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TMI Blog1997 (12) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... ied 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, 1979 for manu- facture of sponge iron in the District of Keonjhar in the State of Orissa. The land was acquired and purchased on April 4, 1980 and the appellant proceeded to construct the factory. It went into commercial production with effect from April 1, 1984. 3.. The industrial policies in the State of Orissa with which we are concerned in this appeal are three policies, (i) the policy of 1980, (ii) the policy of 1986 and (iii) the policy of 1989. (i) 1980 Policy: Interest-free loan for sales tax paid: In the industrial policy of 1980 which came into effect from August 1, 1980 it was stated that large and medium industries would be entitled to reimbursement of entire cost of preparation of project/feasibility rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales 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 deferment, annually." (iv) Exemption of sales tax on finished products in lieu of deferment: In lieu of the sales tax deferment scheme, new medium and large industrial units can opt for exemption of sales tax on their finished products for a period of 3 years if located in Zones B and C and for a period of 5 years if located in zone A from the date of their commercial production." But in view of exclusion of continuing units of 1980-which have either made investment or availed of incentives/facilities of 1980 policy-from the 1986 policy, the continuing units of 1980 policy could not avail of the 1986 policy regarding deferment/exemption, whether they went into production before April 1, 1986 or after April 1, 1986. It was only in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, where investment has been made after August 1, 1980 and prior to April 1, 1986 but where production started after April 1, 1986. They are again given the same sales tax incentives as in Part I, applicable to new industries of 1989 policy, subject however to the provision relating to surrender of loan or other benefits received under the 1980 policy. This is mentioned in para 7.3.2 is follows: 7.3.2. Exemption/deferment of sales tax on finished products: The sales tax incentive on finished products as is applicable to new industrial units under Part I shall be applicable to continuing units of 1980 Policy, after the effective date, provided that sales tax loan, if any, availed of under the Orissa Sales Tax Loan Scheme Rules, 1980 is surrendered within the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 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 and the learned counsel supported the view taken by the High Court. 11.. Is there a draftman's mistake. So far as the first contention that there was mistake in para 2.18 of the 1989 policy by the draftsman in using the words after the 1st April, 1986 is concerned, this contention, in our opinion, has absolutely no basis. We cannot presume any such mistake. Further, para 7.3.3 which deals with expansion of units of 1980 policy also refers to the same cut-off date. Moreover the Gazette notification (Finance) dated August 16, 1990 in S.R.O. 790 of 1990 (referred to below) issued under section 7 of the Act to reflect the 1989 policies again contains the same date April 1, 1986 under item 3 and item 6. It is, therefore, absolutely clear that there is no question whatsoever o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provision of SRO 790 of 1990 dated August 16, 1990 violative of article 14. We then come to the main point which was strongly urged by the learned counsel for the appellant, namely, that para 2.18 of the new policy of 1989 was violative of article 14 in so far as it denied the benefits of the sales tax deferment/ exemption to those units which went into production before April 1, 1986. The learned counsel explained that among those units which made investments after August 1, 1980 under the 1980 policy some, like the appellant, were managed efficiently and could go into production before April 1, 1986 while some others, which were managed badly, could not go into production either before April 1, 1986 (when the 1986 policy came into being) or before or after December 1, 1989 (when t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 concerned in the case before us with serial No. 3 above relating to the continuing units of 1980 and the alleged discrimination thereunder denying benefit of the 1989 policy to such units of the 1980 policy which went into production before April 1, 1986. 19.. Under the 1980 policy, where units have made investments after August 1, 1980, there could be three types of units: firstly, those which made investment after August 1, 1980 but which, like the appellant, went into production before April 1, 1986; secondly, those units which made investment after August 1, 1980 and before April 1, 1986 but had gone into production after April 1, 1986 and before December 1, 1989; thirdly, those units which made investments after August 1, 1980 and before April 1, 1986 but which had gone into production after December 1, 1989. Now, out of these three types, only the second and third, were made eligible to take benefits of column 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 far as the first type of unit of the 1980 policy, where the investment was between August 1, 1980 and April 1, 1986 but where the unit (like the appellant) had gone into production before April 1, 1986, those units could not therefore stand comparison with the new units of 1986 policy, or the second and third type units of 1980 policy-for the date of production by latter units was a date on or after April 1, 1986. After all, the principle of deferment/exemption was introduced only under the 1986 policy and was continued under the 1989 policy and there was nothing wrong in extending benefits to type two and three of the 1980 policy so as to avoid discrimination as far as possible, between them and the new units of 1986 policy. In that context, there was good reason for leaving out the first type of units of the 1980 policy. In addition, as stated by us earlier the scheme of interest-free loan and deferment exemption were di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption 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 decide to exempt any goods from taxation. The power may be exercised having regard to social, economic administrative and fiscal considerations." 25.. Therefore, it was for the policy-maker to consider whether he should not allow the older units to get benefits of sales tax which they were proposing to give to new units. If they felt that units which were already established at lesser cost and which got well stabilised, should not be allowed to have any advantages over new industries, then such a classification would be perfectly valid. 26.. Nor can the argument that units of the second and third type under the 1980 policy did not go into production before April 1, 1986 only on account of bad planning or inefficiency, be accepted. There could be a variety of factors like increase in cost of construction, machinery, the comparative backwardness of the area, administrative delays or labour problems-as to why some units could not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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