TMI Blog2002 (4) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... unit in the particular district, from the date of commencement of production of the unit. However, units opting for deferment of sales tax on sale of finished goods in terms of clause 16.2 would be eligible for set-off only on purchase of raw materials. Clause 16.2 provides that the new units in sales tax on purchases will also have the option to choose deferment or exemption of sales tax both Bihar sales tax and Central sales tax on sale of finished goods for a period of ten years or eight years depending on the location of the units in the particular district from the date of production. Clause 16.3 with which we are concerned in this case, provides for similar benefits to units going in for expansion or diversification within the eligibility period, i.e., September, 1995 to August, 2000. The dispute herein revolves round the interpretation of clause 16.3, besides some other allied provisions and therefore, I will come back to this clause again later in this judgment. 3.. The petitioner, which is a company incorporated under the Indian Companies Act, 1956 having its registered office at Bhagalpur is engaged in the production of rectified spirit in its factory at Rajoun in Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipt of the above said application for exemption certificate on August 23, 1997 the claim was processed by the Commercial Taxes Officer with reference to certificate of the Industries Department contained in its letter No. 6488 dated November 7, 1998, copy whereof has been enclosed as annexure 3 to the writ petition. The Commercial Taxes Officer vide his order dated July 18, 2000 came to the conclusion that both in terms of the additional investments in fixed capital assets and in terms of the production capacity as a result of diversification, the petitioner's unit was eligible for exemption and thus submitted a favourable note. The Joint Commissioner of Commercial Taxes however, vide his order dated August 29, 2000 came to a different conclusion. He took the view that investment in fixed capital assets of Rs. 137.92 lakhs was less than 50 per cent of the capital investment of Rs. 494.89 lakhs made earlier and therefore the unit did not fulfil the requisite condition in para 12(Ka) of S.O. No. 479 dated December 22, 1995 and thus it was not eligible for exemption of sales tax. He accordingly directed assessment of the sales tax on sale of the goods from the date of commencem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus the petitioner will qualify for exemption in terms of the Industrial Policy as well as the exemption Notification S.O. No. 479 dated December 22, 1995. 7.. To complete the narration of events, on receipt of the above said letter of the Joint Director, Industries, dated December 22, 2000, on December 23, 2000 the Deputy Commissioner of Commercial Taxes directed the matter to be put up before the Joint Commissioner, Commercial Taxes (Administration) for fresh consideration. Vide his order dated May 16, 2001 the Joint Commissioner took the view that the Deputy Commissioner had merely forwarded the file without expressing any opinion or giving finding and therefore it was not possible for him to give his approval or issue any direction. The file was sent to the Circle In-charge. On October 29, 2001 the Assistant Commissioner of Commercial Taxes, i.e., the Circle In-charge observed that the then Joint Commissioner, Commercial Taxes (Administration), did not approve the application of the petitioner for exemption, vide his order dated August 29, 2000 but without taking any permission or order from the department, i.e., the Commercial Taxes Department the petitioner had got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o consider the matter afresh. 10.. At this stage the relevant provisions may be noticed as follows. Clause 16.3 of the IPR concerning the sales tax exemption with respect to the units undertaking expansion/diversification which is the basis of the claim of the petitioner, runs as follows: Such units should be given identical treatment as new units for their expanded/diversified capacity and incremental production both in purchase of raw materials and for sales tax on finished goods. All such incentives will be admissible to such units which are covered by the definition of expansion/diversification as given in the annexure. The term incremental production has been defined to mean: the incremental production shall mean the excess of actual production over 2/3 of the originally installed capacity or the highest production in 3 years immediately preceding the year in which such expansion/diversification commenced, whichever of the two is higher. The term expansion/modernisation/diversification has been defined to mean: Expansion/modernisation/diversification of an existing industrial unit would mean additional fixed capital investment in plant and machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier and hence it is eligible for exemption. 12. Shri R.K. Dutta, learned Standing Counsel appearing for the Revenue pointed out that the addition of boiler, cooling tower, PHE was made during the year 1999-2000, i.e., after the unit had already commenced its production of Extra Neutral Alcohol on July 19, 1997 and hence any investment on such addition cannot be taken into account. On behalf of the petitioner it was submitted that though these investments were made in 1999-2000 it was part of diversification programme and the delay in installation of boiler, etc., was on account of belated sanction of loan by the State Bank of India. 13. Even if the investment of 112.74 lakhs on boiler, cooling tower, PHE is excluded, the investment of 179.17 lakhs undisputedly made prior to July 19, 1997 in the process of diversification would be more than 50 per cent of the investment of 311.60 lakhs provided if the investment on setting up of the effluent treatment plant is excluded. I am not sure as to whether or not the machineries of the effluent treatment plant should be included in the list of investment on plant and machineries as constituting fixed capital investment on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution should not be exercised in a manner that they are denied the benefit which is otherwise available to such unit under the Industrial Policy. Notification under section 7 of the Bihar Finance Act, 1981, is issued to carry out the objects of the Industrial Policy and in that view of the matter, any notification issued by the Government in exercise of powers under section 7 of the Bihar Finance Act, 1981, found to be repugnant to the Industrial Policy must be held to be bad to that extent. 15.. It is also to be kept in mind that as per the definition of the fixed capital investment only such investments made in land, building or plant and machinery can be taken into account which may be productive assets of permanent nature . I am not sure if the machineries of the effluent treatment plant can be called productive assets . Nonetheless the opinion of the Industries Department describing that it is unproductive and not directly related to the production deserves due weight and consideration. Unfortunately, the claim of the petitioner has not been considered on merits by the competent authority, i.e., the Joint Commissioner of Commercial Taxes (Administration). Perhaps ..... X X X X Extracts X X X X X X X X Extracts X X X X
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