9911796707
TMI Blog2009 (4) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... (for short, "the BIFR") conveying that it had accumulated loss of Rs. 522 lacs which had made its net worth negative by Rs. 469 lacs. The Bank of India was appointed as an operating agency on June 13, 1994 with the directions to examine the viability and prepare a report for the revival of the company. The company proposed in 1995 to settle the dues of the Bank of India and the Madhya Pradesh Financial Corporation (for short, "the MPFC") by selling some assets of the company in the prescribed manner. The State Government agreed to grant the company status of relief undertaking. As set forth in the petition the respondent-company submitted its revival plan which was examined by an operating agency and subsequently a draft rehabilitation plan for the company was circulated. The claim of the respondent was approved by the BIFR on August 21, 1996. In the revival scheme certain provisions for relaxation were made in respect of commercial tax and certain dues pertaining to M.P. State Electricity Board. A reference has been made to paragraph 3.5 of the revival scheme which deals with exemption pertaining to sales tax. Emphasis has been laid on sub-clause (d) of clause 3.5. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of tax payable under the policy changed by the Government during the period, whichever is less. In column No. 3 of the said Schedule the maximum period within which the quantum of exemption is available, was prescribed to be nine years commencing, February 1, 2003 up to January 31, 2012 or the period under the policy changed by the Government during the period, whichever is earlier. In column 4 of the aforesaid Schedule restrictions and conditions subject to which exemption was granted was prescribed that such exemption was to be in respect of sale of manufactured goods, raw materials or incidental goods consumed or used in manufacture of goods and packing material used in packing of goods manufactured in such units. It is asseverated that respondent No. 1, company failed to establish rolling mill unit in the industrial area but in papers it has shown the status of the rolling mill in order to avail of exemption under the revival scheme. It is contended that unless the company establishes the rolling mill unit in the industrial area it would not be entitled to get any sort of exemption in terms of the revival scheme or notification issued by the State Government. Certain doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a notification. A reply on behalf of respondent No. 1 has been filed contending, inter alia, the draft scheme was circulated by the BIFR vide letter dated June 4, 1996 as per annexure R1. The proposed sanctioning of the scheme was notified in a local newspaper by the BIFR as contained in annexure R2. After following due procedure the scheme was brought into force on August 21, 1996, annexure P3. A reference has been made to paragraph 3.5 of the said scheme to pyramid the stand that the benefit of exemption was granted for a period of nine years, and no objection was filed by the State Government in respect of the proposed draft scheme but on the contrary, consent was given for sales tax exemption at the time of hearing for the purpose of sanctioned scheme. Respondent No. 1 referred to the correspondence with the Principal Secretary, Commercial Tax and other Departments to show that respondent No. 1 had informed the petitioner before issuance of the notification about the products that will be manufactured in its unit by the respondent. The said letter has been brought on record as annexure R3. Reliance has been placed on DIC Registration Certificate, annexure R4, to highlight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant exemption of sales tax under the VAT Act and also to issue notification that monetary limit be removed since that was envisaged in the sanctioned scheme in paragraph 3.5 itself. It is contended that the State Government did not challenge the order dated July 4, 2006 wherein it was ordered to comply with the sanctioned scheme and was further directed to extend the benefit of exemption under the VAT Act. A reference has been made to section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short, "the Act") which empowers the BIFR to monitor periodically the implementation of the sanctioned scheme. It is urged that the State Government was a party to the initial sanction of scheme and the scheme was clear and, therefore, the BIFR passed the order. It is contended that section 72 of the M.P. VAT Act, 2002 clearly stipulates that the reliefs to which a company was entitled as per the earlier enactment including the facility of exemption/deferment, etc., would be continued for the balance unexpired period. A reference has been made to the Notification No. A-3195-205-1-V(31), dated March 31, 2006 wherein it was mentioned that registered dealers who were availi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1996 and the State Government had not expressed any objection as the orders would reflect and, therefore, the grievance that the State's consent was not taken is totally unacceptable. (ii) The State Government by letter dated November 13, 2002 had asked the respondent-company as to what products were being manufactured since the same have to be notified as per the BIFR order in Case No. 48 of 1994 and in response to the said letter the respondent by letter dated January 8, 2003 had intimated the Principal Secretary with a copy to the Commissioner of Commercial Tax and Industries Commissioner stating that the unit has installed various types of furnaces and other equipment to manufacture items of mild steel, MS alloy steel and other MS cast articles, MS and alloy steel ingot, non-malleable cast steel billets, rolled products, forging heavy fabrication, etc., and only thereafter the State Government had issued a notification on February 1, 2003 exempting the respondent's rolling mill unit for a period of nine years from February 1, 2003 to January 31, 2012 in respect of sale of manufactured goods, raw material and incidental goods consumed or used in manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales tax. The said paragraph is reproduced below in entirety: "3.5 Sales tax (a) Exemption of sales tax benefit for further period of five years from November 8, 1997. (b) The arrears of entry tax/sales tax of Rs. 0.67 lakhs up to March 31, 1995 to be paid in instalments commencing from April 1, 1996. (c) The penalty levied to be waived. (d) The extension of sales tax benefit for nine years in case of the rolling mills which is pending due to settlement of dispute of land with MPAVN, Bhopal." In paragraph 5.6 the BIFR had observed as follows: "5.6 The package shall be subject to annual review and based on that the bank/State Government shall have right to recompense for the losses/sacrifices undertaken by them and enhance the rate of interest and/or accelerate the repayment schedule of the debts owed to them if, in their opinion, the profitability of the company, its cash flow, etc., so warrant. However, this can only be done with the prior approval of BIFR." Eventually, in paragraph 7 of the order the Board directed as under: "7. The scheme shall come into force with immediate effect and shall be implemented by all concerned as per the time-frame stipulated in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 5.83 lakhs (Approx.) dated October 13, 1996 on the company in respect of the applicability of VAT for the period from April to June, 2006. (ii) The company, finally, requested the Board to issue necessary direction(s) to the Sales Tax Department of the GOMP to desist from illegal action(s) and to issue a revised notification, in consonance with the SS-96, i.e., to permit the company to take sale tax benefits, for a period of 9 (nine) years in respect of the rolling mill unit without any limit and also to include the company's name in the list of the unit(s), which are being exempted from payment of VAT for the period from April 1, 2006 to January 31, 2012." The Board taking note of the fact-situation directed as follows: "(b) The Sales Tax Department, GOMP, keeping in view the longterm profitability/viability of the company M/s. SMPL, to grant exemption of sales tax to the company up to March 31, 2006 and, in view of the substitution of applicability of sales tax by VAT with effect from April 1, 2006 the GOMP, in terms of their notification dated February 1, 2003, to also grant exemption to the company from the applicability of VAT for the remaining period, i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. It is noticed from the documents placed on record that it has been specified in section 72 of the M.P. VAT Act, 2002 that the parties who were eligible to avail of facility of the exemption/deferment of payment as per the earlier enactment are entitled to avail of the said facilities as per the new enactment. As such, there was no variance in the terms of the sanctioned scheme but a mere reiteration of the terms entailed in the sanctioned scheme and direction to the appellant to grant the requisite reliefs and concessions as per the terms of the sanctioned scheme. Thus, there was no requirement to seek the consent of the appellant in terms of section 19(1) of the SICA as no fresh cause of action had emerged. It is further noteworthy that the BIFR had examined the factual matrix and only on taking into consideration the vital facts regarding the relief and concession entailed in the sanctioned scheme of 1996 had directed the grant of such relief. The objection raised by the appellant that the company has not manufactured rolled products and hence exemption could not be allowed is not tenable as it is contrary to the terms entailed in the Sanctioned Scheme, 1996 and the notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been heard in the matter. At this juncture, we think it condign to refer to notification which was issued in terms of sanctioned scheme. It is also worth noting that the State Government did not object to the sanctioned scheme. Mr. Shukla fairly conceded to the fact that in initial 1996 Scheme the State was a party and had agreed for the said scheme. On the basis of the said notification which has been brought on record the State Government has granted exemption as specified in the column 1 of the Schedule (which has been reproduced hereinabove) from the payment in rolling mill units established at New Mandideep, Raisen. The appellate authority has appositely taken note of the same and not accepted the submission of the State with regard to the factum that the respondent is not engaged in manufacturing of goods in rolling mills. It is noticeable that the notification had fixed the financial limit. Clause 3.5 of the Scheme which we have reproduced above did not fix any financial limit. Paragraph 3.5 of the Sanctioned Scheme, 1996 is clear and unambiguous. It clearly stated that sales tax benefit for further period of nine years in case of the rolling mills which is pending due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2002 protect exemption already granted. The relevant part of the said provision reads as under: "72. Repeal and savings.-The Madhya Pradesh Vanijyik Kar Adhiniyam, 1994 (No. 5 of 1995) shall stand repealed on the date of coming into force of this Act: Provided that- (i) such repeal shall not- (a) affect the previous operation of the Act so repealed or Act No. 2 of 1959 repealed by Act No. 5 of 1995 (hereinafter referred to as a repealed Act) or anything duly done or suffered, thereunder; or (b) affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed Act, except the right or privilege accrued under that Act for availing of the facility of industrial concession by way of exemption from or deferment of payment of tax by registered dealers who had established new industrial units in the State of Madhya Pradesh or undertaken expansion, modernisation or diversification in such industrial unit or exemption from payment of tax by registered dealers who had established hotel under the New Tourism Policy, 1995 or the Heritage Tourism Policy of the Government of Madhya Pradesh; or ..." In view of the aforesaid, we are of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
