TMI Blog2007 (9) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... granted. Interpretation of an exemption notification in regard to payment of sales tax is involved in this appeal which arises out of a judgment and order dated August 9, 2006 Reported as Tata Sponge Iron Ltd. v. State of Orissa [2007 6 VST 461 (Orissa)., passed by the High Court of Orissa in O.J.C. No. 2213 of 2001. Before embarking upon the said question, we may notice the basic fact of the matter. Respondent herein which is a large industrial unit had set up a sponge iron factory at Bileipada, Joda, in the district of Keonjhar, Orissa. Indisputably, it is classified as a large scale industry in terms of Industrial Policy Resolution (IPR), 1980 adopted by the State. In or about 1989, IPR was adopted for existing industries classified under IPR, 1980 wherein benefits for exemption from payment of sales tax on finished products were to be granted subject to the terms and conditions laid down therein including repayment of loan availed under IPR, 1980. Before the benefits of the said IPR could be obtained by the respondent, the Government of Orissa announced IPR, 1992 in terms whereof the existing industrial units could obtain exemption or deferment of sales tax on finished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of deferment of payment of sales tax on finished products in respect of incremental sale over and above the immediate preceding year as it existed prior to expansion of the industrial unit up to a limit of Rs. 49.45 crores being 75 per cent of the fixed capital investment in the plant and machinery. It was furthermore claimed to be entitled to capital investment subsidy. As the said benefits were denied to the respondent, it filed a writ petition before the High Court of Orissa, Cuttack, which was marked as O.J.C.No.2213 of 2001. By reason of the impugned judgment, a Division Bench of the Orissa High Court Reported as Tata Sponge Iron Ltd. v. State of Orissa [2007] 6 VST 461 (Orissa). allowed the said writ petition directing: "1. Opposite party No. 2 The Director of Industries, Orissa, is directed to reconsider the petitioner's application for re-evaluation of its investment for expansion of the unit and determine afresh, the extent to which the petitioner is entitled to the sales tax incentives and also to make necessary amendment to the eligibility certificate granted by it in accordance with the IPR, 1992. 2.. The stipulation of a 'time period' in the certificate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y unit should also maintain necessary records and registers for this purpose as may be prescribed by the Director of Industries, Orissa." It was pointed out that the purported operational guidelines had been circulated by reason of a circular letter dated February 8, 1993 by the Government of Orissa to all concerned which is in the following terms: "I am directed to enclose herewith a set of 'operational guidelines' relating to sales tax concessions admissible under Industrial Policy Resolution 1992 (IPR 1992) effective from August 1, 1992 for your information and necessary action. You are requested kindly to bring it to the notice of all concerned for proper implementation of the provisions of IPR 1992." The learned Additional Solicitor General would submit that the respondent herein made expansion of its undertaking in the year 1997 and it having asked the benefit in terms of IPR, 1992 for a period of five years only as would be evident from its application filed in prescribed form II-A dated May 26, 1999 which is in the following terms: "This certificate is issued for 5 (five) years of its commercial production or expansion/modernisation/diversification and is valid fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly incompetent to do. A reading of the said 'operational guidelines' and the terms thereof would clearly indicate that the stipulations regarding time period find mention in clause 5 of the 'operational guidelines'. It would be clear that the said stipulation would relate only to those industries covered under paras 7.3 and 7.4 of the IPR 1992 and would be limited in application to only those industries to which 'time periods' have been stipulated in the IPR itself and not to the industries/activities covered under paragraphs 7.2 and 7.5. Since the petitioner's industry is covered in the EMD category under para 7.5 of the IPR, 1992 read with entry No. 44 of S.R.O.No.1091 of 1992, clause 5 of the 'operational guidelines' cannot be said to apply to it. We are of the view that clause 5 of the 'operational guidelines' and stipulation in the eligibility form (the eligibility certificate), to the extent that it provides for a period of time, is not in consonance with the IPR, 1992, is clearly without jurisdiction/without sanction of law and is also ultra vires to the IPR, 1992. (c) The operational guideline and/or instructions were made for administration of incentive contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, no period far less the period of five or seven years had been mentioned. The only limitation prescribed thereby was that only 75 per cent of the additional capital investment in Zone B would be allowed where the unit of the respondent is situate. In terms of clause 5 of IPR, 1992, the respondent became entitled to exemption from payment of sales tax on finished products for an amount of Rs. 49.45 crores being 75 per cent of Rs. 63.95 crores invested in plant and machinery. We may notice that the Finance Department of the State of Orissa passed a consequential order in IPR, 1992 bearing S.R.O. No. 1091 of 1992 dated September 23, 1992 which was given effect from August 1, 1992. A bare perusal of the said notification would clearly show that whenever the period up to which the exemption, could be obtained was required to be stated had specifically been done therein, as for example serial Nos. 30A, 41, 42A and 43A, etc. We may, furthermore, notice that against the entry 44, however, what is mentioned is the extent to which such exemption would be granted. No period during which such exemption is to be obtained was stated. In other words, no period of limitation was fixed the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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