacity of the unit. For such reason the section has been enacted and Rules have been framed. Thus I say and submit that the provisions of section 41 D are valid piece of Legislature introduced in the interest of public." 22. Thus, it is submitted that there are remedies availab....
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....Entitlement were issued by the Respondents. I say that the doctrine of promissory estoppel is clearly applicable in the instant case and the Respondents cannot take actions at variance with the prescribed conditions, which are to the detriment of the petitioners. I say that the Petitioners have acted on the representations made by the respondents in the Package Scheme of Incentives 1983, the Agreement entered in pursuance thereto, the eligibility Certificate and Certificate of Entitlement issued thereunder and altered their position and it is therefore not permissible for the Respondents to resile from their promises or representations to the prejudice, of the Petitioners. 6. I say that the Petitioners interalia carry on the business of manufacture and sale of Jelly Filled Telephone Cables and Insulated Electrical Wires. I say that the Government of India, Ministry of Industry, Department of Industrial Development, Secretariat for Industrial Approvals had by their letter dated 7th February, 1991 communicated approval of expansion from 5,00,000 CKM of Jelly Filled Telephone Cables to 7,00,000 CKM of Jelly Filled Telephone Cables at village Urse. I say that this letter is annexed ....
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....ks for the purpose of clarification and thereby avoiding misinterpretation by the dealers to claim more benefits than what they are entitled as per the Scheme. The amendments merely have provided the procedure and the substance thereof is in consonance and conformity with the Package Schemes announced from time to time. Without admitting that the amendment in any manner sought to levy taxes retrospectively, it is within the competence of the legislature to enforce fiscal statutes retrospectively when clear intention thereof is found in the enactment, especially when it is clarificatory in nature, as also the principles of promissory estoppel does not apply to Statutory enactment when the same is in larger interest of the society. The amendments have been brought to avoid large scale, excessive or unlimited claims of incentives irrespective of the sanction as per eligibility and entitlement certificates and contrary to the principles of the Schemes. The Petitioner is seeking to interpret the scheme in the sense that the moment the eligibility certificate and entitlement certificate are obtained, it gets unlimited and unfettered right to claim entire sales tax exemption or deferment ....
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....It is, therefore, unwarranted on the part of the petitioners to challenge the amendment, which, in fact, confer additional benefits on them rather than curtailment thereof. It is stated that the continuation or curtailment of the incentives is sole discretion of the respondents considering the facts and circumstances, keeping in view its budgetary constraints and need for promotion and decentralization of industries. The respondents submit that the quantity up to which the petitioners are eligible to claim benefits in the eligibility certificate is explicit and patent. It is known to the petitioners. It is not correct to say that the eligibility certificate is silent about the quantity up to which the incentives will be available. The Petitioners claimed incentives in excess of the permissible limit mentioned in the eligibility certificate. As provided in the scheme, it does not confer any right on the petitioners to claim incentives unless they obtain eligibility certificate for such expansion or installation of a factory in such areas. For the additional capacity, the petitioners have not obtained the eligibility certificate. Therefore, they are not entitled to extension of the b....
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....titioners exhausted the financial ceiling of Rs. 1338.32 crores on 31st January, 1994. The assessing authority, while passing the order of assessment for the period 1991-92 and the appellate authority followed Rule 31B/C that prevailed during the relevant period. 32. Mr. Joshi further submitted that Section 41D was inserted on 1st October, 1995 while the order of assessment was passed on 31st March, 1995. Therefore, the said section cannot have any application especially when the required rule was not even framed till 31st May, 1996 by insertion of Rule 31AAA. 33. Mr. Joshi further submitted that while the proposed revision action referred to the entitlement certificate as mentioned in notice in Form 40 dated 3rd October, 1997, the respondent finding that revisional action cannot be defended, a new case is sought to be made out by referring to column 5 of the eligibility certificate. Such an action cannot be permissible especially when the basic jurisdiction of initiation of revisional proceedings is under challenge. 34. The reliance of the respondents on column 5 of the eligibility certificate is also erroneous and contrary to the law laid down by this court in the case o....
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.... urging that the impugned notice is not without jurisdiction as falsely contended. Mr. Sonpal urges that:- (a) Section 41D is not scheme specific and provides for restriction in respect of all schemes prior to and after the amendment. (b) The notice under section 57 does not refer to section 41D or Rule 13AAA. (c) The agreements, the eligibility certificate and entitlement read together clearly demonstrate that there is ceiling to the maximum quantity that can be covered for availment of incentives irrespective of section 41D or Rule 13AAA. (d) The challenge to constitutional validity or legislative competence does not survive in view of the field of legislation under Entry 54 of List II of Seventh Schedule is not transgressed. (e) The notice under section 57 is within thepowers expressly provided by the BST Act and therefore, it cannot be claimed that the notice is without jurisdiction. (f) The amendment is in no way imposing fresh levy in the present context inasmuch as the scheme, agreement, eligibility certificate and entitlement certificate clearly provided for ceiling of maximum production. (g) The provisions in the present context are statutory incorpora....
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....to say incentives are in respect of the eligible unit of the petitioners as approved and not for whole turnover of the petitioners from every unit other than at the village Urse. (r) The permission of Central Government to increase production from 5 lacs to 10 lacs was not a project specific at Urse village but petitioners specific which expanded present capacity from 5 lacs at Pimpri in Haveli taluka to additional 5 lacs at Urse village at Maval taluke totaling to 10 lacs. Another expansion of two lacs is also petitioners specific and not unit specific. (s) It is not the case of the petitioners that excess production over 5 lacs CKM is related only to the Urse unit. (t) The principle of promissory estoppel is not applicable in the present facts and circumstances as supported by the judicial precedents. 39. With the assistance of both counsel appearing for both sides, we have perused the writ petition and the annexures thereto. We have also perused the affidavits placed on record. We have also perused the relevant statutory provisions and the decisions. 40. The facts have already been recorded in detatils. 41. In this case, we are concerned with the Package Scheme....
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....idered eligible for incentives under the 1983 Scheme if it satisfies the conditions set out at internal page 4 running page 78 of the paper book. The units which may have filed on or before 31st March, 1983 applications for eligibility under the 1979 Scheme are advised to approach the concerned implementing agencies regarding their eligibility. Such units may not be considered eligible under the 1983 scheme. However, decision regarding eligibility in such cases will depend on facts of each case to be decided by the implementing agencies. There are two types of incentives - (a) Part - I which includes special capital incentives and (b) Part - II. Both parts of the incentives are mutually exclusive and no unit will be eligible to get both the incentives simultaneously. The option once exercised hereunder shall be final and binding on the unit. These incentives and particularly with regard to sales tax read as under:- "INCENTIVES UNDER PART I For New Units (including a Pioneer Unit which is a New Unit) A new eligible unit under Part I will be entitled to: (i) Sales Tax Incentive either by way of exemption or by way of deferral; and (ii) Special Capital Incentive. For....
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....sed so as to encourage dispersal of the industries. That was also evolved so as to de-congest certain areas. Then what we have is the form of application for eligibility styled as Form No. 1. The petitioners filled in this application in the prescribed form for eligibility under Part - I of the 1983 Scheme of Incentives. That was in connection with their proposed new unit for manufacturing 5 lacs CKM jelly filled telephone cables at Village Urse, Taluka Maval, District Pune. The petitioners pointed out in that application that they are public limited company. It is a light engineering industry and project, for which, registration is obtained for manufacture of jelly filled telephone cables. The petitioners also pointed out that they are informally in possession of land. Agreement for sale has already been signed, sale deed and conveyance will be effected on 29th February, 1998. The permission for non agricultural use has been granted by the Government. They pointed out that their registration authority is the Ministry of Industry, Department of Industrial Development and they have obtained registration on 26th May, 1987. Their annual capacity is 5 lacs CKM for this proposed unit. T....
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....oduction at the eligible unit as considered admissible under the Eligible Certificate to be issued to him." 49. A bare perusal thereof would indicate that the petitioners have confirmed that they are aware of the incentives available under this scheme are relating only and exclusively to the eligible unit and only for the products and for maximum production at the eligible unit as considered admissible under the eligibility certificate to be issued to it. Thereafter, there are various clauses and which would bind the parties. 50. We have also before us the agreement dated 18th August, 1988 and which records that the petitioner company would get Rs. 20 lacs as special capital incentives or such similar amount as may be found admissible. Then, what we have before us is the incentives under part I of the 1983 Scheme as notified and that is Annexure 'N' at page 174 of the paper book. That states in clause (11) that maximum entitlement of sales tax incentive by way of deferral not to exceed Rs. 1338.32 lacs. The validity period was stipulated as 1st May, 1990 to 30th April, 1995. The terms and conditions, based on which the eligibility certificate is issued, are found in t....
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.... under:- "GIST OF ORDER M/s Finolex Cables Ltd. R.C.No. : N 25 H 336 Period : 1.4.91 to 31.3.92 On scrutiny of Assessment order dated 31.3.95 passed by Sr. Asstt. Commr. Of Sales Tax (Assessment) A- 22, Pune Division R. C. No. N-25-H-336/MAH N 25 F-1959 for the period 1.4.91 to 31.3.92 under the B.S.T. & C.S.T. Act and Appeal order No. DC/APP/PN/A-91/95-96/761 dated 18.3.96 under B.S.T. Act 1959 and No.DC/APP/PN/ CA-66/95-96/762 dated 18.3.96 passed by the Dy. Commr. Of Sales Tax (Appeals) Pune, it is observed that while assessing the dealer total sales of jelly filled telephone cable products for value of Rs. 75,75,47,016/- were allowed for deferent under 31-B whereas the admissible sales as per the Entitlement Certificate (Capacity 5 lakhs K. M.) for which the sale value arrives only at Rs. 45,45,00,000/-. Thus the sales of jelly filled telephone cable produced & sold in excess of 5,00,000 K. M. has become taxable since it is produced in excess of production capacity ceiling. In view of the above facts, the Sr. Asstt. Commr. Of Sales Tax (Assessment) A-22, Pune Division, Pune has not applied his mind properly while allowing all sales for defertment. Had the Sr. ....
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....ailed of by any eligible unit in contravention of sub-section (1) shall be and shall be deemed to have been withdrawn and such Unit shall be liable to pay the tax n respect of sales or purchases, in so far as they relate to such excess production referred to in sub-section (1). Rule 31AAA. Appraisal of annual production capacity. - The annual production capacity of an eligible unit to whom the eligibility certificate has been granted under any package scheme of incentives, shall, in respect of any period commencing on or after the 1st January 1980, be taken to be as shown in the table below:- Serial No. Package Scheme of Incentives Type of unit Annual production capacity 1 1979 Scheme (a) Small-scale industrial units including (a) small-scale units manufacturing electronics equipments; No ceiling in respect of annual production capacity. (b) Medium scale and large scale units. (b) Capacity means 125 per cent of the capacity as indicated in the registration certificate or licence issued by the competent authority under the Scheme or the capacity as appraised by the term le....
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....gle Judge of this court in the case of Maharashtra Metal Powders Private Limited (supra). There, somewhat identical controversy was dealt with by the learned Single Judge. Paras 2, 3, 4, 7, 9, 10 and 12 of this decision read as under:- 3. It does not appear to be in dispute that the petitioner installed additional machinery in December, 1987 by availing a further loan of Rs. 10 lacs, and stepped up their production beyond 300 MT per annum and availed sales tax exemption for 398.963 MT for period from 01.07.1986 to 30.06.1989, 612.812 MT for period from 01.07.1987 to 30.06.1988, 557.261 MT for period from 01.07.1988 to 30.06.1989. Thus, in the three years amount of excess sales tax exemption incentive availed was Rs. 2.11 lacs for 98.963 MT in the first year, Rs. 6.03 lacs for 312.802 MT in the second year and Rs. 7.38 lacs for 257.261 MT in the third year, in all Rs. 15.52 lacs. It is not in dispute that the total exemption availed had not exceeded Rs. 70.08 lacs. 4. It is likewise not in dispute that the Sales Tax Officer concerned had assessed petitioners liability to pay sales tax for all those three years, and, by orders dated 16.03.1990 and 30.03.1992, held the petitione....
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....r new unit set up at Village : Moregaon, Dist : Bhandara for manufacture of Pyrotechnic Aluminium Powder, 300 M.T. Per annum involving Fixed Capital Investment of Rs. 82.45 lacs approved as detailed on prepage. 2. The period of this Eligibility Certificate shall stand automatically curtailed (i) from the point of time when the total sales tax incentive admissible under the Scheme/ the sales tax incentive as per the entitlement under the scheme availed of/ drawn exceeds the limits laid down in Clauses 2.13/ 5.3 of paras 1 and 2 of the Deferral Scheme notified under Government Resolution, No. IDL7082/ (3559)IND8, dated July 5, 1982, namely eighty five percent of the Gross Value of Fixed Capital Investment of Rs. 82.45 lacs i.e. Rs. 70.08 lacs of Rs. 82.45 lacs. OR (ii) from the date from which the Certificate of Entitlement issued by the Commissioner of Sales Tax is cancelled or revoked, whichever event occur earlier." 60. Then, the court dealt with the rival contentions from para 20 and held thus:- 20. I have considered the contention of the learned Assistant Government Pleader about applicability of this Rule 6.2 and find that it has no relevance to the petitioner....
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....se (7) is about various sales tax registration, clause (8) mentions a date of commencement of the production and clause (9) states the Sales Tax Officer with whom returns are to be filed. Thus, the reference to 300 MT per annum in Clause (5) of this certificate is merely descriptive of the goods to be produced and is not a condition of eligibility. The conditions, subject to which Eligibility Certificate was granted, are enumerated separately in the certificate itself and those do not refer conditions to any ceiling on production. 23. The revenue would have been entitled to deny the benefits of the incentive granted to the petitioner only upon showing that there was a condition putting ceiling on the annual production and that such condition was breached. In the absence of any such stipulation in the two certificates issued, in the two schemes as also the indentures, it would not be open to the revenue to put such an additional restriction, particularly when the petitioner has not claimed any additional capital incentive for the additional investment of Rs. 10 lacs made for augmenting capacity in December, 1987. 61. A letters patent appeal was filed to challenge this order be....
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....red above. 64. The petitioners have also relied upon a Division Bench judgment of this court in the case of Commissioner of Sales Tax, Mumbai vs. PCE VEE Textile Ltd. (2009) 26 VST 281. The facts and circumstances of that case were also identical. It is in this backdrop that the Division Bench, from paras 15 onwards, held as under:- 15. It is pertinent to note that the 1993 Scheme was initially made applicable only to the new units /pioneer units / prestigious units established in the backward area. However, para 3.8(I)(i)(c) of 1993 scheme reads as follows:- "3.8 Gross Fixed Capital Investment (I) Gross Fixed Capital Investment shall mean and include, in the case of: (i) New Fixed Assets - The value of new Fixed Assets acquired at site and paid for Explanation- (a) ......... (b) ......... (c) Any acquisition of new Fixed Assets outside the project scheme accepted by the Implementing Agency can be considered for the purposes of proportionate incentives during the residual eligible period provided such acquisition is not less than 25% of the Gross Fixed Capital Investment at the end of the previous financial year of the Eligible Unit." Thus, para 3.8 (I)(i....
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.... incentives which the existing unit is entitled to and the period within which those incentives could be availed. Neither para 3.8(I)(i)(c) nor any other provision under the 1993 scheme nor any provision under the BST Act / CST Act provide for utilization of the incentives in each year proportionately on the finished products attributable to the fixed assets newly acquired by the Existing Unit. 17. In these circumstances, the question to be considered is, whether the Deputy Commissioner of Sales Tax after determining the quantum of incentives and the time period during which the said incentives could be availed, was justified in inserting conditions (i) and (m) in the Entitlement Certificate so as to impose ceiling on the utilization of the incentives per year? In other words, the question is, if the grant of incentives to an existing unit under the 1993 scheme is based on newly acquired fixed assets and not on the production capacity of the newly acquired fixed assets, whether the Deputy Commissioner of Sales Tax could impose conditions to the effect that the said incentives can be availed proportionately to the production of the finished products attributable to the newly acqu....
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....stood originally, did provide for availing the incentives by a unit acquiring new fixed assets outside the project scheme on proportionate basis. However, that para has been substituted with effect from 6/7/1994 and in the newly substituted para 3.8 I(i)(c) the provision for availing the incentives on proportionate basis has been completely omitted. Thus, the 1993 scheme as amended in 1994 makes a specific departure from the earlier schemes and provides for availing the incentives not on the proportionate basis but on the total production of the Existing Unit. In these circumstances, imposing conditions for availing the incentives on prorata basis would be contrary to the 1993 scheme of incentives. 21. It is, however, contended by the learned A.G.P. that since the incentives as per para 5.1 (I)(A)(iii) of the 1993 scheme are available on the finished products and definition of the term 'finished products' contained in para 3.6 of the 1993 scheme read with Rule 31B of the Bombay Sales Tax Rules, 1959, ('BST Rules' for short) require every unit to maintain separate books of account in respect of the finished products, it is abundantly clear that the incentives under the 1993 schem....
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....by that State Government. In the present case, neither the 1993 Scheme nor the B.S.T. Act nor the B.S.T. Rules contain a provision for availing the incentives on prorata basis. Moreover, Section 41BB inserted to the B.S.T. Act by Finance Act, 2001 specifically requires the State Government to prescribe the ratio for availing of the incentives on prorata basis and admittedly, till date the State Government has not prescribed the ratio for availing the incentives by different classes of dealers under different schemes. Thus, the decision of the Apex Court in the case of Mahim Patram Private Limited (supra) is wholly distinguishable on facts. Therefore, in the absence of any provision under the 1993 scheme and alternatively, in the absence of any ratio prescribed by the State Government by framing Rules, it was not open to the Deputy Commissioner of Sales Tax to direct the assessee to avail the incentives under the 1993 scheme in proportion to the production attributable to the newly acquired fixed assets. 65. The only argument of Mr. Sonpal is that clause 2 of the agreement entered into with the Governor of Maharashtra Annexure 'K' dated 18th August, 1988 would enable the ....
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....riod 1991-92 and the appellate authority, followed Rule 31B/C. Once section 41D was inserted on 1st October, 1995, while the order of assessment was passed on 31st March, 1995, then, we do not think that against such a finalised process and assessment, the amended provisions can be invoked. Mr. Joshi is right in relying upon the order passed by the Nagpur Bench of this court in Letters Patent Appeal No. 305 of 2011 decided on 24th November, 2015. In the view thereof, column 5 of the eligibility certificate cannot be relied upon. The Division Bench held thus:- 1. Heard Ms Bharti Dangre, learned Government Pleader for appellant and Mr S. P. Dharmadhikari, learned Senior Advocate for respondent at length. Perused the eligibility certificate and impugned judgment delivered by the learned single Judge. 2. Learned Government Pleader submits that augmentation in production capacity by Rs. 10 lacs ought to have been treated as an expansion and, therefore, the concession flowing from 1979 Package Scheme of Incentives is erroneously held available to the respondents. Second contention is, as the production capacity exceeded 300 MT per annum, the condition of eligibility was again breac....
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.... policy contained in 1988 Package Scheme. Identical arguments were advanced by these very learned counsels for parties appearing in those proceedings also. Facts of these proceedings are more or less similar to the facts of the said case. In that case also the petitioners had set up an industrial unit to manufacture electrical goods at village Mahim, Taluka Palghar, District Thane, an area declared as backward, with a view to avail of the exemption method of the assessment tax under the 1988 Scheme. The said scheme was similar or one may even call identical with the Scheme of 1983 with which presently we are concerned. Both the schemes were introduced by the State Government with a view to achieve dispersal of industries outside the Mumbai-Pune-Thane belt. To attract these units to the under developed and developing areas, the State Government had evolved a Package Scheme of Incentives to new units set up in the developing regions. 26. In view of introduction of Rule 31AA to the Act and Rules having effect from 1st January, 1980, petitioners in that case had challenged the Constitutional validity of Section 41B and Rule 31AA by contending that the petitioners' vested right i....
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....Therefore, the CQB availed of by a unit covered under the 1988 Scheme, as per para 2.11 of the 1988 GR had to be computed on the basis of the tax payable by a unit not covered under the 1988 Scheme as per the provisions including the exemption provisions contained in the BST Act/BST Rules. 32. The expression "computed at the maximum rates of tax under the local sales tax law" clearly denotes that the computation is not referable to the rate of tax specified in the Schedule to the BST Act, but is referable to the maximum rate of tax payable in view of the exemption provisions contained under local sales tax law. By using the wider expression "local sales tax law", it is amply made clear in para 2.11 that it is the tax which is actually payable by a unit not covered under the 1988 Scheme should be the basis for calculating the CQB availed of by a unit covered under the 1988 Scheme. Para 2.11 of the 1988 GR cannot be construed to mean that the computation of tax has to be made by ignoring the exemption provisions contained in the BST Act/BST Rules. When a notification issued under section 41 of the BST Act grants partial exemption, then the tax payable pursuant to the notification ....
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....covered under the 1988 Scheme as per the local sales tax law including the exemption provisions contained in the BST Act/BST Rules. Once it is held that para 2.11 of the 1988 GR provides for computation of notional tax liability on the basis of the tax actually payable by a unit not covered under the 1988 Scheme under the provisions of th sales tax law which includes the exemption provisions contained under the BST Act/BST Rules, then it would have to be held that rule 31AA inserted with effect from March 24, 1995 to the extent it directs the Commissioner to compute the CQB by ignoring the exemption provisions is bad in law. The reason being that the petitioners had established a unit in the backward area on the assurance contained in the 1988 GR to the effect that the CQB would be computed at the maximum rates specified under the local sales tax law and not at the rate specified in the Schedule to the BST Act. The said terms and conditions which forms the basis for entering into a contract between the State Government and the petitioners could not be altered retrospectively by introducing rule 31AA with effect from March 24, 1995. 27. ..... 28. ..... 29. Before conclud....