2008 (4) TMI 801 - HC - Indian Laws

Summary

Issues Involved:
1. Denial of sales-tax incentive benefits under the Government of Gujarat Capital Investment Incentive Premier Prestigious Scheme, 1995-2000.
2. Delay in project completion due to external factors.
3. Eligibility for sales-tax deferment scheme.
4. Legal consequences of court injunctions and subsequent relief from the Supreme Court.
5. Restitution and equitable relief.

Detailed Analysis:

1. Denial of Sales-Tax Incentive Benefits:
The petition was filed under Article 226 of the Constitution against the denial of sales-tax incentive benefits to the petitioner company under the Government of Gujarat Capital Investment Incentive Premier Prestigious Scheme, 1995-2000. The petitioner company had planned a major venture in Vadinar, Jamnagar District, Gujarat, as a 100% export-oriented unit for refining petroleum products.

2. Delay in Project Completion Due to External Factors:
The project faced delays due to several external factors, including injunctions and required permissions. The petitioner company initially obtained necessary permissions from the State and Central Governments. However, a Division Bench of the High Court restrained the State Government from granting further permissions, impacting the project's progress. The petitioner company was not a party to the Public Interest Litigation that led to these injunctions.

3. Eligibility for Sales-Tax Deferment Scheme:
The petitioner company had obtained provisional registration as a Premier Unit and incurred more than 25% of the project cost before the stipulated date. Despite this, the company could not commence commercial production within the extended time limit due to the injunctions. The petitioner argued that the delay was beyond their control and sought extension of the time limit for commencing commercial production.

4. Legal Consequences of Court Injunctions and Subsequent Relief from the Supreme Court:
The High Court's injunction was ultimately set aside by the Supreme Court, which directed the State Government to issue the necessary permissions. The Supreme Court's judgment highlighted that the petitioner company had taken all required steps and that the delay was due to the court's injunction, which was later found to be incorrect.

5. Restitution and Equitable Relief:
The petitioner invoked the doctrine of restitution, arguing that no one should suffer due to an act of the court. The Supreme Court's decision in South Eastern Coalfields Ltd. vs. State of M.P. and other relevant cases supported this argument. The court agreed that the period during which the petitioner was prevented from proceeding with the project should be excluded from the computation of the time limit for commencing commercial production.

Judgment:
The court directed the State Government to consider the petitioner's application for sales-tax deferment benefits under the scheme, excluding the period from 13.07.2000 to 27.02.2004. The court stipulated that the petitioner should not claim any sales-tax deferment benefits beyond 14.08.2020 and should not seek a refund of the sales-tax already paid. Additionally, the amount of sales-tax deferment should be reduced by Rs. 700 crores.

The petition was allowed with the following directions:
1. The period from 13.07.2000 to 27.02.2004 shall be excluded for considering the commencement of commercial production.
2. The petitioner shall not claim sales-tax deferment benefits beyond 14.08.2020.
3. The sales-tax already paid shall not be refunded.
4. The amount of sales-tax deferment shall be reduced by Rs. 700 crores.

The court emphasized that these directions were given in the peculiar circumstances of the case, where the High Court's earlier decision had adversely affected the petitioner without hearing them, and the Supreme Court had subsequently reversed that decision. The petition was allowed with no order as to costs.