TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1907
X X X X Extracts X X X X
X X X X Extracts X X X X
....payment of External Development Charges (EDC) and has further sought refund of Rs. 11,82,47,000/- paid by it in lieu of EDC and cess thereon, besides refund of Rs. 7,09,23,000/- paid towards licence fee. Both the reliefs have been sought on the premise that the petitioner has been exempted from such levies under the Industrial Policy, 2003. In the second writ petition, there is a challenge to the letters dated 14.10.2013 (P11) and 15.11.2013 (P12) requiring the petitioner-Company to obtain 'No Dues Certificate' from Greater Mohali Area Development Authority (GMADA) upon payment of External Development Charges and licence fee as a pre-condition for processing the Change of Land Use (CLU) despite exemption of Change of Land Use charges as well as other levies under the Industrial Policy, 2003. The petitioner has also assailed the letter dated 22.11.2012 (P13), asking it to obtain NDC from GMADA as a pre-condition for allowing concessions under the Punjab Apartment and Property Regulation Act, 1995 (in short, 'the PAPRA, 1995'). Similar challenge is laid to yet another letter dated 28.08.2012 (P18) requiring the petitioner to obtain NDC from GMADA as a pre-condition for approval of La....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of these benefits, the eligibility of each such park / estate / zone will be assessed and determined by the Empowered Committee for Industrial Approvals. Upon approval of the Committee, the Department of Industries will issue an eligibility certificate. 10.4.2 Change of land use Change of land use will not be required anywhere in the State except in the areas falling within the municipal limits, Chandigarh Capital periphery or planning or controlled areas and along the notified schedule roads and bye passes (as and when notified by Department of Housing & Urban Development). However, in the case of Industries being set up in the areas other than specified above, intimation by the Industries Department about the location of the proposed unit shall be sent to Chief Town Planner, Punjab, Department of Housing & Urban Development, so as to keep the data bank regarding land use updated. 10.4.3 Sale / Transfer of developed infrastructure There shall be no stamp duty on first sale/transfer of developed infrastructure by the developer in industrial parks / complexes as approved by the Department of Industries during the setting up of such areas and subsequently for a period of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the provisions of Punjab Mines & Mineral Act shall be allowed within the project area for works relating to development of the project. However, due charges will be payable. vi) High-rise buildings upto 45 mtrs. shall be allowed subject to Air Safety Regulations, Traffic Circulation and Fire Safety Norms. vii) Work contract tax on construction material required for the project shall be charged at minimum floor rate. viii) FAR or 2 shall be allowed for industrial and commercial purpose. However, the relevant Building Bye-laws/regulations shall be applicable to the area. The guidelines issued by the Department of Industries & Commerce for Industrial Parks shall also be applicable. ix) The State Government will try to ensure that connectivity to power, roads, accessibility, communication, civic and other infrastructure upto project is provided within 240 days from the date the same is applied for to the concerned department/agency/authority/local body on fulfillment of various terms and conditions required in this regard at such rates/fee etc. which shall not be less favourable to them compared to similarly placed projects/customers. x) The project of industrial park ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....implement its project for which the parties agreed to the terms and conditions as contained in Para-5 of the Agreement. Some of the agreed terms and conditions are as follows:- (i) The Company shall make an investment of Rs.952 crore including fixed capital investment of at least Rs.100 crore at one location, as defined by the Department of Industries under Industrial Policy, 2003, by setting up of Information Technology Parks projects in 125 acre of land at Mohali with an investment of about Rs.952 crore within a period of 3 years, effective from 29.03.2006. The said project shall have to be fully implemented and brought into commercial production within the said stipulated period. (ii) xxxx xxxx (iii) The project of Information Technology Park shall be further subject to the provision of the guidelines notified by Department of Industries & Commerce. Some of the relevant provision shall be:- a. A minimum of 60% of area will have to be developed as an industrial Pocket, a maximum of 30% of area may be developed as residential pocket and 10% of area can be developed as commercial pocket Government in the Department of Industries may however, reduce the permissible lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nment will try to ensure that connectivity to power, roads, accessibility, communication, civic and other infrastructure upto project is provided within 240 days from the date the same is applied for to the concerned department/agency/authority/local body on fulfillment of various terms and conditions required in this regard at such rates/fee etc. which shall not be less favourable to them compared to similarly placed projects/customers. j) The project of industrial park shall be exempted from PAPR Act. k) xxxx xxxx l) xxxx xxxx m) xxxx xxxx n) xxxx xxxx o) xxxx xxxx p) xxxx xxxx q) Proportionate cost of infrastructure development which will be carried out by the State Government in the area where project is located shall be borne by all the developers of Information Technology Park/Industrial Park proportionately." (emphasis applied) (8) Para-6 of the Agreement further says that :- "In case the above company fails to comply with provisions of para-5(i), 5(ii) & 5(iii) above, within the stipulated period mentioned therein, the concession enumerated in para-5(iv) above shall stand automatically withdrawn and the company shall have no claim or liability....
X X X X Extracts X X X X
X X X X Extracts X X X X
....standing dues were to the tune of Rs. 1917.41 lacs, which was payable in nine equated biannual instalments by 27.04.2016. (13) The petitioner is said to have made some more payments towards External Development Charges and in this manner a sum of Rs. 965.25 lacs remained outstanding as on 29.09.2014, due to non-payment whereof, show cause notice dated 29.09.2014 (P15) was served on it. The petitioner replied to the show-cause notice pointing out that as per the amicable settlement between the parties, a sum of Rs. 200 lacs was paid by it so that GMADA could clear the pending revised Layout Plan/Zoning Plans/Building Plans. The GMADA, however, did not accede to the petitioner's request and served it with the impugned memo dated 10.03.2015 (P17) informing that as per the Punjab Government policy, it was decided to recover the due amount along with interest etc. as per the revised schedule of payment mentioned therein, asking the petitioner to clear the outstanding dues in instalments by 09.10.2016. (14) While assailing the afore-mentioned demand orders, the petitioner's precise case is that the payments made by it have been wrongly appropriated by the respondents towards EDC as no ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Commerce has filed a short affidavit-cum-reply, admitting the fact that all the Mega Information Technology Parks Projects including that of the petitioner-Company were approved by the Empowered Committee in its meeting held on 29.03.2006 followed by the Agreement with the State Government on 11.10.2006. It is interestingly averred that in view of the amendment made in the Allocation of Business Rules on 16.03.2012, the cases/files of all such Projects approved by the Empowered Committee stood transferred to the Department of Information Technology vide letter dated 04.04.2013 and as such the detailed reply, if any, is to be filed by the Department of Information and Technology. (18) The Director-cum-Secretary, Department of Information Technology (respondent No.4) has filed a separate reply dated 08.04.2015, which again does not deal with any factual issue except pointing out that GMADA has raised a demand towards EDC and licence fee and the petitioner in its reply dated 10.11.2014 sent to the Department of Information Technology "has not taken the stand" that EDC or other fees having been exempted, are not payable by the petitioner. The only other reference made is to a letter d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to implement the Projects in public-interest. The Policy contemplates re-scheduling the payment of outstanding dues provided that 10% of the defaulted/due amount was paid. It was in terms of the aforestated policy that a revised demand notice dated 10.03.2015 (P17) was served on the petitioner according to which an amount of Rs. 2.26 crores was required to be deposited till 09.04.2015. The petitioner, instead of depositing the said amount, challenged the said demand notice, may be to thwart the payment of outstanding dues. It is also alleged that various complaints, oral and written, have been received against the petitionercompany from the general public/allottees for not honoring the commitments made to such allottees while selling the plots. (23) It has been reiterated that instead of investing Rs. 952 crores within a period of three years or within the extended period till September, 2012, the petitioner has admittedly invested only Rs. 154 crores till 31.03.2014 and is thus guilty of violating the Agreement as well as the basic objective of the Industrial Policy, 2003 which was aimed at providing cascading benefit to the people of the State and not to an individual company w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....11.10.2006 on the basis of the incentives and concessions provided for under the Industrial Policy, 2003 and which were further re-affirmed by the Letter of Intent dated 05.05.2006 (P3). The respondents are said to have made an unequivocal promise to give special package of incentives through the written agreement between the parties. The petitioner allegedly altered its position on account of the assurances given by the respondents and has already made a huge investment of Rs. 150 crores, therefore, the respondents cannot arbitrarily revoke or rescind the incentives and concessions in derogation of the promise given or to the disadvantage of the petitioner. Reliance was placed on two decisions of the Supreme Court in (i) Kasinka Trading & Anr. vs. Union of India & Anr. (1995) 1 SCC 274; (ii) State of Bihar vs. Kalyanpur Cement Ltd. case (supra); (ii) the only motivation for the petitioner-Company for entering into agreement with the respondents was the incentives to be given under the Industrial Policy, 2003 which expressly include exemption of payment of EDC, licence fee and CLU charges etc. The petitioner went ahead with the Project without making arrangements for any payment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essions "in the area" is defined and demarcated, the amount of proportionate cost to be apportioned by the petitioner cannot be determined. Furthermore, the liability towards proportionate cost of infrastructure-development in the area where the petitioner's project is located would be determined at an appropriate stage only after:- (a) the area where infrastructure has been developed is defined in metes and bounds; (b) the nature of infrastructure developed in such area is explained; (c) the cost incurred on each component of the infrastructure is quantified; (d) a fair and transparent criteria is evolved for proportionate distribution of such costs on all the beneficiaries, be that they be Industrial Parks Developers, commercial sites or allottees of residential plots within that defined area; No such exercise has been undertaken as may be seen from the impugned notices and the petitioner has not been apprised at all as to what is the criteria of proportionality; (viii) the respondents, especially GMADA have misdirected themselves by treating 'Infrastructure Development Costs' and 'External Development Charges' as one and the same thing. The components of infrastructu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the respondents itself permits to pay the same till 09.10.2016 which was yet to expire. The respondents have therefore, illegally and arbitrarily withheld the necessary approvals and permissions on the basis of an objection, which as per their own action, is premature; (xiii) the Agreement dated 11.10.2006 was entered into with the State Government through the Secretary, Department of Industries and Commerce, Punjab. The State Government has not rescinded the Agreement. GMADA which is a subservient statutory authority of the State, to whom the development works might have been entrusted, has no authority in law to proceed against the petitioner on the premise that the Agreement stands abrogated. GMADA being a developer like the petitioner, is indeed a competitor and cannot be allowed to sit over the Government decisions and to unilaterally determine the petitioner's liability. (28) Shri R.S. Khosla, learned senior counsel for GMADA and Shri Rajesh Bhardwaj, learned Addl. AG Punjab strenuously opposed the petitioner's claim, as according to them, the writ petitions are liable to be dismissed for the reasons that:- (i) Time is the Essence of the Contract and Clause-5(i) of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... this Court in Janta Land Promoter's case or Chandigarh Overseas Pvt.Ltd. case (supra) for the reason that there was no clause in the Agreements entered into between them and the State Government, obligating those developers to pay EDC or proportionate cost of infrastructure development. On the other hand, such a condition was expressly agreed to by the developer in the case of Hansa Tubes Pvt.Ltd. (supra) as also by the petitioner vide Agreement dated 11.10.2006. In fact, such a condition was conveyed to the petitioner, in no uncertain terms, vide LOI dated 05.05.2006 also [Clause (xvii) of P3]; (v) the exemption from PAPRA, 1995 was conditional and as the petitioner failed to perform the obligations agreed to by it, the exemption got automatically withdrawn; (vi) the petitioner was exempted from payment of licence fee in respect of the area of the project to be developed for industrial purposes and that exemption had never been withdrawn. There was no exemption from payment of licence fee qua the commercial or residential components and the demand raised against the petitioner pertains to the residential and commercial projects only; (vii) the petitioner itself is responsib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herefore, felt the need to formulate a law in order to check, control and regulate the activities of private colonizers and protect the interest of consumers. The Model Draft Bill circulated by Government of India on the same subject elucidated necessary guidance to the State Government to enact such a legislation. (30) Section 2 of the Act contains the definition clause, the relevant parts whereof have already been reproduced. Section 5 mandates that any promoter, who desires to develop a land into a colony, shall have to apply in the prescribed format with a prescribed fee to the competent authority for grant of permission. Its sub-sections (1), (5), (6) & (7) are reproduced below:- "(1) Any promoter, who desires to develop a land into a colony, shall make an application in the prescribed form alongwith the prescribed information and with the prescribed fee to the competent authority for grant of permission for the same and separate permission will be necessary for each colony. (2) xxxx xxxx (3) xxxx xxxx (4) xxxx xxxx (5) The promoter shall enter into agreement undertaking to pay proportionate development charges for External Development Works to be carried out by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....p) of PAPRA, 1995? ii) If so, whether the petitioner is exempted from payment of External Development Charges/Cost of Infrastructure Development in view of para 5(iv)(j) of the Agreement dated 11.10.2006 whereunder its project has been exempted from PAPRA, 1995? iii) What is the effect of para-6 of the Agreement dated 11.10.2006 on the petitioner's claim for exemption from payment of EDC and other charges? iv) Whether the time prescribed for completion of the project is the essence of contract, and if so, whether it would have any adverse effect on the petitioner's claims after the expiry of the extended period? v) Whether the respondents are bound by the principles of 'legitimate expectation' and 'promissory estoppel' and consequently are debarred from levying EDC on the petitioner? vi) Whether the action of the respondents in levying EDC/CLU/licence fee etc. is discriminatory, based upon arbitrary and irrational considerations? Point Nos.(i) & (ii) (34) For the correct appreciation of these issues, it is necessary to make reference firstly to Clause 10.4.1 of the Industrial Policy, 2003 which in so many words declared that in order to facilitate and encourage private....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ture Development" has been illustrated in para 5(iv)(e) of the Agreement, according to which, the 'Infrastructure Development' "would include roads (including approach roads), water supply and sewerage facilities, common effluent treatment facilities, telecom networks, generation and distribution of power, parking facilities, parks, street lights and such other facilities as are of common use for industrial activities which are identifiable and are to be commonly used". (37) From the comparative analysis of the above reproduced two expressions, there should remain no doubt that the 'Infrastructure Development' is a very expansive phrase which includes the 'External Development Works' as well. 'Infrastructure Development Works' are of wider configuration to include certain works which do not find mention amongst the 'External Development Works'. The State Government who alone is the competent authority to grant exemption from the provisions of PAPRA, 1995, while granting special package of incentives including exemption from PAPRA, 1995, has by way of a special clause fastened the liability of paying proportionate cost of infrastructure development on the petitioner. Such a special....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he petitioner having failed to honour the prescribed time schedule is not entitled to any concessions/incentives, merits rejection. The time limit was prescribed by the State Government while it entered into agreement with the petitioner on 11.10.2006. The State Government thereafter at its own has extended the time limit repeatedly and its latest policy dated 06.02.2015 (R3) conclusively establishes its inclination towards the completion of projects by granting concession/relief in the agreed time schedules, for which an offer has been made even to the petitioner also. Since the respondents themselves are not keen to adhere to the time schedule, we hold that GMADA has no authority to assume the role of State Government or to invoke Para 6 of the Agreement to say that the petitioner has lost its right to claim concessions due to the 'expiry' of time period, within which the project was required to be completed. Point No.(v) (41) The petitioner's claim that the respondents are estopped by their act and conduct from levying EDC or that after exemption from PAPRA, 1995, it legitimately expected not to be burdened with EDC has to be held to be misconceived and misdirected in view of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re allowed vide judgments dated 26.11.2010 and 09.09.2013 (P18 & P19). Contrarily, somewhat similar clause was inserted in the agreement dated 15.10.2007 between State of Punjab and M/s Hansa Tubes Pvt. Ltd. who challenged the levy of EDC and claimed parity with M/s Janta Land Promoters and Chandigarh Overseas. A Division Bench of this Court to which one of us (Surya Kant, J) was a member, turned down the plea of discrimination vide order dated 29.09.2014 passed in CWP No.23053 of 2010 (Hansa Tubes Pvt. Ltd. Vs. State of Punjab & Ors.) and held that :- "Thus, whereas in the agreement in Janta Lands' case, there was no specific qualification to the condition of ensuring connectivity to power, roads etc., in the present case, it is clearly stipulated that the proportionate costs of any infrastructure upgradation would be borne by the Company. Hence, as regards external development charges, both the cases run on their own facts, as per the agreements entered into by Government, with different companies. Therefore, as already held by us, external development charges are very much payable by the petitioner in the present case, even though they were not payable by M/s Janta L....
X X X X Extracts X X X X
X X X X Extracts X X X X
....etitioner's liability towards 'Punjab Urban Development Fund' is concerned, it is totally inescapable for the reasons that firstly the petitioner has been expressly declined such exemption of Section 32 of PAPRA, 1995 by way of Notification dated 29.10.2009. Secondly, the said notification is not under challenge in petitioner's both the writ petitions. Thirdly, there is even otherwise no prayer made by petitioner to exempt it from such statutory charge. Fourthly, the demand has an express statutory back-up. Save where the Court finds wrong with a provision of the Statute, it ought to be given full effect. (48) As a result of the above discussion and findings, it is reiterated that the petitioner is liable to pay proportionate cost towards infrastructure development works and all the 'External Development Works' as defined in PAPRA, 1995 are by implication included in the infrastructure development works. The inescapable consequence would be that the impugned recovery notices served on the petitioner are fully justified. (49) Having held so, we cannot be oblivious of the fact that the time schedule extended by the State Government under its new policy dated 06.02.2015 (R3), for gi....