Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + HC VAT and Sales Tax - 2013 (10) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (10) TMI 256 - HC - VAT and Sales TaxAmendment to u/s 41C of Bombay Sales Tax Act - Constitutional validity - Cessation of SSI units - Package Incentive Scheme of 1979 - validity of Eligibility Certificates - Held that:- Government was aware of the alleged error in the 1979 Scheme since 1982 & took some steps to provide cure through 5.7.1982 modification. But then consistent with the commitments contained in 1979 policy, it gave option to SSI units & allowed them to continue under 1979 unmodified Scheme. The amendment in the shape of S.41C(1)(a)(i)(A) has come in 1995 and it results in curtailment of the benefit period & also imposes an unforeseen tax liability. Till then all benefits without any ceiling or then, after 10.1.1983, incentives equal to 100% of the fixed capital investments made during entire period of eligibility qualified for claiming the exemptions. That has been suddenly changed & eligibility is pegged down to initial year in which the eligibility certificate was issued. This drastic change results in retrospective cancellation of the eligibility certificate. Need for such a measure was felt in 1982 itself & it lead to issuance of 5.7.1982 modification. Why State Government could not bring in such an amendment immediately after 1982 is not clear. If the measure of imposing ceiling on quantum of incentives was evolved in public interest, its advance notice to aspiring investors was possible & also must. But, even in 1982 modification, the Petitioner Units are given exemption equal to cent-percent capital investments made during the period of eligibility. The mode & manner of calculating quantum continued without any ceiling for all these Petitioners & they may have also expanded their projects by investing back the exemptions granted. Even otherwise, it is obvious that no SSI unit under 1979 Scheme would have surrendered & voluntarily subjected themselves to any ceiling and hence, if Government wanted really to remedy the mischief, bringing proper legislation at the earliest was the only solution. The legislation has been brought after majority of the units completed their eligibility period. A liability not in contemplation, has been fastened for past investments which were then eligible for exemption. Past investments may be expansions which catered to the development of underdeveloped area & therefore, advanced the objective of State Government. Thus, such investments & appropriation of incentives are now irreversible & it is irrational to disallow the same & demand taxes. It is strange to levy penalty for the same. We, therefore, see no justification in subjecting very few units to such legislation ie to S.41C(1)(a)(i)(A). Had the legislation been enacted immediately after 1982 & all SSI units were subjected to it, a different perspective may have been required to be adopted. The present situation demands a liberal approach & as observed by Hon. Apex Court (supra) “the Government has itself come forward alluring industrial units to set up their industries”. Since we do not see absence of power in State Legislature, it is not necessary to quash & set aside said provision which may have outlived itself considering the fact that out of total possible 14, only three matters are before us. But then exposing Petitioners to such unforeseen liability prejudices their entire planning, projections & future. We reiterate that it is not the case of the Respondents that expansion of project or then investment in capital affected the status of Petitioner Units & thereby, they ceased to be SSI Units or then the Petitioners have violated any other term or condition of the 1979 Scheme. Appropriations made & expansions are now irreversible. No commercial concern can shoulder such a burden for past legal transactions. Therefore permitting S.41C(1)(a)(i)(A) to be used against the Petitioners will be inequitable & may result in killing the Units & defeat the 1979 Scheme which was deliberately designed to be broad-based. Interest of justice can be met with by directing the Respondents not to extend the provision of S.41C(1)(a)(i)(A) to the Petitioners if their Units never ceased to be SSI units during the eligibility period as per the eligibility & entitlement certificates granted to them. - Decided partly in favour of assessee.
|