TMI Blog2016 (4) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... ility Certificate beyond the validity period of the First Eligibility Certificate granted upon establishment as new industrial unit. The petitioner units are only entitled to get the benefits by way of alternative benefits in lieu of benefits being enjoyed under the existing Scheme in terms of part one of the definition of eligibility under the Meghalaya Industries (Tax Remission) Scheme 2006 and that too, for the remainder period of First Eligibility Certificate of seven years which they have already enjoyed. Besides, the Directorate of Industries and the Meghalaya Industrial Development Corporation have not been empowered under the Meghalaya Value Added Tax Act to levy and assess the tax liability of any dealer. - Decided against the petitioner - WP (C) No. 78 of 2014, WP(C) No. 79 of 2014 - - - Dated:- 13-1-2016 - Uma Nath Singh And Sr Sen, JJ. For the Petitioner : Dr A Saraf, Sr.Advocate Mr A Goyal, Advocate Mr K Choudhury, Advocate Mr P Baruah, Advocate Mr L Islam, Advocate For the Respondents : Mr ND Chullai, Sr. Govt. Advocate Mr S Sen Gupta, Govt. Advocate JUDGMENT Uma Nath Singh, CJ One of two writ petitions, namely, WP(C) No.78/2014 (Meghalaya Bit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9% remission of tax payable under the Meghalaya Industries (Tax Remission Scheme), 2006, on the ground that, under this Scheme there is no provision for extension of period of eligibility for new industrial units that have undergone expansion, modernization and diversification. As per the contention on behalf of the petitioner-companies, the impugned orders of Assessment are passed beyond the jurisdiction of the authority who, while rejecting the entitlements of the petitioner-Companies to claim benefits of exemption, has raised the demand in clear violation of the Scheme of 2006, and also in derogation of the order dated 07-01.2008 and 08.09.2009, passed by the Director of Industries-cum-Member Secretary, Single Window Agency, Meghalaya, whereby he has accorded an ex-post facto approval to petitioner s industrial unit for (i) expansion and modernization programme and (ii) grant of eligibility certificate which was issued by appropriate authority on 30.05.2011. 6. We have heard learned counsel for parties and perused the pleadings of writ petition. 7. Learned counsel appearing for the petitioner submitted that, admittedly there was no other Industrial Policy except the Policy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88) 3 SCC 570 [Para 5](Assistant Commissioner of Commercial Taxes (Asst) Dharwar and Ors v. Dharmendra Trading Company and Ors); (ii) (2005) 6 SCC 292. 9. It is the submission of the petitioner that, under the Scheme of 2006, it is no where provided that an industrial unit which was established as new unit as per the Meghalaya Industrial Policy 1997 and subsequently underwent the expansion was not entitled to the benefits of tax remission under the Scheme of 2006. The only condition required was that the industrial unit shall not be a non-eligible unit under the Meghalaya Industrial Policy 1997 and the same must be approved by the Single Window Agency on or before 30.4.2005. It also appears that Meghalaya Value Added Tax Act, 2003 was enacted to provide for and consolidate the laws relating to levy of Value Added Tax on sales and purchases of goods within the State of Meghalaya. The said Act was published in the Gazette of Meghalaya Extraordinary No.25 dated 4.3.2005 vide Notification No.LL(B)53/2002/314. In exercise of powers conferred under sub-section(3) and (4) of Section 16 of the VAT Act, the Governor of Meghalaya was pleased to frame the Meghalaya Industries (Tax Remissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of petitioner in WP(C)No. 79 of 2014 (M/s Dyna Roof Pvt. Ltd) since the date of commercial production was recorded as 12.12.2004, the period of seven years eligibility ended on 11.12.2011. This is also a submission that under the Notification dated 16.10.2006, there were two clauses, namely, (i) for providing alternative benefits in lieu of benefits being enjoyed by the eligible industrial units under the existing scheme without breaking the VAT chain and (ii) to provide alternative benefits to the industrial units in the pipeline which would have enjoyed the same benefits had the Act not come into force. In the instant case, since the petitioner units had already started production in 2004-2005 they were covered under Clause (i). Moreover, there was no provision under the Meghalaya Industrial Policy, 1997 or the Tax Exemption Scheme of 2001 for the new units that have already enjoyed the benefits provided thereunder to claim extended period of eligibility, having undergone expansion, modernisation or diversification. 13. In order to appreciate the rival submissions and decide the controversy, it would be necessary to examine the objectives of the Policy. On reproduction, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting up of export-oriented, Agro based, Mineral-based, Horticultural based and Electronic units as thrust area . 14. It is noticeable that none of the objectives seems to support the stand of the petitioner that a newly established industrial unit upon undertaking further expansion during the subsistence of the period of initial eligibility can be encouraged to claim extended period of eligibility. The thrust of the Policy is basically directed to promote village and small scale industries and that is why only very selective medium and large scale industries are to be promoted and set up. The Policy of 1997 seems to be designed to promote local interest and local entrepreneurship. Further it is only need based with restriction so that the ecological balance is not disturbed and the purpose of the Policy is not defeated. 15. Under the Meghalaya Industrial Policy, 1997, the Government also issued the Meghalaya Incentives Scheme of 1997. This Scheme was to remain in operation for a period of five years commencing from 15th August, 1997 or till such time as the Government may deem fit. The State Government also reserved the right to make any amendment to the Scheme from time to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no tax under this Act was to be payable by any eligible industrial unit to whom an Exemption Certificate in the form of Certificate of Authorization has been issued by the Commissioner of Taxes with prior approval of the Taxation Department in respect of sale of goods manufactured by such unit in the course of inter-State trade or commerce during the period of validity of the Certificate of Authorization subject to the condition that such sale to any person outside the State of Meghalaya is supported by proper documents of sale. Thereafter, the notification as aforesaid dated 16.10.2006 of the Meghalaya Industries (Tax Remission) Scheme 2006 was issued. However, the petitioner units had already started commercial production in 2004-2005. Thus, they were covered only under the Clause which provided for alternative benefits in lieu of benefits being enjoyed by eligible industrial unit under the existing Scheme of 2001 without breaking the VAT chain. 16. It appears that the petitioner in WP(C)No. 78 of 2014 M/s Meghalaya Bitchem Pvt. Ltd. was issued eligibility certificate under the Meghalaya Industrial Policy 1997 on 29.05.2006 by Managing Director, Meghalaya Industrial Developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on subject to the condition that such sale to any person outside the State of Meghalaya is supported by proper documents of sales. This shall come into force with immediate effect. Sd/ BK Verma Principal Secretary to The Govt. of Meghalaya Excise, Registration, Taxation and Stamps Department. 19. Thus, it appears that, the petitioners became aggrieved by the aforesaid Notification which, according to them, was contrary to the Industrial Policy of 1997 and the Meghalaya Industries (Sales Tax Exemption) Scheme, 2001 as it superseded the Notification of 2001 and the benefits admissible under the said Notification of 2001 were only restricted to sales made in the course of Inter-State trade or commerce to registered dealers or Government only. Under the earlier Notification dated 12.4.2001 which was issued in exercise of powers under Sub-Section (5) of Section 8 and in pursuance to the Industrial Policy of 1997, the benefits of sales in the course of Inter-State trade or commerce were not confined only to registered dealers and Government. 20. Thereafter, Government of Meghalaya, Department of Excise, Registration, Taxation and Stamps by the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute with the word This Notification shall be deemed to have come into force with effect from 1st October, 2006. Sd/- Principal Secretary to the Govt. of Meghalaya Excise, Registration, Taxation Stamps Deptt. 21. Thus, petitioner being aggrieved by the Notification dated 16.10.2006 and Corrigendum dated 2.4.2007, filed writ petitions wherein the following directions were given by this Court : 1. The State respondents shall consider the grievances of the petitioner and take a decision thereof in accordance with law without and loss of time. 2. Pending such decisions taken by the State respondents, the impugned Notification No. ERTS(T) 64/98/314 dated 16.10.2006 shall not be given effect to. 3. The State respondents shall also, in the meantime, issue C Form and Road permits in favour of the petitioner . 22. It also appears that the Assessing Authority, following the Notification No.ERTS(T)64/98/211 dated 5.9.2005 carried out the assessment of the petitioner companies levying tax on the inter-State sale made by the Company which was also challenged by way of petitions before this Court. In WP(C) No.113(SH) of 2007, vide order dated 13.8.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of entitlement of remission of tax as provided by the First Eligibility Certificate by way of exemption or remission, by way of alternative available under the Meghalaya Industries (Tax Remission) Scheme 2006. 24. The petitioners having commenced commercial production on 12.12.2004 and 25.03.2005 as new units were found eligible under the criteria laid down by the Meghalaya Industrial Policy 1997 and the Meghalaya Industries (Tax Exemption) Scheme 2001, and thus, were granted and have enjoyed for seven years the benefits of tax exemption under the Meghalaya Industries (Tax Exemption) Scheme 2001 and subsequently remission under the Meghalaya Industries (Tax Remission) Scheme 2006 which substituted the Meghalaya Industries (Tax Exemption) Scheme 2001 for providing alternative benefits in lieu of benefits being enjoyed by the eligible industrial units under the existing Scheme without breaking the VAT chain. In fact the petitioner units fell under the first part of the eligibility criteria mentioned in Clause (2) containing the definition of eligibility under the Meghalaya Industries (Tax Remission) Scheme 2006 as : 2. Definition of Eligibility An industrial unit, having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so reserved the right to amend the Meghalaya Industrial Policy 1997 and the Scheme issued thereunder. Further, the power to levy, collect, exempt or remit sales tax is conferred on the State Government by Acts of the State Legislature or the Parliament. Again, the power for carrying out the purpose of the Acts is vested on the sales tax authorities appointed as per the provisions of the concerned Sales Tax Acts. It is only because of these legal provisions, that in order to give effect to the sales tax incentives promised under the Industrial Policy, the Government framed the relevant Schemes and notified them by exercising the powers conferred by relevant provisions of the Sales Tax laws. Thus, it is well within the powers of the Assessing Authority under the Sales Tax laws, which have got the sanction of law, to levy and assess the sales tax liability of a dealer and to grant exemption/remission under the Schemes notified by the State Government. Therefore, the contention of the petitioners, that it is the Directorate of Industries for small scale industries sector and the Meghalaya Industrial Development Corporation for medium and large units, that have the authority to decid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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