TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 1521
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....ppearing on behalf of the Finance and Taxation Department of the Government of Assam. 2. Both the writ petitions are taken up together taking into account the similarity of the issues involved. At the outset, it is relevant to take note of WP(C) No.6977/2015 which relates to the assessment year 2005-2006 and WP(C) No.6978/2015 which relates to the assessment years 2006-07; 2007-08; 2008-09; 2009-2010 and 2010-11. 3. The facts as could be discerned from the writ petitions are that the petitioner is a registered dealer under the provisions of the Assam Value Added Tax Act, 2003 (for short, 'the Act of 2003') and the Central Sales Tax Act, 1956 (for short, 'the Act of 1956'). The Government of Assam had formulated an Industrial Policy in the year 1997 with the goal to provide an effective thrust to expeditious promotion and growth of all industries with a view to creating a strong industrial base and employment opportunities in various directions. In the said Industrial Policy of 1997, the State of Assam had formulated a package of incentives for promotion and setting up of industrial units and revitalization of sick industrial units in the State. The period of said new package ....
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....plementing Agency as per the said clause in respect to SSI sector shall be the Director of Industries, District Industries Centres and for the medium and large scale sector, it would be AIDC Ltd. 4. Chapter 5 of the said Industrial Policy Resolutions, 1997 stipulates the package of incentives. Amongst the various incentives granted under the said Industrial Policy of 1997, Sales Tax Exemption was one of it. Clause 5.4 of the said Industrial Policy Resolutions relates to the incentive of stipulates sales tax exemption. The said Clause 5.4 being relevant for the purpose of the instant dispute is reproduced herein under:- "5.4 SALES TAX EXEMPTION All new units and existing units going in for expansion/diversification/modernsation will be granted sales tax exemption for sale of finished products and purchase of raw materials as per following scale : Category SSI/Tiny/SSSBEs Medium and Large New unit 7 years subject to maximum of 150% of fixed capital 7 years subject to maximum of 100 % of fixed capital investment 7 years subject to maximum of 150% of fixed capital 7 years subject to maximum of 100 % of fixed capital investment Units undergoing ....
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....er State trade or commerce. Therefore, the definition contained in Section 2 (22) of the Act of 1993, i.e. the definition of 'manufacture' became very relevant. 7. In terms with the said Scheme of 1997, more particularly Clause 2, the eligibility criteria was defined. A perusal of the said Clause stipulates that the eligible industrial units in Category A industries are new industrial units, Category B are those industries which carry out expansion, modernization and diversification to the minimum extent of 25% increased in fixed assets at the same location or at other place in the State of Assam. Emphasis has been laid that their commercial production had to be after 01.04.1997. Category C are those industries which were declared as relief undertaking by the Government of Assam under the Assam Industrial Relief Undertaking (Special Provisions) Act, 1984 or units declared sick by the State Government/Director of Industries under any Scheme/Act of the Government of Assam. It is also seen from the said Scheme of 1997 that there are certain categories of industries which were not eligible for any benefit under the said Scheme of 1997. From the said list, it appears that originally ....
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.... the Certificate of Authorization. The Certificate of Authorization would be issued only to those industrial units granted the Eligibility Certificate and subject to further verification to be carried out by the Assessing Officer in terms with Sub-Clause (b) of Clause 7.I of the Scheme of 1997.. Sub-clause (c) stipulates that the Assessing Officer shall have the authority to withhold the issuance of the certificate of authorization or refuse to grant it if the application and the documents accompanying therewith are not found to be in order and the conditions laid down for the purpose are not fulfilled or if any information furnished is not correct. Clause 7.III stipulates renewal of Certificate of Authorization. A perusal of the said clause which also has a vital significance for disposal of the instant writ petition shows that the Certificate of Authorization shall remain valid for a year only, i.e. up to the end of financial year and thereafter shall be renewed after examination of annual return for each financial year or for a fraction of the financial year till the eligible industrial unit reaches the maximum permissible limit of sales tax exemption as specified in the Clause ....
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....ificate on the face of it, was contrary to the Clause 7.III of the Scheme of 1997 in as much as the Certificate of Authorization as per the said clause was to remain valid for 1 year only and was to be renewed after examination of annual return for each financial year. 10. It is also seen from the records that the petitioner started production of soda water w.e.f 04.09.2002 and again applied to the Director of Industries and Commerce, Assam for issuance of additional Eligibility Certificate under the Industrial Policy of 1997 and to specify and control the additional incentive due to them as promised in the said Industrial Policy of 1997. On such request made, an Eligibility Certificate was issued on 30.09.2004 in favour of the petitioner by the Director of Industries and Commerce, Assam for undergoing expansion, modernization or diversification and amongst the finished products which were earlier three, i.e. packaged drinking water, pet jars and pet bottles; soda water was also brought within the fold of the finished products. A Certificate of Authorization was also issued by the Senior Superintendant of Taxes whereby apart from the three finished products, the soda water was a....
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....f 2003 to substitute the said Scheme for the period commencing on or after appointed day. The proviso added to Section 109 (4) of the Act of 2003 stipulates that eligible unit would be entitled to retain the part or the whole of the tax collected by way of subsidy from the Government subject to its entitlement. This proviso was added to bring the sales tax exemption in conformity with the Tax Remission Scheme. 13. The State of Assam accordingly, in terms with the Sub-Section (4) of Section 109 of the Act of 2003 formulated the Assam Industries (Tax Remission) Scheme, 2005 thereby substituting the Scheme of 1997. The said Assam Industries (Tax Remission) Scheme, 2005 is hereinafter for the sake of convenience referred to as "the Scheme of 2005". A perusal of the said Scheme of 2005 would reveal that the said Scheme was framed for continuing the conferment of benefits being enjoyed by eligible industrial units under the Scheme of 1997 by way of remission of tax to those units in conformity with the provisions of the Act of 2003 in the manner specified therein. Therefore, it would be seen that the power conferred upon the Government to formulate a Scheme in terms with Section 109 (....
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.... commencement of the Act of 2003 has to make an application in the format appended to the Scheme of 2005 to the prescribed authority within one month from the date of commencement of the Act of 2003. However, the delay in submitting the application can be condoned by the prescribed authority for sufficient reason. It further stipulates that upon receipt of the application, the prescribed authority after satisfying himself that the application is correct and complete in all respect shall issue a Certificate of Entitlement in the Format-II appended to the Scheme of 2005 in lieu of the Certificate of Authorization, ordinarily within 30 days. It also stipulates that the said Certificate of Entitlement shall be issued for a financial year only. Clause 4 (2) of the Scheme of 2005 stipulates that those eligible industrial units which are not holding the Certificate of Authorization in terms with the Scheme of 1997 can also apply so in the same manner as was required to be applied by an eligible industrial unit holding the Certificate of Authorization issued under the Scheme of 1997. In terms of sub-clause (d) of Clause 4 (2) of the Scheme of 2005, the prescribed authority could withhold t....
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....de by two separate orders by the Appellate Authority dated 17.06.2014. Thereupon, the Assessing Officer preferred a revision before the Commissioner of Taxes. Vide the impugned order dated 11.08.2015, the order dated 17.06.2014 passed by the Appellate Authority was set aside by the Additional Commissioner of Taxes in so far as it related to exemption of tax allowed on sale of packaged drinking water. However, relief was granted for tax remission to the petitioner in respect of sale of pet bottles, pet jars and soda water. In respect to the five reassessment order passed on 31.05.2014 pertaining to the assessment year 2006-2007; 2007-2008; 2008-2009; 2009-2010 and 2010-2011, the petitioner preferred ten revision petitions before the Commissioner of Taxes challenging the said five re-assessment orders dated 31.05.2014. Vide a common order dated 11.08.2015, the Additional Commissioner of Taxes disposed of the said revision petitions thereby denying the claim for tax remission on sale of packaged drinking water. The Additional Commissioner of Taxes, however, granted the relief of tax remission to the petitioner in respect of the sale of pet bottles, pet jars and soda water and also in ....
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....tion was upheld by this Court in the case of NE Packaged Drinking Water Manufacturer's Association and Others vs. the State of Assam and Another, reported in (2013) 2 GLR 557. It was therefore stated that there is no infirmity in the impugned order dated 11.08.2015 whereby the benefit of tax remission was denied in respect to the packaged drinking water was concerned. 20. The records also reveal that the Industries Department of the Government of Assam had also filed an affidavit-in-opposition wherein a similar stand has been taken to what was taken by the Commissioner of Taxes in it affidavit-in-opposition. It was categorically stated that the Certificate of Eligibility, in so far as packaged drinking water was concerned was granted erroneously without taking into consideration that conversion of raw water into packed drinking water would not come within the ambit of manufacture. 21. The record further reveals a common affidavit-in-reply was filed by the petitioner to the affidavit-in-opposition of both the Commissioner of Taxes as well as the Industries Department reiterating its stand taken in the writ petitions. In the affidavit-in-reply, the petitioner's stand was that t....
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....y applied for the grant of the Certificate of Entitlement which for unlawful reasons was withheld by the respondent authorities. Be that as it may, it was also submitted that granting of the tax remission by the Respondent Authorities in terms with the impugned order dated 11.08.2015 in respect to soda water, pet bottles and pet jars would also clearly show that non-granting of the Certificate of Entitlement was not the issue. The dispute herein is not granting of tax remission on sale of packaged drinking water. The learned senior counsel, therefore, placed reliance upon Paragraph Nos.22 & 23 of the judgment in the case of Vadilal Chemicals Ltd. (supra). 24. The learned Senior Counsel further submitted that both the Respondent Authorities, i.e. the Industries Department as well as the Taxation Department of the Government of Assam after due application of mind had held that the conversion of raw water into packaged drinking water would come within the ambit of manufacture and on the basis thereof, had issued the Certificate of Eligibility and the Authorization Certificate. The application filed by the petitioner on 21.09.2005 for grant of the Certificate of Entitlement was neve....
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....of finished products manufactured by the unit. The learned Standing Counsel, therefore, submitted that there has to be manufacture of finished goods for the purpose of granting the benefit of the exemption. The learned Standing Counsel submitted that there is nothing new which had come into existence on the basis of packaging the raw water after purification and as such the same would not come within the ambit of manufacture of finished products. The learned Standing Counsel further submitted that the word 'manufacture' appearing in Section 2 (22) of the Act of 1993 though is of wide amplitude but, then also for the purpose of coming within the ambit of the term 'manufacture', it has to bring into existence a new product by way of a process. The learned Standing Counsel referred to the judgment of the Division Bench of this Court in the case of Deepak Kumar Poddar vs. the State of Assam and Others, reported in (2010) 6 GLR 835 wherein Section 2 (22) of the Act of 1993 was taken into consideration and observed that filtration of raw mustard oil into mustard oil cannot be understood to come within the ambit of 'manufacture' in terms of Section 2 (22) of the Act of 1993. The learned S....
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.... the same applies as a res-judicata not to speak of being binding as a precedent upon this Court. The learned Standing Counsel, therefore, referred again to the judgment of the Division Bench of this Court in the case of NE Packaged Drinking Water Manufacturer's Association and Others (supra). 28. The learned Standing Counsel further submitted that this is not a case of a change of opinion as has been submitted by the learned senior counsel for the petitioner. The present case pertains to some actions on the part of some authorities who had committed a mistake in issuing the Eligibility Certificate in respect to packaged drinking water as a finished product which ought not to have been done as the same did not amount to 'manufacture'. The issuance of the Eligibility Certificate in so far as the packaged drinking water was contrary to Clause 3 (3) of the Scheme of 1997 as well as also the Industrial Policy Resolutions of 1997 wherein it is only for the purpose of manufacturing and commencement of commercial production, the incentive under the Industrial Policy Resolutions, 1997 could have been granted. 29. The learned counsel also placed before this Court the judgment of the S....
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.... the ambit of the Act of 2003, it has to also be in conformity with Section 2 (30) of the Act of 2003 which categorically mandates that the manufacture would be an activity which results in transformation into a new and different article so understood in commercial parlance having a distinct name/character and use. He further submitted from the very pleadings in the writ petitions, the petitioner duly admits that the industrial activity of conversion of raw water into drinking water would not come within the ambit of Section 2 (30), and therefore, the petitioner herein cannot claim the benefit under the Scheme of 2005. 32. Mr. B. Choudhury, the learned counsel further referring to the Scheme of 2005 and submitted that it is categorically mandated in its preamble itself that the entitlement to remission of tax is only to those units in conformity with the provision of the Act of 2003 meaning thereby it has to confirm Section 2 (30) of the Act of 2003. Further referring to Clause 3 (1) of the Scheme of 2005, Mr. B. Choudhury, the learned counsel submitted that for the purpose of entitlement under the Scheme of 2005, the eligible unit registered under the Act of 2003 would be entit....
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....dustries (Sales Tax Concessions) Scheme, 1997 (Scheme of 1997), Section 109 (4) of the Act of 2003 as well as the Assam Industries (Tax Remission) Scheme, 2005 (Scheme of 2005). This Court has also duly taken note of Section 2 (22) of the Act of 1993 vis-à-vis Section 2 (30) of the Act of 2003 which defines the term 'manufacture'. 36. The learned Division Bench of this Court in the case of Deepak Kumar Poddar (supra) had the occasion to deal with Section 2 (22) of the Act of 1993 and observed that the word 'manufacture' which has been defined in Section 2 (22) of the Act of 1993 was in very wide terms. It was observed that the said definition read in juxtaposition with the dictionary meaning of the word 'manufacture' would indicate that what is beyond the normally understood meaning of 'manufacture' has been included in the definition contained in Section 2(22) of the Act of 1993. It was observed that the definition of 'manufacture' under Section 2 (22) of the Act of 1993 comprehends within its sweep an article which could be a result of production process or the making, extracting, altering, ornamenting, blending, finishing, processing, treating or adapting of goods. It ....
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....g, extracting, altering, ornamenting, blending, finishing, processing, treating or adapting of goods. The deployment of any of the means included in the definition may give rise to a new commodity distinguishable from the input used. It may also bring about another article which, though not an entirely different commodity, may have some new features but at the same time retaining some features of the original input. The decisions of the apex court relied upon by the learned Counsel for the parties to which a detailed reference has been made earlier indicate that while interpreting the pari materia definition of the word "manufacture" as contained in the Assam Act, the unanimity of the views seems to be that though no new article need to come into existence to attract the wider definition of "manufacture", some changes in the end-product in comparison to the basic input must emerge. The extent of such change may vary from case to case. The decision of the apex court in Ashirwad Ispat Udyog and Others Vs. State Level Committee and Others, and Sonebhadra Fuels Vs. Commissioner, Trade Tax, U.P., Lucknow, in the ultimate analysis, does not lay down any proposition of law fundamentally d....
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....case, cannot bring the activity carried out in the petitioner's unit within the meaning of the definition of "manufacture" contained in Section 2(22) of the Act. The end-product "mustard oil", is fundamentally the same as the raw material/input used, i.e., raw mustard oil, inasmuch as, it is only the impurities in the raw mustard oil which is removed by a process of filtration." 37. It is further relevant to take note of that the learned Division Bench of this Court in Deepak Kumar Poddar (supra) had also dealt with Section 9 (4) of the Act of 1993 on the basis of which the Scheme of 1997 was framed. It was observed that Section 9 (4) of the Act of 1993 was in two parts. The first part indentifies the industries entitled to grant of relief by way of exemption and the second part deals with the goods in respect of which the benefit of exemption would be applicable. While identifying the industries in the first part it was mandated that those industries which are producing goods to be entitled to grant of relief under Section 9(4) of the Act of 1993, whereas the second part states that exemption will be both on raw materials and manufactured goods. It was observed that emphasi....
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.... i.e, those "produced" has been contemplated for grant of exemption under section 9(4). The learned Single Judge, therefore, was right in laying emphasis on the words "producing such goods", as appearing in section 9(4) of the Act and in examining the claim of the appellant/writ petitioner from the said perspective. 18. The word "production" has not been defined in the Assam Act. The court will, therefore, have to understand the meaning of the said word by reference to its everyday/common use and by its dictionary meaning. There can be no dispute that production denotes bringing something into life or existence by human effort. Such human effort, naturally, has to be on something already existing, though it is not impossible to visualize production of goods also from nonexistent goods, i.e, mining of minerals. If something already exists what would come to life or existence, therefore, logically, has to be something different, i.e, something new. The position has been succinctly explained by the Apex Court in CIT v. N.C Budharaja and Co., (1993) 204 ITR 412 by observing that "The word 'production' has a wider connotation than the word 'manufacture'. While every manufacture....
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....me of 2005 are Schemes framed under Section 9 (4) of the Act of 1993 and Section 109 (4) of the Act of 2003 which specifically mention granting exemption about manufactured finished products within the State of Assam. The definition of 'manufacture' is found only in the Act of 1993 or the Act of 2003. This aspect of the matter would be dealt with a little later while dealing with the judgment of the Supreme Court in the case of Vadilal Chemicals Ltd. (supra). 40. Section 109 (4) of the Act of 2003 has already been quoted herein above and a reading of the said provision makes it clear that in respect to registered units who have been enjoying benefits of sales tax concession under the Scheme of 1997 and other such Schemes immediately prior to 01.05.2005 and would have continued to be eligible for any period which is to end after 01.05.2005, if the Act of 2003 would not have come into force, a power was conferred upon the Government to formulate an appropriate Scheme in conformity with the provisions of the Act of 2003 to substitute the said Scheme of 1997 or any other scheme for the period commencing on or after 01.05.2005. The words "inconformity with the provisions of this Act"....
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....n the ambit of manufacture. Paragraph Nos.10, 11, 15 & 16 of the judgment of the Division Bench in the case of NE Packaged Drinking Water Manufacturer's Association and Others (supra) are quoted herein under:- "10. Coming to the present case, it is seen that though the raw water is subjected to the process of purification, it continues to be water. Its character and use remains the same though quality has been improved. It cannot, thus, be held that a new and distinct commercial commodity has emerged on account of the process undertaken. 11. The matter was considered by the Kerala High Court in the light of judgment of the Hon'ble Supreme Court in Tungabhandra Industries Ltd.'s case, (1960) 11 STC 827 as follows : ".......Ground water which is taken and used by the appellants as raw material for heir finished product, viz. mineral water/packaged drinking water can be used for all purposes for which the so called mineral water is used. Similarly the so called mineral water can be used for all the purposes for which the ground water can be used. What is done by the appellants is to employ various processes described by them to bring the commodity more accep....
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.... a new identity must merge. This distinguished the judgments relied upon by the petitioner. Moreover, judgments relied upon by the Revenue are directly and close to the issue in the context of goods involved. We, thus, upheld the stand of the Revenue. 16. As regards the submission that eligibility certificate once granted cannot be cancelled on a mere change of opinion, the applicability of such principle has yet to be gone into. Whether it is a case of mere change of opinion on a debatable issue or a case of mis-statement or error of application of binding law has to be gone into by the concerned authority. If it is held that it was not a case of mere change of opinion on a debatable issue but the case of wrong grant of eligibility certificate either on account of mis-statement or on account of ignoring the settled law, the appropriate authority may take a decision accordingly in accordance with law." 42. Therefore, from the above it is well settled that the industrial activity of purification of raw water into packaged drinking water would not come within the ambit of manufacture as defined under Section 2 (30) of the Act of 2003. Under such circumstances and in the l....
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....l eligible unit, the question of the petitioner Company being entitled to the benefit of the tax remission for the period w.e.f. 01.05.2005 does not arise. 43. The learned senior counsel for the petitioner submitted on the application of the principles of promissory estoppel. In the opinion of this Court, the said principles cannot be applied till Clause 3 (1) of the Scheme of 2005 stands in as much as already held hereinabove, Clause 3 (1) of the Scheme of 2005 has to be read along with Section 2 (30) of the Act of 2003 and if so read, then any application of the principles of promissory estoppel would amount to applying the said principle against the Statute or the legislative mandate which is clearly not permissible in view of the well settled principles. At this stage, this Court also finds it relevant to take note of paragraph No.22 of the judgment of the Supreme Court in the case of Dr. Ashok Kumar Maheswari (supra) which is quoted herein under:- "22. Whether a promissory estoppel, which is based on a "promise" contrary to law can be invoked has already been considered by this Court as also in Shabi Construction Co. vs. City & Industrial Development Corpn wherein ....
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.... by the Department of Industries and Commerce and could not be cancelled by the Sales Tax Authorities. 23. There is another reason why the action of the DCCT cannot be upheld. The primary facts relating to the processes undertaken by the appellant at its unit were known to the Department of Industries and Commerce and the DCCT. The only question was what was the proper conclusion to be drawn from these. The Department of Industries and Commerce which was responsible for the issuance of the 1993 G.O. accepted the appellant as an eligible industry for the benefits. Apart from the fact that it can be assumed that the Department of Industries was in the best position to construe its own order, we can also assume that in framing the scheme and granting eligibility to the appellant all the departments of the State Government involved in the process had been duly consulted. The State, which is represented by the Departments, can only speak with one voice. Having regard to the language of the 1993 G.O. it was the view expressed by the Department of Industries which must be taken to be that voice." 45. From a perusal of the above quoted paragraphs, it would reveal that the Supre....
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....' had been used to exclude dealers who merely purchased the goods and resold the same on retail price. What the State Government wanted was investment and industrial activity. It is in this background that the 1993 G.O. must be interpreted. [See: Commissioner of Sales Tax. Vs. Industrial Coal Enterprises (1992) 2 SCC 607). The Department of Commerce and Industries had by its letters dated 3rd June 1995 and 20th August 1996 clarified the issue. The exemption was granted in terms of the 1993 G.O. the thrust of which was to increase the industrial development in the State. The Commissioner, Commercial Tax had also in no uncertain terms accepted the interpretation put by the Industries Department on the 1993 G.O. and written to the DCCT to permit sales tax exemption to the appellant in accordance with the 1993 G.O. for a period of five years upto a limit of Rs.35 lakhs." 47. The facts in the case of Vadilal Chemicals Ltd. (supra) would show that the Government of Andhra Pradesh, in its Industries and Commerce Department to effectuate the liberalized State Inventive Scheme for setting up new industries as introduced in the year 1989 issued a Government Order in the year 1993 (199....
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....ates that though the Industrial Policy of 1997 was declared by the State of Assam thereby declaring various incentives including sales tax exemption on purchase of raw materials and sale of finished products but the Industries Department of the Government of Assam did not issue any notification granting the said incentives. The State of Assam exercised powers under Section 9 (4) of the Act of 1993 and formulated the Scheme of 1997. It is pertinent to mention that Section 9 (4) of the Act of 1993, as already observed in the preceding segments of the instant judgment categorically mandates conferring power on the State Government to grant exemption to those industries upon production of such goods to the extent of purchase of raw materials or other inputs within the State or on sale of manufactured goods sold by such industrial unit within the State or in course of inter State trade or commerce. It is also pertinent to mention that Clause 3 (3) of the Scheme of 1997 clearly mandated sales tax exemption on purchase of raw materials and sales of finished goods manufactured by the unit. Further to that, it is also seen from the Scheme of 1997, that merely upon issuance of the Eligibilit....