TMI Blog1997 (12) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... H.N. Salve, Senior Advocate (Ms. Kirti Mishra and Preetosh kapur, Advocates, with him), for the respondent. -------------------------------------------------- The judgment of the Court was delivered by M. Jagannadha Rao, J.- Leave granted. This civil appeal is directed against the judgment of the Orissa High Court in O.J.C. No. 4056 of 1995 dated May 14, 1996, dismissing the writ petition filed by the appellants. The appellants are aggrieved by the Industrial Policy Resolution of 1989 of the State of Orissa which came into force from December 1, 1989 in so far as it restricted the benefit of defermentof sales tax to industries which had gone into commercial production after April 1, 1986 and denied such benefit to those which had gone into production before April 1, 1986. The industrial policy of 1989 in this behalf was notified by the Orissa Government under S.R.O. No. 790 of 1990 (Finance) dated August 16, 1990 issued under section 7 of the Orissa Sales Tax Act with effect from December 1, 1989 to which we shall refer in detail later. We are concerned with medium and large-scale industrial units. 2.. The appellant-company was incorporated on April 9, 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuing industries to which the 1980 policy applied. It was further stated that continuing industries of 1980 policy are those which have made any kind of investment before the effective date or have availed themselves of any incentive or facility under the Industrial Policy of 1980. Part D deals with concessions relating to sales tax. Sub-paragraph (i) thereof deals with exemption of sales tax on raw materials, while sub-paragraph (ii) deals with exemptions of sales tax on finished products produced by all existing and new khadi, village and cottage industries. So far as medium and large industrial units are concerned sub-clause (iii) of Part D deals with sales tax deferment scheme while sub-clause (iv) deals with exemption of sales tax on finished products in lieu of deferment. The two sub- clauses read as follows: (iii) Sales tax deferment scheme: New medium and large industrial units will be eligible to defer payment of sales tax collected on their finished products for a period of 5 years in Zones B and C and 7 years in Zone A from the date of their commercial production. Deferred amount in respect of each year would be paid in full after the expiry of the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has gone into production before April 1, 1986, i.e., on April 1, 1984. 5.. We shall refer to the incentives granted under the 1989 policy. The scheme of 1989 divides the incentives into three parts as Parts I, II and III. (a) Part I deals with incentives of deferment/exemption from sales tax in respect of new industries established after December 1, 1989. Provision is made for deferment of payment of sales tax up to 9 years or 7 years depending on whether they were located in different geographical areas Zones A, B and C. If one opts for the benefit of deferment, it will be for 9/7 years as the case may be while if one opts for exemption it will be for 7/5 years. (b) Part II of the 1989 policy deals with incentives granted in favour of the continuing units of the 1986 Policy, i.e., as stated in para 2.17, where investment has been made after April 1, 1986 and prior to December 1, 1989 and where production started after April 1, 1986. They get the same sales tax incentives as in Part I, applicable to new industries of 1989 policy. (c) Part III of the 1989 policy deals with incentives granted in favour of the continuing units of the 1980 Policy, i.e., as stated in para 2.18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters and the same could not be interfered with in writ jurisdiction. 9.. Contentions in this Court: In this appeal, it is contended by Shri Shanti Bhushan, the learned counsel for the appellant, that the words in clause 2.18 of the 1989 policy after the 1st April, 1986 must be a drafting mistake and the Government must have meant after 1st August 1980 . It was also contended that in view of the decision in Nakara v. Union of India (1983) 1 SCC 305, the cut off date April 1, 1986 in para 2.18 of the 1989 policy must be declared as bad because the 1989 scheme could not be treated as a new scheme, but was a continuation of the 1980 scheme. In any event, even treating the 1989 scheme as a new scheme, it was discriminatory inasmuch as the classification of units into two groups, those which went into production before April 1, 1986 and those which went into production after April 1, 1986 was violative of article 14. Finally, Sri Shanti Bhushan contended that this was the only unit which was before us and we should grant relief under article 142 of the Constitution of India. 10.. On the other hand, Shri Harish N. Salve contended that the above sub- missions are not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced in a new scheme for the first time. It was stated (at p. 333). And beware that it is not a new scheme, it is only a revision of existing scheme. It is not a new retiral benefit. It is an upward revision of an existing benefit. If it was a wholly new concept, a new retiral benefit, one could have appreciated an argument that those who had already retired could not expect it. 13.. This is because whenever any financial benefit is intended to be conferred on persons or units, etc., for the first time from an anterior date, the State has to fix some cut-off date and could not be compelled to go back into the past without time-limit. If the State should confer financial benefits retrospectively without any time-limit, it might indeed be impossible for the State to come forward with any beneficial scheme. Every such beneficial scheme which is introduced by the State will depend for its implementation upon considerable sacrifice of the finance of the State. In view of our finding that the 1989 scheme is a new one, as distinct from the 1980 scheme, the appellant cannot rely on Nakara (1983) 1 SCC 305. 14.. Is the classification in para 2.18 of 1989 policy or the corresponding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years as compared to those who opt for exemption. 17. The gist of the deferment/exemption notification classifies the medium and large-scale units of the 1989 Policy (entitled to deferment) as follows: S.No. Class of industrial unit Effective data Period 1 2 3 4 1. New medium/large industrial units (of 1989 policy) Where fixed capital investment has been made only on or after 1-12-1989. 9 years in some districts and 7 years in some districts. 2. Continuing medium/ large industrial units on or after 1-4-1986(after 1986 policy) where fixed capital investment has been made on or after 1-4-1986 but before 1-12-1989 and the unit had gone into commercial production after 1-4-1986 Do. 3. Continuing medium/ large industrial units set up on or after 1-8-1980 (after 1980 policy) Where fixed capital investments commenced on or after 1-8-1980 and prior to 1-4-1986. Do. Note. -Serial Nos. 4 to 6 deal with similar concession to expanding all industries and there also Sl. No. 6 deals with 1980 policy units.] 18.. We are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypes two and three of the 1980 policy were concerned, where also the production was after April 1, 1986, those units were entitled to the same benefits of deferment/exemption as the new 1986 units. Obviously, the first type of unit under the 1980 policy where even though the unit made investment after August 1, 1980 and before April 1, 1986 the unit had gone into production before April 1, 1986, could not and would not fit into such a scheme. At the same time, if the benefit of deferment/exemption which came into being for the new units under the 1986 policy was not extended to the second and third type of units of 1980 policy, both of which went into production after April 1, 1986, then perhaps there was a good case for a plea by the second and third type of units of 1980 policy to contend that they were being discriminated as compared to the new units of 1986 policy. It could perhaps be legitimately contended by them that the fact that investment was made by them between August 1, 1980 and April 1, 1986 and the fact that so far the new units of 1986 scheme were concerned, they made investments after April 1, 1986-was irrelevant and what was relevant was the date of production. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, be contended that the old units should also have been granted the same benefit as new units since both the units are engaged in the manufacture of the same type of products. In fact, such a policy, if followed by the Government, would not only fail to provide incentive to the new industries but would also place the new units at a comparative disadvantage in being made to face stiff competition with older units which have been established at lesser cost and which have stabilised themselves in the field by successfully running the units for a number of years. 24.. Again in Mohd. Jabbar Malik Lasjan v. State of Jammu and Kashmir [1994] 95 STC 361 (SC); 1994 Suppl 3 SCC 24 (to which one of us S.C. Sen, J., was a party) it was held that though initially exemption from sales tax was granted for a specified period to certain industries by placing them under a common heading, a subsequent denial of extension of the exemption to some only of such industries was not an arbitrary exercise of power, more so when the industry granted further exemption was a comparatively new one. This Court observed: The Government, in exercise of its power given by section 5 of the Act, can dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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