TMI Blog2008 (10) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... are contrary to the 1993 Scheme and accordingly directing the sales tax authorities to delete condition Nos. (i) and (m) incorporated in the entitlement certificate issued to the assessee cannot be faulted. The second question raised by the Revenue is also without any merit, because, the conditions (i) and (m) imposed in the entitlement certificate could be directed to be deleted only after recording a finding that the 1993 scheme did not empower the Deputy Commissioner of Sales Tax to impose such conditions. In the result, both the questions are answered in the affirmative, i.e., in favour of the assessee and against the Revenue. - SALES TAX APPLICATION NO.8 OF 2007 IN REFERENCE APPLICATION NO.90 OF 2001 - - - Dated:- 13-10-2008 - DESHMUKH D.K. AND DEVADHAR J.P. , JJ. The judgment of the court was delivered by J.P. DEVADHAR J. The Commissioner of Sales Tax, Mumbai, has filed this application under section 61 of the Bombay Sales Tax Act, 1959 against the decision of the Maharashtra Sales Tax Tribunal, Mumbai ( the Tribunal , for short) dated April 13, 2007 in R.A. No. 90 of 2001 whereby the Tribunal has declined to refer the following questions of law for the opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mode of incentives for the unexhausted portion of the monetary ceiling provided under the aforesaid certificates. The assessee was accordingly permitted to avail of exemption mode of incentives up to the remaining period of the eligibility from April 1, 1993 to May 31, 2000 or till exhausting the unexhausted portion of the monetary ceiling, whichever is earlier. While enjoying the exemption mode of incentives under the 1988 scheme, the assessee modernised its existing plant by making additional investment of Rs. 884 lakhs and applied for further incentives under the 1993 package scheme of incentives as amended on July 6, 1994. There is no dispute that the additional investment made by the assessee for modernisation and upgradation of the existing plant did not result in increase in the production capacity of the plant. In other words, even after modernisation, the production capacity of the existing unit has remained the same. The implementing agency, namely, SICOM considered the application of the assessee and on being satisfied, issued a separate eligibility certificate on July 29, 1999 for a period of eight years from January 1, 2000 to December 31, 2008 subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 or till achieving the monetary ceiling of Rs. 596.70 lakhs, whichever is earlier. In respect of the balance 40.16 per cent of goods produced per year, the assessee was liable to pay tax after the unutilised incentives granted under the 1988 scheme were exhausted within the time stipulated therein. The assessee challenged the above two conditions imposed in the entitlement certificate by filing an appeal before the Tribunal, inter alia, on the ground that neither the assessee had sought availment of the incentives on pro rata basis nor was there any provision under the Act or under the 1993 scheme (as amended) which empowered the Deputy Commissioner of Sales Tax to impose such conditions in the entitlement certificate. By its judgment and order March 17, 2001, the Tribunal allowed the appeal and directed that the conditions (i) and (m) incorporated in the entitlement certificate dated January 25, 2000 be deleted, inter alia, on the ground that the said conditions were not consistent with the 1993 scheme as amended on July 6, 1994. Thereupon, the Commissioner of Sales Tax, Maharashtra State, Mumbai ( the applicant , for short) filed a reference application requesting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less than 25 per cent of the gross fixed capital investment. In the light of the representation received from the industries particularly the existing units, the State Government deleted para 3.8(I)(i)(c) and substituted a new para 3.8.(I)(i)(c) by issuing Government Resolution dated July 6, 1994. The newly substituted para 3.8(I)(i)(c) reads as follows: 3.8(I)(i)(c) Any acquisition of the new fixed assets outside the project scheme accepted by the implementing agency can be considered for incentives, other than special capital incentives, provided such acquisition is not less than 25 per cent of the gross fixed capital investment at the end of the previous financial year. A separate eligibility certificate will be issued for availing of such benefits with eligibility period as admissible to new unit in the relevant area and for the relevant category of units as per the scheme. However, for the purpose of sales tax benefits, the quantum of entitlement will be limited to 75 per cent of that admissible to a new unit in the relevant area and for the relevant category of units as per the scheme. A unit cannot, however, claim benefits for acquisition of new fixed assets under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oportionate basis, it is contended on behalf of the applicant that since the incentives are given to an existing unit on acquisition of certain additional fixed assets and the said incentives are to be utilized on the tax payable on the finished products, it must be held that the incentives under the 1993 scheme are to be availed of on the finished products attributable to the new fixed assets acquired by the existing unit. It is contended that in the present case, the assessee had expressed its inability to maintain separate books of account. As a result, identification of the finished products attributable to the newly acquired fixed assets was not possible and, therefore, the Deputy Commissioner was justified in determining the proportionate quantity of finished products attributable to the newly acquired fixed assets at 59.84 per cent of the total production and accordingly direct the assessee to avail of the incentives on 59.84 per cent of the total production till the time period set out in the entitlement certificate or till the quantum of incentives granted under the 1993 scheme is exhausted, whichever is earlier. We see no merit in the above contentions. Admittedly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d capital assets and, therefore, in the absence of any possibility of maintaining books of account for identification of the finished products attributable to the newly acquired fixed assets, the Deputy Commissioner was justified in incorporating the impugned conditions in the entitlement certificate. There is no merit in the above contentions, because, firstly, neither para 5.1 nor para 3.6 nor any other provision in the 1993 scheme provides that the incentives available to an existing unit acquiring new fixed assets must be availed of against the finished products attributable to the newly acquired fixed assets. Merely because an existing unit is entitled to the incentives on acquisition of requisite new fixed assets and merely because the incentives are to be availed of on the finished products, it cannot be presumed that the incentives under the 1993 scheme are to be availed of on the finished products attributable to the fixed assets newly acquired by the existing unit. Secondly, since increase in the production capacity of the existing unit acquiring new fixed assets, is not the criteria for entitlement of incentives under the 1993 scheme, availing of the incentives und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of assessment could adopt proportionate method of availing of the incentives but in para 14 of its judgment the Tribunal has erroneously recorded that the 1993 scheme does not provide for availing of the incentives on pro rata basis. There is no merit in this argument because, what is stated by the Tribunal in para 12 of its judgment is that where a unit manufactures both eligible finished products as well as non-eligible finished products and if separate accounts are not maintained, then in such a case, at the time of assessment it would be open to the assessing officer to adopt pro rata method for the purpose of availing of incentives. In other words, the question of availing of the incentives proportionately would arise only when there are eligible finished products and ineligible finished products or where the incentives are relatable to the increase in production attributable to the newly acquired fixed assets. As noticed earlier, an existing unit is entitled to the incentives under the 1993 scheme irrespective of the increase in the production capacity. Thus, there is no conflict in the findings recorded by the Tribunal. It is further contended by the learned A.G.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral provision and is not relevant in the context of availing of incentives under the 1993 scheme. Relying upon the decision of the apex court in the case of Mahim Patram Private Ltd. v. Union of India reported in [2007] 6 VST 248, it is contended that even though the State Government has not framed the Rules and prescribed the ratio for availing of the incentives, the Deputy Commissioner was justified in imposing ceiling for availing of the incentives under the 1993 scheme on pro rata basis. We see no merit in the above contention. In the case of Mahim Patram [2007] 6 VST 248 (SC), the provisions of the CST Act clearly provided that till the Central Government frames rule under the CST Act for determination of the turnover in relation to inter-State works contracts, determination of the turnover may be carried out by the assessing officer in a State in terms of the Rules made by that State Government. In the present case, neither the 1993 Scheme nor the BST Act nor the BST Rules contain a provision for availing of the incentives on pro rata basis. Moreover, section 41BB inserted to the BST Act by the Finance Act, 2001 specifically requires the State Government to prescribe the rati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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