9911796707
TMI Blog1998 (1) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... sthan Sales Tax Incentive Scheme for Industries, 1987 (for short, "the Scheme") in the category of "expansion". It is said that this application was moved for claiming the eligibility in the category of new industrial unit covered by the "1985 Dispensation" which is defined by clause 2(b) of the Scheme as an industrial unit which commenced commercial production on or after April 1, 1985 and was entitled for Interest-free Sales Tax Loan Scheme under the 1985 Dispensation. The respondent-company is stated to have commenced its commercial production on May 20, 1980 and was therefore, not covered by the Scheme and was not entitled for the grant of benefits under the Scheme. It is further stated that on the basis of the application moved by the dealer its business premises was inspected with a view to verifying the facts set out in the application with regard to the Fixed Capital Investment (FCI) made by it. The inspection revealed that after April 1, 1985 the dealer had made investment to the tune of Rs. 5,37,275.77 and a report to this effect was prepared in the presence of the Director of the respondent-company-dealer which was accepted as correct by the said Director. The instant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter affording a reasonable opportunity to the dealer arrived at the finding that the dealer was not entitled to the grant of EC under the Scheme and accordingly by an order dated February 7, 1997 the EC was cancelled and it was further ordered that for the purpose of determining the tax liability of the dealer it shall be presumed that no sanction for the EC was ever accorded. Aggrieved by the order of the DLSC, the dealer preferred an appeal before the Board which by its impugned order set aside the decision of the DLSC. The Board, according to the petitioners, arrived, inter alia, at the following findings: (i) An exemption granted and availed of though illegally, could not be cancelled or withdrawn with retrospective effect. (ii) The promise extended to the dealer in response to which the investment was made that he would be entitled to exemption of sales tax, by the Government was certainly not in conflict with the provisions of law and public policy and it was acted upon by the applicant. Therefore, the principle of promissory estoppel is attracted in the matter and the promise could not be broken and has to be kept. (iii) Though no period of limitation has been prescribed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of clause 2 of the Scheme defines "New Industrial Unit covered by 1985 Dispensation" to mean an industrial unit which commenced commercial production on or after April 1, 1985 and was entitled for Interestfree Sales Tax Loan Scheme under the 1985 Dispensation. 9.. The term "Expansion" is defined in sub-clause (f) of clause 2 to mean increase in the value of Fixed Capital Investment (FCI) by not less than 25 per cent of the net fixed assets of the existing project, and accompanied by an increase in the production to the extent of at least 25 per cent of the original licensed/ registered capacity provided that "sick units" shall be eligible to claim incentives. By way of explanation it is clarified that the benefit of sales tax incentive for expansion projects will be admissible to the eligible units only after they have achieved at least 85 per cent of their licensed/registered capacity. 10.. Sub-clause (k)(ii) of clause 2 prescribes that the DLSC was the appropriate Screening Committee for the grant of sanction of benefits to the smallscale units and comprises the District Collector as Chairman, representative of the Sales Tax Department (nominated by the CCT), and Branch Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any of the conditions mentioned above has been committed, obtain the prior permission of the CCT before taking legal action under the provisions of the Rajasthan Sales Tax Act for the purpose of levy of tax on the finished goods not taxed under the tax exemption scheme, as if there was no exemption and there was escapement of tax. The CCT, in case he concurs with the findings of the assessing authority, shall before according such permission to the assessing authority, seek the advice of the appropriate screening committee. (c) The screening committee shall be empowered to amend, suspend, restore or cancel the sanction for eligibility certificate accorded by it and copies of such orders shall be endorsed to the assessing authority." 16.. From a perusal of the above cited provisions of the Scheme the following points may be made: (i) New industrial units covered by 1985 Dispensation and expansion cases are two distinct categories to which benefits can be extended under the Scheme. (ii) An industrial unit to qualify for benefits under the Scheme on the basis of expansion need not necessarily be a new unit covered by 1985 Dispensation. (iii) Any industrial unit not engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the applicant and was informed that details of capacity and production have been furnished which was required to be linked. On September 11, 1997 there is a note of the J.D. (Joint Director?) to the effect that the case was discussed with the applicant who mentioned that the scheme did not mention any date for eligibility for expansion cases and therefore, the benefits should be granted. The note mentions that this aspect of the matter would be discussed at the meeting (of the DLSC?) and that in the meanwhile clarifications should be obtained from the Directorate; that otherwise 90 days was the period within which the application had to be made when the expansion took place after March 5, 1987. This note was recorded in response to the note of the office to the effect that the unit has commenced production on May 20, 1980 and had applied on the basis of expansion under the 1985 Dispensation and that if it had expanded in 1985 the application for the benefit under the Scheme was barred by time. It also mentions that no proof of expansion had been given and that the limitation even under the Incentive Scheme had expired on August 20, 1987 and as the application dated August 7, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of expansion from April 1, 1990 onwards. The District Industries Officer, District Industries Centre, Udaipur, replied to this by a letter dated January 21, 1991 saying that the additional investment was not 25 per cent of the FCI and that therefore the case was not covered by the definition of expansion and that for adding the eligible amount to the EC the dealer should contact the Commercial Taxes Department. The Commercial Taxes Officer, Special Circle, Udaipur, by a letter dated June 6, 1992 wrote to the District Industries Officer, District Industries Centre, Udaipur, with reference to the letter dated January 21, 1991 saying that the dealer had sought to avail of benefits even on the additional investment not found eligible as being less than 25 per cent of FCI and seeking clarification whether the dealer had been so authorised. The Commercial Taxes Officer was informed by the GMDIC by letter dated June 20, 1992 that the matter was under consideration and the reply would be sent in due course. 25.. The GMDIC sent a letter dated July 2, 1992 addressed to the Director, Industries. By this reference clarification was sought on two points. The first was whether the deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made which was accepted as the quantum of exemption, (iv) that actually the unit had expanded between the years 1983-84 and 1985-86 and had sought further exemption of the investment made prior to April 1, 1985, (v) that the unit had commenced production on May 20, 1980 and therefore was not covered by the definition in the Scheme of a new industrial unit; that as the expansion claimed to have been done was not done after the Scheme became operative it was not eligible for benefits under the Scheme; that possibly the dealer wanted to avail the provision contained in clause (2)(e)(iii) which provided that in the case of a new industrial unit covered by the 1985 dispensation and which had gone into production during the period April 1, 1985 to March 4, 1987 only those assets which were acquired and paid for between April 1, 1983 to March 4, 1987 were made eligible for incentives under the Scheme but the unit in question did not fall into that category having commenced production on May 20, 1980. That therefore it appeared to the Deputy Commissioner (Adm.) that prima facie the dealer's unit was not eligible for any kind of benefits under the Scheme. 29.. On this basis it was sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties that the benefits under the EC had been fully availed of by March 31, 1992 on which date the EC stood expired. It was also not disputed that proceedings for cancellation of the EC were initiated after this. 36.. The Board held that an exemption granted and availed of though illegal could not be cancelled or withdrawn with retrospective effect; that the principle of promissory estoppel was also attracted; that the promise extended to the applicant in response to which the investment was made was that he would be entitled to exemption of sales tax; that this promise made by the Government was not in conflict with law or contrary to public policy and it was acted upon by the applicant and thus the essential ingredients of promissory estoppel existed and the promise could not be broken and had to be kept; the decision of this Tribunal in Bhatnagar Cement Co. v. State of Rajasthan [1996] 103 STC 146 and notes of a Supreme Court decision in Commissioner of Sales Tax v. Elopic Paper Converter published in [1997] 104 STC (Journal) 2 and the Board's own earlier decision were followed. The inordinate delay and the lapse of time between the expiry of EC and its cancellation was te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rulings referred to of the Supreme Court and of this Tribunal wrongly to the facts of this case. The cases cited were cases where the benefits under the scheme admissible to the applicant at the time of admission to the Scheme were sought to be curtailed subsequently and it was in these circumstances that the doctrine of promissory estoppel was brought into play. That is not the case in the matter in hand. The case in hand is one of shutting the stable doors after the horse had bolted or of crying over split milk. Had the Department and/ or the DLSC woken up or bestirred themselves in time, i.e., before the expiry of the EC, the remaining life of the EC could have been cancelled i.e., invalidated prospectively. 41.. Therefore, the first question raised in the application for revision is answered in the negative as the fact of the matter is that expansion was the basis for eligibility on which benefits were sought and granted. The second question too is answered in the negative in the sense that in the facts and circumstances of the case the DLSC could not have cancelled the EC. As such the third question is answered in the affirmative. The Board was justified in this case in hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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