TMI Blog2006 (8) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... trial Policy Resolution, 1992 (hereinafter referred to as IPR, 1992 ), the petitioner in support of the challenges noted hereinabove, submitted as follows: (a) The petitioner set up a large scale industrial unit for manufacture of sponge iron at Bileipada, Joda in the district of Keonjhar and was classified as a large scale industry under IPR, 1980. It availed sales tax loans as benefits under IPR, 1980. (b) The Government of Orissa published IPR, 1989 wherein it granted benefits for existing industries classified under IPR, 1980 wherein benefits of exemption from payment of sales tax on finished products was available subject to the loans availed under IPR, 1980 policy being repaid. The petitioner repaid the loans and applied for necessary eligibility certificates so that it could avail the benefits of exemption from payment of sales tax on finished products for a period of five years from the effective date of IPR, 1989, i.e., December 1, 1989. (c) However, in absence of an operation guideline, the petitioner could not avail the benefits and it came up in a writ petition before this honourable court being O. J. C. No. 6198 of 1994. This honourable court disposed of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the petitioner's unit falls in Champua subdivision under Zone B). The proviso to the said clause 7.5 was that provided further that the benefit of exemption/deferment shall not have the effect of reducing the sales tax paid by the unit prior to the commencing of the expansion/modernisation/diversification programmes. In other words, the benefits shall be applicable to 'incremental sales'. (h) The corresponding Finance Department notification was published vide Notification No. 41261 CAT-106/92-F on September 23, 1992 with effect from August 1, 1992 wherein entry 44 of the Tax Free Schedule List (A) was inserted. (i) That in pursuance to the said promises and/or notifications published by the Government of Orissa, both in the Industries Department as well as in the Finance Department as far as EMD of existing large scale industries was concerned, the petitioner made an additional investment of Rs. 70.48 crores by way of expansion on the basis of a separate project report duly appraised by the financial institutions. The expanded unit went into commercial production with effect from September 7, 1988. Therefore, the petitioner claimed that it was entitled to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anded unit completed trial production. Since the petitioner's expanded unit has completed trial production in the year 1998, the petitioner was entitled to capital investment subsidy in the year 1998 and since the same was not granted, the petitioner has challenged the said non-grant of subsidy in this petition. (m) The provisions of para 7.5 of the IPR, 1992, the corresponding operational guidelines for availing the benefits and the entry 44 of the Tax Free Schedule of the Orissa Sales Tax Act, 1947 do not prescribe of a period by which the exemption is to be availed. They only prescribe the ceiling limit, i.e., 75 per cent of the fixed capital investment of plant and machinery. Therefore, up to the said limit, the petitioner can avail the exemption from payment of sales tax on finished goods and only on incremental sales. Therefore, it can be seen that it is a clear cut provision and the Government of Orissa while making the provision have applied its mind and the said decision not to impose a time period is a conscious decision of the Government. (n) Para 7 of the IPR, 1992 deals with the benefits to be given to different classes of industries both new as well as exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B and C . It may be mentioned here that no time-limit has been fixed for availing such exemptions. The condition of period of exemption made for new small, medium and large scale industries in para 7.4 is in no way similar or comparable to the exemptions/deferment allowed to EMD industries in para 7.5.(u) The objectives of the IPR, 1992 under para 7.4 and 7.5 are different. They are as follows: (g) Government does not get any revenue by way of sales tax on finished products. (g) Government gets revenue by way of sales tax on finished products of existing turnover before expansion. Hence, clauses 7.4 and 7.5 are distinct and different from each other. The averment of the Industries Department in annexure 1 that paras 7.4 and 7.5 of the IPR, 1992 are co-related, is not correct. (v) The Director of Industries is authorised to issue the eligibility certificate but as per the conditions envisaged under the IPR, 1992, as the IPR was silent on the period , the Director of Industries acted beyond his powers by limiting the period of eligibility to five years . Hence, it was not permissible for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expansion project being located in Zone B is entitled to a capital investment subsidy of 20 per cent of the fixed capital investment of Rs. 70.48 crores amounting to Rs. 14.096 crores and subject to a limit of Rs. 20 lakhs. The petitioner is, therefore, entitled to subsidy of Rs. 20 lakhs. The State of Orissa have filed a counter-affidavit through the Assistant Director of Industries (RR) taking the following contentions: (A) The writ petition is not maintainable inasmuch as the petitioner has been provided with the necessary benefits, i.e., tax benefit for a period of five years as per the terms of the guidelines of the Industries Department as well as Industrial Policy Resolution framed by the Government and is not entitled to any extra benefit as claimed by him. (B) M/s. IPITATA Sponge Iron Ltd., located at Joda under the subdivision of Champua, District Keonjhar is a large/medium industrial unit has changed its title to M/s. Tata Sponge and Iron Ltd., after obtaining approval from the Government of India. The original project was governed under the IPR, 1980 and it availed the sales tax incentives under the IPR, 1989 vide clause 7.3.1, part III as a continuing unit of IP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives as a pioneer unit under the IPR, 1989 as it was not a new unit under the said IPR. Government have accepted the above findings of the SLEC. The unit was allowed sales tax exemption for a period of five years accordingly as per the provisions of the IPR. (E) In the case of M/s. Tata Sponge Iron Ltd., the first fixed capital investment for its expansion was made on February 7, 1996 by way of purchase of plant and machinery (second kilns) valued at Rs. 56,55,000 for its EMD. The IPR, 1996 became effective from March 1, 1996. Therefore, though General Manager, District Industries Centre, Keonjhar recommended entitlement of benefit under IPR, 1996, determination of IPR by the Director of Industries, Orissa 1. Reported as Ipitata Sponge Iron Ltd. v. State of Orissa [2001] 122 STC 259 (Orissa). correcting it to IPR, 1992 was done basing on the first investment made by the unit on February 7, 1996. According to the general provisions of the incentives on sales tax as per clause 6.1 of IPR, 1992 subject to operational guidelines instructions and procedures, sales tax incentives shall be allowed after the unit has gone into commercial production and from the date of commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industrial unit is an industry of IPR, 1980 and not a new industrial unit of IPR, 1992. As such, the petitioner's unit is not a pioneer unit as per the provision of clause 2.14 of IPR, 1992. (H) According to clause 5 of the operational guidelines vide L. No. 11068/I dated February 8, 1993 of Industries Department, sales tax incentive is restricted for a period of five years in case of all new and EMD units and seven years for pioneer industries. (I) It is submitted that: (i) the fixed capital investment (FCI) of the unit of EMD was assessed basing on the chartered accountant certificate produced dated March 10, 1999 by the unit as on February 28, 1999 to Rs. 6,135.61 lakhs. The petitioner-unit again vide its letter dated November 17, 1999 requested to reassess the fixed capital investment (FCI) basing on the another chartered accountant certificate dated July 29, 1999 taking into account the closure of financial year ended as on March 31, 1999. It is submitted that the exemption certificate was issued in favour of the petitioner unit on May 26, 1999, i.e., prior to receipt of the letter dated November 17, 1999. It was clarified to the petitioner that there is no prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it is misconceived and irrelevant. On combined reading of the provisions under IPR at clause 6.7.5 and clause 5 of operational guidelines for IPR, 1992 issued vide L. No. 11068 dated February 8, 1993, the benefit to the tune of 75 per cent of the additional capital investment in plant and machinery under EMD is restricted to five years only after the unit had gone into commercial production after EMD is valid for the incremental sales only. (O) As per provisions of IPR, 1992 clause 7.5, industrial units taking up EMD are entitled for sales tax incentives limited to 60 per cent for Zone C, 75 per cent for Zone B and 100 per cent for Zone A of the additional capital investment in plant and machinery only. The petitioner unit has invested Rs. 4,601.36 lakhs in plant and machinery, the unit being located at Champua sub-division which is under Zone B, as per provisions 3 of IPR, 1992 (classification of area) is entitled for incentives limited to 75 per cent of capital investment in plant and machinery. Therefore, the unit is entitled to 75 per cent of Rs. 4,601.36 lakhs (investment under plant and machinery), i.e., Rs. 3,451 lakhs. Thus, the claim of the petitioner unit for en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999. As per provisions, expenditure incurred after the unit goes into commercial production cannot be taken into consideration for evaluating the financial limit for sales tax exemption/ deferment. Therefore, Director of Industries has rightly rejected the claim for amending the eligibility certificate in disallowing the petitioner's claim for modification of investment. (T) It is submitted that by no way the legitimate benefit as per IPR, 1992 has either been denied to the unit or prevented by executive declaration as claimed by the unit. (U) It is, therefore, contended that the points raised by the petitioner have no merit as per IPR, 1992 along with the operational guidelines and other instructions and the Director of Industries, Orissa has not made anything wrong by not revising the petitioner unit's sales tax exemption/deferment eligibility certificate and in assessing its fixed capital investment. Before proceeding any further, it would be appropriate to take note of the relevant Industrial Policy Resolution, 1992, which arises for consideration in the present case. (I) The IPR, 1992 dated August 1, 1992 was published in the Orissa Gazette on August 14, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4.3 Expansion/modernisation and diversification will be eligible for specific incentives as mentioned against the concerned incentive. However, defaulters of OSFC/IPICOL dues shall be eligible only after they have cleared such dues. Incentives 5.. Capital investment subsidy: 5.1 New industrial units as well as expansion/modernisation/diversification projects as defined earlier, shall be allowed capital investment subsidy in the following manner: . . . Zone B . 20 per cent of the fixed capital investment subject to a limit of Rs. 20 lakhs. . . . 5.3. Capital investment subsidy will be released within 30 days after the unit completes trial production. 6.. Incentive sales tax General provisions: 6.1 Subject to operational guidelines/instructions and procedure, sales tax incentives shall be allowed after the unit has gone into commercial production and from the date of commercial production. 6.2 Deemed payment of deferred sales tax: Whenever payment of sales tax on finished product is allowed to be deferred, such deferment shall, for the purpose of payment of income-tax by the concerned industrial unit, at the option of the industrial unit and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible only after they clear such dues. of exemption or deferment of sales tax on finished products shall be available for expansion/modernisation/diversification of existing units taken up after the effective date subject to a limit of 60 per cent of the additional investment in plant and machinery only in Zone C, 75 per cent in Zone B and 100 per cent in Zone A provided that such expansion/modernisation/ diversification has been undertaken on the basis of separate project report duly appraised by the financial institutions and provided further that, subject to the provisions of the Sales Tax Act, the benefit of exemption/ deferment/shall not have the effect of reducing the sales tax paid by the unit prior to commencement of the expansion/modernisation/diversification programmes. In other words, the benefit shall be applicable to incremental sales. (II) The State of Orissa in the Finance Department passed a consequential notification to give effect to the IPR, 1992, bearing S. R. O. No. 1091 dated September 23, 1992 to take effect from August 1, 1992 the relevant portion of which are quoted hereinbelow: S.R.O. No. 1091/92. In exercise of the powers conferred by section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed for a period of five years from the date of commercial production to be certified by the concerned General Manager/Project Manager of the District Industries Centre: Provided that such exemption of sales tax on purchases of raw materials, spare parts of machinery and on sale of finished products taken together shall be limited to a ceiling of 100% of fixed capital investment in land, buildings, plant and machinery if the unit is located in Zone A, 75% of fixed capital investment if the unit is located in Zone B, 60% of fixed capital investment if the unit is located in Zone C: Provided that to be eligible for such exemption the unit shall produce certificate from OSFC/IPICOL showing clearance of their defaulted dues: Provided further that no exemption as indicated above shall be allowed to the following categories of industries. . . . 43. 44 (a) Purchase of (i) Raw materials, that is to say, goods which directly go into the composition of the finished products. (ii) Spare parts of machinery used in the industry for manufacturing/processing goods in Orissa for sale. When purchased by a registered d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed to the following categories of industries: ... The exemption of sales tax shall be limited to 60 per cent of the additional capital investment, in plant and machinery only in Zone C, 75 per cent of the additional capital investment in plant and machinery only in Zone B and 100 per cent of additional capital investment in plant and machinery only in Zone A. Explanation I. Additional capital investment in plant and machinery means additional investment of 50 per cent or more of the undepreciated book value of fixed capital investment of an existing unit in acquisition of plant and machinery for expanding/modernising/diversifying the production of the said unit: Provided that the benefit of exemption is admissible only on the incremental sales arising out of such expansion/modernisation and diversification: (III) The State of Orissa in the Industry Department issued operational guidelines vide letter No. 4068/I dated February 8, 1993 under the IPR, 1992, relevant portions of which are quoted herein below: In pursuance of the IPR, 1992 issued by the Government vide Resolution No. 21875-XIV-HI-4/92/Ind., dated August 1, 1992 allowing e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, inspect the unit and withdraw the certificate in case of non-fulfilment of the conditions. The beneficiary unit should also maintain necessary records and registers for this purpose as may be prescribed by the Director of Industries, Orissa. 6.. An industrial unit will be treated as a pioneer unit only if, it is so certified by the Director of Industries. 7.. (a) In case of expansion/modernisation/diversification the concessions are available only in respect of the incremental sale over and above that of the immediate preceding year as it existed prior to expansion/modernisation/diversification of any industrial unit. (b) The industrial unit shall be eligible for the concessions if such expansion/modernisation/diversification has been undertaken on the basis of a separate project report duly appraised by the financing institutions (DIC/DI in case of self financed units). 8. In case of fixed assets acquired under hire-purchase or lease-hold basis the ceiling of sales tax concessions shall be computed on the original value of the said fixed assets. FORM NO. I-A Application for sales tax exemption/deferment of units which has undertaken expansion/modernisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 2 3 4 5 6 7 14. Date of commencement of commercial production in respect of expansion/modernisation/diversification. 15. Registration No. under the Orissa Sales Tax Act, 1947 and Central Sales Tax Act, 1956. I, Sri . . . S/o . . . . at present . . . . (designation) of . . . . (name of the industry) do hereby declare that the facts stated above are true to the best of my knowledge and undertake to state that separate accounts shall be maintained on the sale of finished products relating to the enhanced commercial production resulting from expansion/ modernisation/diversification. I request for issue of sales tax exemption/deferment certificate under IPR, 1992 on sales of finished products as mentioned hereunder: Sl. No. Item Specification, if any Annual quantity 1. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the dues of OSFC/IPICOL as on the date of application. 5. The position of annual installed capacity of production of this unit before and after expansion/modernisation/diversification is indicated as below: Sl. No. Particulars of the finished products Installed capacity of production before E/M/D (in quantity) Installed capacity of production after E/M/D (in quantity) 1. 2. 3. 4. 1. 2. 3. 4. 6. This unit located at . . . . . . . . . . . . . in sub-division . . . .of . . . .district being a small-scale/medium/large/pioneer industrial units and having undertaken expansion/modernisation/diversification on or after August 1, 1992 is eligible for exemption of sales tax on sale of its finished products to the extent of incremental sales o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EMD) as two distinct and different categories, for the purpose of providing incentives. He further submits that if an analysis is made of the two distinct categories of industry and the incentive offered under paragraphs 7.4 and 7.5 of the IPR, 1992, the following distinctions would be noted: 7.4 New Industries 7.5 EMD Existing Industries New industry is eligible for exemption for sales tax on raw materials, spare parts andfinished products. Eligible for exemption of sales tax on finished products. Exemption from payment of sales tax on finished products for entire sales. (Exemption period five years and deferment period seven years) Exemption from payment of sales tax on finished products for incremental sales only. The valuation of exemption as percentage of entire industries capital investment. The valuation of exemption as percentage of additional capital investment on plant and machinery. Learned counsel for the petitioner drawing attention of this court to the aforesaid distinctions contended that there is no co- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner that paragraphs 7.4 and 7.5 of the IPR, 1992 are distinct and different and have no co-relation , is wholly incorrect. He submitted that as far as sales tax incentive under the IPR, 1992 is concerned, paragraph 6 which contains general provisions for sales tax incentives has to be read along with all sub-clauses of paragraph 7 which deals with sales tax incentives and vehemently contended that for the purpose of interpreting the extent and/or extant of the incentives available, a conjoint reading of both paragraphs 6 and 7 is necessary and if such a conjoint reading is done, then time-period as contemplated under paragraph 7.4 has to be read into as a condition in paragraph 7.5 as well. He further submitted that once paragraphs 7.4 and 7.5 are read together along with the stipulations in the eligibility certificate, as contained in clause 5 and form II-A of the operational guideline, it would be clear that the sales tax incentive is available for a limited period, i.e., for 5/7 years and not for an unlimited period as contended by the learned counsel for the petitioner. In the light of the aforesaid rival contentions, it becomes necessary to ascertain the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the resultant product but would also include materials which, though not used in the manufacture of the resultant product, are required in order to manufacture the resultant product. Crystar beams imported by the appellant are materials, which though not used in the manufacture of H. T. Porcelain Insulators required for lightning arrestors, are required for producing the insulators in the kilns. See Oblum Electrical Industries Pvt. Ltd. v. Collector of Customs [1997] 7 SCC 581 (c) In taxing statutes, provisions granting incentive for promoting economic growth and development should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. The object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of the industry in the State. Therefore, the exemption granted to the respondent from August 9, 1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . See Commissioner of Trade Tax v. D. S. M. Group of Industries [2005] 139 STC 269 (SC); [2005] 1 SCC 657. (f) The object behind enactment of the Industrial Policy, 1995 was to confer incentives on industries set up in the State. As part of the incentives, the industrial policy envisaged allotment of land/building in growth centres to companies for setting up industrial units on lease for 99 years with an option for renewal. As a part of the incentives, it was also envisaged under clause 16 that sales tax benefit/exemption shall be granted to attract investments in order to sustain industrial development in the State. It is in this background, that we have to consider clause 16.1 and clause 16.2 of the Industrial Policy, 1995. The two notifications are merely instruments giving effect to the policy envisaged under the Industrial Policy, 1995. If one reads the notification(s) in the light of the incentive policy it is clear that incentive is admissible to the unit which is the owner of the building in which it is located from which the industrial production commences or it (unit) is located in a leasehold premises (building or land or both), provided that the lease shall be of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guidelines issued by the State of Orissa, on which great reliance has been placed by the learned counsel for the Revenue. The operational guidelines has been issued under Industries Department Letter No. 4068/I dated February 8, 1993, which has been extensively noted hereinabove. The source of authority for issue of such an operational guidelines purportedly come from clause 23 of the IPR, 1992 which advises the State Government to issue such a guideline/instruction for administration of incentives contained in this policy . It may be kept in mind that the Industrial Policy Resolution, 1992 is a declaration by the State of Orissa which has been passed by the State Cabinet and thereafter, published in the official Gazette. Post such publication, the resolution is put into operation by passing certain consequential notifications as required for the purpose of extending incentives committed by the State in the IPR. In furtherance thereof, the Finance Department have issued a S. R. O. dated September 23, 1992 in order to extend the benefit as contained in the IPR, 1992 by noting amendment to the Tax Free Schedule which though not used in the manufacture of H. T. Porcelain Insu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion must be given which would extend benefit to such industries. There would be no purpose in denying an industry which had invested rupees fifty crores or more and whose production in the State had, as a result, increased, the benefit of the exemption granted by the notification merely because the whole of the investment was not in any particular unit. Thus, even where the investment was made by the company in more than one unit, so long as the total investment was rupees fifty crores or more, the benefit of the notification would be available. Such benefit would then be distributed in the manner set out in the schedule depending on where a unit in which expansion, diversification or modernisation had taken place, was situated. However, it was the company which had made the investment and was paying the tax. It was the company which would be getting the benefit of the exemption. See Commissioner of Trade Tax v. D. S. M. Group of Industries [2005] 139 STC 269 (SC); [2005] 1 SCC 657. (f) The object behind enactment of the Industrial Policy, 1995 was to confer incentives on industries set up in the State. As part of the incentives, the industrial policy envisaged allotment of lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied to the Director of Industries for being granted an eligibility certificate under the IPR, 1996 which came into effect from March 1, 1996. (ii) The Director of Industries took into account the fact that the petitioner-company had made its first investment in its EMD unit on February 7, 1996 (i.e., before IPR, 1996 came into effect) and therefore, while being of the view that the petitioner-company's application for grant of eligibility certificate under the IPR, 1996 (with effect from March 1, 1996) was not in order, issued a certificate of eligibility to the incentives to the petitioner-company under the IPR, 1992 fixing a period of five years. It is, therefore, clear that the petitioner-company itself had not made any application under the IPR, 1992. (a) An important aspect of law that has arisen for our consideration is the legal status of the operational guidelines issued by the State of Orissa, on which great reliance has been placed by the learned counsel for the Revenue. The operational guidelines has been issued under Industries Department Letter No. 4068/I dated February 8, 1993, which has been extensively noted hereinabove. The source of authority fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 091 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 in the policy and not for the purpose of imposing any new stipulation and/or conditions alien to and/or not in consonance with the passing of the 1992 Policy. Such a stipulation cannot in law be read into and allowed to operate since it would frustrate the very objective sought to be achieved by the 1992 Policy Declaration. (a) Upon perusal of the IPR, 1992 and the consequential Finance Department notification, we are of the view that the argument advanced on behalf of the petitioner to the effect that the new industries and the EMD of existing industries have been treated as distinct and different and have been treated separately not only for the purpose of eligibility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of the industrialisation in the State by granting specific exemption of sales tax on finished products on incremental sales to EMD units. The words of a notification for the purpose of exemption have been examined by the apex court and the principles that have been laid down in K. R. Steel Union Ltd. v. Commissioner of Customs [2001] 4 SCC 736; AIR 2001 SC 1899, Commissioner of Trade Tax v. D. S. M. Group of Industries [2005] 139 STC 269; [2005] 1 SCC 657, State of Jharkhand v. Tata Cummins Ltd. [2006] 145 STC 340; [2006] 4 JT SC 1, Commissioner of Sales Tax v. Industrial Coal Enterprises [1999] 114 STC 365; [1999] 2 SCC 607 and Oblum Electrical Industries Pvt. Ltd. v. Collector of Customs [1997] 7 SCC 581; AIR 1997 SC 3467. It is well-settled law that the duty of the judicature is to act upon the true intention of the Legislature. In other words, if a provision is open to more than one interpretation, the court has to choose that interpretation which represents true intention of the Legislature. Although the aforesaid principle apply to the interpretation of the statute, yet, the self-same principle would also apply to interpretation of the IPR, 1992 inasmuch as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of the rule-making power. . . . Rule 74(2) and bye-law 24(5) are beyond the scope of the Act and, therefore, ultra vires. In the case of Kunj Behari Lal Butail v. State of H. P. AIR 2000 SC 1069, the apex court while dealing with the Rules framed under the H P. Ceiling on Land Holdings Act, 1972 held as follows: . . . Section 26 delegates to the State Government the legislative power of making rules which delegation is circumscribed by the expression 'for carrying out the purposes of this Act'. In exercise of such delegated power to legislate, the State Government cannot bring within the net of the rules what has been excluded by the Act itself. Tea estates are excluded from the provisions of the Act by section 5. 'Tea estate' is defined in the interpretation clause of the Act to mean an area under tea plantation and includes within the definition, 'such other area necessary for purposes subservient to a tea plantation as may be prescribed'. Rule 3 defines what areas shall be treated as subservient to tea plantation. The amendment made vide notification dated April 4, 1986 places an embargo on right to transfer such subservient land thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d comparative chart would clearly indicate that there, in fact, exists absolute parity between the IPR, 1992 and Finance Department notification, especially in relation to the stipulation regarding time-period . In view of the aforesaid conclusion, we are of the view that the stipulation of the period of five years made in the eligibility certificate granted to the petitioner is without sanction of law and the petitioner shall be entitled to such benefit under the IPR, 1992 without any limitations as to the period of time. The next question that arises for our consideration relates to quantification of the benefit to which the petitioner may be entitled to. It has been contended by the learned counsel for the petitioner that at the time when the petitioner-company made an application for the issue of the eligibility certificate, by that time it had made fixed capital investment amounting to Rs. 6,135.61 lakhs and the break-up of such investment was valued on land and building at Rs. 13.45 lakhs and plant and machinery valued at Rs. 46.64 lakhs. Basing on such declaration the certificate had been granted declaring the petitioner to be entitled to sales tax exemption up to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, of the view that the reasons ascribed by the Revenue for rejecting the request of the petitioner for re-evaluating the financial limits of its incentives on account of the certificate granted by the chartered accountant on closure of the financial year is wholly unjustified. Of course, it was open to the opposite parties to get confirmation of such claims of the petitioner from appropriate sources and on its satisfaction that such investment has, in fact, been made for the purpose of expansion of the petitioner's plant to the extent so satisfied, there is no impediment in law for not considering the same, especially when the District Industries Centre has also favourably recommended the case of the petitioner for re-evaluation of such financial limit. The next question raised by the petitioner in course of hearing relates to its claim for grant of subsidy under clause 5 of the IPR, 1992. On perusal of the same, it would be clear that expansion project , as defined under the said resolution, was entitled to capital investment subsidy in the manner stipulated therein. Since the petitioner's factory is located in Zone-B, the petitioner claims that it is entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption as noted hereinabove, subsequent thereto the petitioner-company has not been granted exemption as a consequence of which, the petitioner-company has been making deposit of tax with the Revenue from its own resources without effecting any collection of tax on sales. The Sales Tax Officer, Keonjhar Circle, Keonjhar who has been impleaded as opposite party No. 3 to the writ petition, has entered his appearance but has not filed any counter-affidavit. In the light of the aforesaid discussion of facts and law, we allow this writ application with the following directions: 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 of eligibility granted to the petitioner in form No. II-A under annexure 4 to the writ petition is declared ultra vires the IPR, 1992 and shall have no effect. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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