TMI Blog2012 (11) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... uty Advocate-General, The judgment of the court was delivered by DEEPAK GUPTA J.- The brief facts of the case are that the petitioner is a public limited company duly incorporated under the Indian Companies Act, 1956. It is engaged in the manufacture of cement. The company has been set up at Barmana in District Bilaspur in the State of Himachal Pradesh. The company also has a mining lease to extract lime stone and from this lime stone, it manufactures clinker and cement. 2. This company set up its first unit prior to the year 1984 but the unit was commissioned sometime in the year 1984. In 1984, the installed capacity of plant was 5.6 lakhs ton per annum (LTPA). In 1989, the capacity of the plant was increased from 5.6 to 7.6 LTPA. Thereafter, the company again contemplated an increase in the manufacturing capacity of cement by 10 LTPA but finally instead of increasing the capacity of the old unit, it set up another unit (hereinafter referred to Unit No. II). The company invested more than ₹ 200 crores and gave employment to more than 200 people in the second unit. In earlier litigation in LPA No. 23 of 2004 decided by this court on April 10, 2008, this court clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e down the old unit, establish a new unit and the production would be shown to be that of the new unit only. He submits that the State being alive to such a situation, purposely laid down a condition that the production level of unit No. I should be maintained at the same level at which it was producing immediately before unit No. II went into commercial production. He further submits that it is nobody's case that unit No. I is not capable of production. His last submission is that both unit No. I and unit No. II of the company manufacture cement from the raw material which is extracted from the same mines and the feeding area for both the units is the same. Unit No. I has already taken the benefit of incentives and now that the period of incentives of unit No. I is over, there is every possibility that the production of unit No. I is lowered and transferred to unit No. II only with the purpose of taking tax benefits of unit No. II and hence the need to impose such a condition. 6. To appreciate the rival contention of the parties it would be appropriate to refer to certain documents. The first incentive policy referred to by the petitioner is the policy issued initially in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores and shall employ at least 200 persons on regular basis. 11. It is not in dispute that the second unit of the petitioner-company would fall in the category of prestigious cement units and would therefore be entitled to sales tax incentives stipulated in clause 27.1 which reads as under: 27. Incentives to prestigious cement units 27.1 Sales tax incentives: Prestigious cement units including expansion projects as defined in rule 2.1(rrrr) shall be eligible for sales tax deferment for a period of 12, 9 and 7 years in category A, B and C blocks respectively. The repayment of deferred amount of sales tax shall commence from the fourth year and shall be repaid in one instalment on the due date. It is thus apparent that as per the incentive policy, the prestigious cement units were entitled only to sales tax deferment for the various periods reflected in the policy. 12. On December 31, 1994, the State of Himachal Pradesh issued a comprehensive exemption notification in exercise of the powers vested in it under section 42(1) of the Act. In fact, this is not one notification but a compendium of various notifications which have been published together. No doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescribed authority or is not annulled or quashed in any appellate, revisional or other proceedings: Provided that the exemption contained in sub-para (1) to M/s. Associated Cement Companies Limited, Barmana, District Bilaspur (H.P.) shall be granted by the prescribed authority only if, in addition to the prescribed conditions: (a) the payment of tax under the Himachal Pradesh General Sales Tax Act, 1968 and the Central Sales Tax Act, 1956, in respect of the old components of the M/s. Associated Cement Companies Limited, Barmana, District Bilaspur (H.P.) is actually made even during each financial year of the period of exemption in respect of the new components of this unit, established as a result of expansion on the quantity respectively of 551664 metric tons and 3,71,028 metric tons sold during the year 1994-95; and (b) the level of manufacture of 922692 metric tons of cement in the old component of M/s. Associated Cement Companies Limited, Barmana, District Bilaspur (H.P.) is also maintained unchanged throughout each financial year during the period of exemption in respect of the new component of this unit established as a result of expansion. 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of sales tax for nine years. Admittedly, the unit of M/s. Gujarat Ambuja Cement Ltd. was a new unit and they had no other older unit. The petitioner-company on the other hand already had one existing unit which was not entitled to tax exemption under this policy and the policy was applicable only to the second unit. Therefore, the petitioner and Gujarat Ambuja stood on different footing. It is not the case of any party that there were no other cement industries existing at that time in the State of Himachal Pradesh. All other cement industries except M/s. Gujarat Ambuja Cement and the petitionercompany were not granted the benefit of the sales tax exemption probably because they were old units. 17. Certain conditions were laid down and admittedly the petitionercompany fulfils conditions Nos. 1 to 6 and is entitled to the benefit granted under the scheme. The proviso to sub-clause (2) of clause 2(1C) lays down an additional condition as far as the petitioner-company is concerned. The second condition is that the second unit would not be entitled to the benefit of the exemption if the first unit does not produce 9226922 MT of cement which it was producing when the second unit c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76 (SC); [2005] 6 SCC 292, are not at all applicable to the facts of the present case. In State of Bihar case [1999] 112 STC 258 (SC); [1999] 2 SCC 31, the incentive policy itself granted the benefit of sales tax exemption on the purchase of raw material for a period of seven years from April 1, 1993. Under the notification issued under the Bihar Sales Tax Act certain other conditions were laid down and the apex court held that in exercise of such powers it would not be permissible for the State Government to deny any benefit which was otherwise available to an industrial unit under the incentive policy itself. As clearly held by us above, the benefit of exemption from payment of sales tax was not available to the petitioner-company under the incentive policy. This benefit was given by the same notification which lays down an additional condition that production in unit-I should not be lowered and the said condition in our opinion is just and reasonable. 21. As far as Vadilal Chemicals' case [2005] 142 STC 76 (SC); [2005] 6 SCC 292 is concerned, the same also has no application because there also the Government Order of 1993 had granted sales tax holidays but the DCCT gave ..... X X X X Extracts X X X X X X X X Extracts X X X X
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