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Finolex Cables Limited Versus The State of Maharashtra & Others

2016 (8) TMI 922 - BOMBAY HIGH COURT

Retrospective amendment - curtailment of the sales tax incentives by way of deferral constitutional validity - impact on completed assessment - section 41D of the Bombay Sales Tax Act, 1959 - the Maharashtra Tax Laws (Levy and Amendment) Act, 1995 - Rule 31AAA of the Bombay Sales Tax Rules, 1959 manufacture and sale of jelly filled telephone cables. - Held that: - the scheme will remain in operation for a period of five years from 1st April, 1983 to 31st March, 1988. Consistent with the .....

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- Decided in favor of petitioner / asseessee. - WRIT PETITION NO. 1009 OF 1998 - Dated:- 20-8-2016 - S. C. DHARMADHIKARI & G. S. KULKARNI, JJ. Mr. P. C. Joshi with Mr. Piyush Shah for the petitioners. Mr. V. A. Sonpal - Special Counsel for the respondents. JUDGMENT :- (Per S. C. Dharmadhikari, J.) 1. By this writ petition under Article 226 of the Constitution of India, the petitioners seek a declaration that section 41D of the Bombay Sales Tax Act, 1959 amended by way of insertion by the .....

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nd in the event this court were to uphold the constitutional validity of the above provisions, then, they ought to be read down so as not to affect the sales tax incentives by way of deferral as availed by the petitioners. They would pray that this court should, therefore hold that the availment of the petitioners is in accordance with Package Scheme of Incentives, 1983, the agreements entered into pursuant thereto, the eligibility certificate and the certificate of entitlement issued thereunder .....

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0 Tilak Bhavan 14-A, Navi Peth, Pune - 411 030 Notice to a person when it is proposed to pass an order which affects him adversely under section 55 or 57 of the Bombay Sales Tax Act, 1959. (See rule 62 of the Bombay Sales Tax Rules, 1959) To M/s Finolex Cables Ltd. Urse Division, Urse, Tal, Maval, Dist. Pune Registration No. N 25 H 336 Licence No. - Permit No. - Recognition No. - Authorisation No. - Whereas it is proposed to pass an order to the effect mentioned below, you are hereby informed th .....

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ner no. 1 is a company incorporated under the provisions of the Indian Companies Act, 1956 and it carried out at the relevant time the business of manufacture and sale of jelly filled telephone cables, submersible insulated winding wires etc. The raw materials, inter alia, consumed for the manufacture are copper wire rod, HDPE, LDPE, jelly compound, polyester tape, polyol tape, steel tape etc. The other materials are set out in para 12(i) of the writ petition. It is the case of the petitioners t .....

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ephone cables. 8. The government of India, Ministry of Industry, Department of Industrial Development, Secretariat for Industrial Approval, by letter No. CIL 157(88) dated 21st July, 1988 communicated approval of expansion from 5,00,000 CKM of jelly filled telephone cables to 10,00,000 CKM at the petitioners' unit at Village Urse, Taluka Maval, District Pune. The Government of India, Ministry of Industry, Department of Industries Development, Secretariat for Industrial Approvals, by their le .....

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heme was to achieve dispersal of industries outside the Bombay-Thane-Pune belt. Applications were invited from eligible units. 10. The petitioners made an application to the State Industrial and Investment Corporation of Maharashtra in the prescribed form for eligibility under Part I of the Package Scheme of Incentives, 1983 for a proposed new unit for manufacturing five lakh CKM jelly filled telephone cables at village Urse, Taluka Maval, District Pune. The said application was made by the peti .....

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Governor of Maharashtra (Government) towards special capital incentives available to the petitioners under the Packaged Scheme of Incentives, 1983. 12. The State Industrial and Investment Corporation of Maharashtra Limited, after processing the petitioners' above application, issued Eligibility Certificate No. FINC(I)/ 1983/ DEFERRAL/EC-2101 dated 6th June, 1990. The eligible unit was located at Village Urse, Taluka Maval, District Pune. The goods to be manufactured were jelly filled teleph .....

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32 lakhs. The eligibility certificate was valid for five years from 1st April, 1990 to 30th April, 1995. 13. In terms of the Package Scheme of Incentives, 1983 and the eligibility certificate issued thereunder, the Deputy Commissioner of Sales Tax (Headquarters) and Director of Training, Maharashtra State, Bombay issued Certificate of Entitlement No.N-25/H/R-31B/217 dated 12th June, 1990 for availing sales tax incentives under Part I of the Package Scheme of Incentives, 1983 of Government of Mah .....

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oners were entitled to sales tax incentives by way of deferral of ₹ 1338.32 lakhs. The period of eligibility was five years from 1st April, 1990 to 30th April, 1995. The petitioners have since been manufacturing and selling their goods and have availed the sales tax incentives available under the Packaged Scheme of Incentives, 1983, the agreements entered into pursuant thereto, eligibility certificate and certificate of entitlement issued thereunder. 15. The petitioners have filed their re .....

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was finalised. 16. The petitioners had carried the matter in appeal before the Deputy Commissioner of Sales Tax (Appeal) on certain issues. The Deputy Commissioner of Sales Tax (Appeals) by his order dated 18th March, 1996 partly allowed the appeal and did not reverse the findings of the assessing officer in respect of the sales tax incentives claimed and allowed. Likewise, the petitioners' appeal against the order of assessment passed under the CST Act also came to be disposed of. 17. Respo .....

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under section 36(3) (b) and penalty under section 36(2) (c) read with Explanation II. 19. The petitioners say and submit that section 41D of the BST Act amended by way of insertion by Maharashtra Act XVI of 1995 called the Maharashtra Tax Laws (Levy and Amendment) Act, 1995 and Rule 31AAA of the Bombay Sales Tax Rules, 1959 amended by way of insertion by Notification No. STR-1195/CR- 80/Taxation-I dated 31st May, 1996 are ultra vires the Constitution of India, beyond the legislative competence .....

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diction and/or in excess of jurisdiction and/or improper exercise of jurisdiction and is illegal, bad in law, suffers from a mistake apparent on the face of the record and is violative of the doctrine of promissory estoppel. 20. An affidavit in reply has been filed for opposing admission and granting interim reliefs in this petition. In this affidavit, it is stated that the petitioners have enclosed agreement before issue of EC 1983 Scheme, which is shown as Exhibit 'K' to the writ petit .....

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issued to the petitioners, it is not open to the petitioners to argue otherwise. The eligibility certificate is then referred in para 4 and it is stated that the petitioners were aware that they are eligible for sales tax incentives to the extent of 5 lakhs CKMs per annum only. It is stated that the Additional Commissioner of Sales Tax, Pune Zone, on scrutiny of the assessment and appeal record of the petitioners for the period from 1st April, 1991 to 31st March, 1992, observed that the petition .....

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y taking recourse to section 57 of the BST Act. That is by revising assessment order and appeal order and hence, notice in Form 40 was issued to the petitioners and the petitioners were requested to show cause as to why the orders passed should not be revised on the basis of the gist enclosed along with the notice in Form 40. Instead of giving a reply to the notice, the writ petition was filed. 21. In paras 6 and 7 of this affidavit, this is what is stated:- 6. I say and submit that while consid .....

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partment, the Government has introduced and amended Section 41 C and 41 D of the B. S. T. Act, 1959 w.e.f. 1.10.1995 to check unhealthy competition with existing units in developed areas and also to monitor the cumulative benefits of incentives smoothly, legally and correctly. The amendments were not made with an intention to put forth some restrictions on a legible units in backward areas or to curtail the benefits by way of Sales Tax incentives enjoyed by such units in backward areas. The Gove .....

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to modify or withdraw benefits. 7. I say and submit that the Rules under Section 41 D of the B. S. T. Act, 1959 have since been framed and published on 31st May, 1996. During the time, the 1979 Scheme 1983 Scheme and 1988 Scheme were inforce, certain restrictions were specified by the Government of India under the Industrial Development and Regulation Act. These restrictions inter alia provided that no unit will produce more than the capacity prescribed for such unit under the industrial Licenc .....

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and Rules have been framed. Thus I say and submit that the provisions of section 41 D are valid piece of Legislature introduced in the interest of public. 22. Thus, it is submitted that there are remedies available for seeking redressal and reliefs. Therefore, the writ petition should not be entertained. 23. The petitioners filed a rejoinder affidavit and controverted the statements in the affidavit in reply. The petitioners in para 3 of the rejoinder affidavit referred to the Package Scheme of .....

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These are exhaustion of the total sales tax incentives and the expiry of the period of eligibility whichever event occurs earlier. The respondents cannot take into account factors or reasons which are extraneous and non germane to the package Scheme of Incentives, 1983. It is stated that the petitioners are entitled to avail benefit of sales tax incentives by way of deferral up to the total prescribed sales tax incentives and within the period of validity. The petitioners have thus reiterated t .....

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to make out any factual basis for a case of promissory estoppel. I say that in the instant petition, the Government of Maharashtra had announced a package Scheme of Incentives, 1983, inviting applications from eligible units. Terms and conditions were set out in the Scheme. I say that the Petitioners after completing the initial effective steps had filed an application for availing the incentives. The Petitioners had also entered into agreements. Letters of intent was issued by the Respondents. .....

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Agreement entered in pursuance thereto, the eligibility Certificate and Certificate of Entitlement issued thereunder and altered their position and it is therefore not permissible for the Respondents to resile from their promises or representations to the prejudice, of the Petitioners. 6. I say that the Petitioners interalia carry on the business of manufacture and sale of Jelly Filled Telephone Cables and Insulated Electrical Wires. I say that the Government of India, Ministry of Industry, Dep .....

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Cables to be manufactured at the petitioners unit at Pimpri, and 7,00,000 CKM of Jelly Filled telephone Cables to be manufactured at the eligible unit at village Urse. Earlier the Government of India, Ministry of Industry, Department of Industrial Development, Secretariat for Industrial Approvals had by letter dated 21st July, 1988, at Exhibit G at page 67 of the petition, communicated approval for expansion in production of Jelly Filled Telephone Cables from 5,00,000 CKM to 10,00,000 CKM, out o .....

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t of Sales Tax Incentives by way of Deferral only in respect of the production at the Eligible Unit at village Urse. I therefore say that advertence to this aspect of the matter by the Respondents to the effect that licenced capacity has relevance in determining disbursal of incentives and the licenced capacity of the Petitioners is less is totally misplaced and without appreciation of facts set out in the petition. 24. The petitioners have pointed out as to how they have availed the benefits in .....

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, it will be explicitly clear that the scheme of calculation of cumulative quantum of benefits was already in the Scheme and by the amendment of the Act, it has been brought in the statute books for the purpose of clarification and thereby avoiding misinterpretation by the dealers to claim more benefits than what they are entitled as per the Scheme. The amendments merely have provided the procedure and the substance thereof is in consonance and conformity with the Package Schemes announced from .....

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unlimited claims of incentives irrespective of the sanction as per eligibility and entitlement certificates and contrary to the principles of the Schemes. The Petitioner is seeking to interpret the scheme in the sense that the moment the eligibility certificate and entitlement certificate are obtained, it gets unlimited and unfettered right to claim entire sales tax exemption or deferment for any quantity of the goods manufactured and sold in the unit in utter disregard to the Eligibility and en .....

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t of the benefits only to the extent of quantifies, the items specified, for the period, at the unit specified and to the extent as provided in the Certificates and it is not correct to isolate the quantum aspect as referred to in the eligibility certificate to be ignored as against the other specifications. I say that to interpret the scheme in the manner in which the Petitioner seeks to interpret it will lead to logical absurdity and large scale revenue loss not envisaged by the Respondent and .....

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tifiable shift from developed to undeveloped areas which is not the intention of the Respondents. The amendments, in fact, are as much clarificatory as by way of some extension of benefits to the eligible units in as much as the extra productions above the sanctioned limit is made unlimited in case of SSI units and 25% in the case of the other MDI units over and above the capacity enumerated in the Eligibility Certificate. 27. It is stated that even without the amendments in the statute, the res .....

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nt of the incentives is sole discretion of the respondents considering the facts and circumstances, keeping in view its budgetary constraints and need for promotion and decentralization of industries. The respondents submit that the quantity up to which the petitioners are eligible to claim benefits in the eligibility certificate is explicit and patent. It is known to the petitioners. It is not correct to say that the eligibility certificate is silent about the quantity up to which the incentive .....

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Thus, it is stated that it is not just a quantum of the benefit but also with reference to the quantum of production which is to be found in the scheme. Once that is part and parcel of the scheme, then, there is no substance in the constitutional challenge. In para 22 of the affidavit in reply, the arguments on the principle of promissory estoppel are dealt with and it is submitted that the said principle cannot be applied for the reasons and grounds set out in the said paragraph. On these state .....

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described the unit and was not a condition for grant of incentive while the second affidavit in reply refers to production capacity endorsed in the eligibility certificate and the later inserted section 41D and Rule 31AAA framed thereunder. Both are not expressly retrospective, however, the respondents seek to apply the later inserted legislation to the closed matters decided in accordance with the law then in force. Such an action cannot be sustained nor supported by any provisions of law nor s .....

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emplated under the scheme is sought to be applied in a discriminatory manner. 31. Mr. Joshi further submitted that the petitioners were entitled to defer the tax payable in the periodical returns as well as the dues on assessment as per Rule 3B/C against the validity period of the entitlement and eligibility certificate from 1st May, 1990 to 30th April, 1995. The petitioners exhausted the financial ceiling of ₹ 1338.32 crores on 31st January, 1994. The assessing authority, while passing th .....

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ion action referred to the entitlement certificate as mentioned in notice in Form 40 dated 3rd October, 1997, the respondent finding that revisional action cannot be defended, a new case is sought to be made out by referring to column 5 of the eligibility certificate. Such an action cannot be permissible especially when the basic jurisdiction of initiation of revisional proceedings is under challenge. 34. The reliance of the respondents on column 5 of the eligibility certificate is also erroneou .....

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e Scheme of Incentives, 1983, is invalid and contrary to the scheme as well as the law settled by this court in the case of Prasad Power Control 41 VST 436 followed in the case of Shakti Arora Expert Ltd. 2012 (56 VST 62) 36. Mr. Joshi further submitted that Rule 31B/C provided for repayment of deferred amount after a period of 12 years in six annual installments. Section 38B was later on amended providing for premature repayment of deferred amount on the basis of net present value in accordance .....

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for a period of 12 years and would be allowed to collect the same and utilise it for that period as a running capital. The erroneous interpretation by the authorities under the Act contrary to Package Scheme of Incentives have violated the principles of promissory estoppel. The latest judgment of the Hon'ble Supreme Court of India on the point is in the case of Devi Multiplex and Anr. vs. State of Gujarat and Ors. (2015) 9 SCC 132 38. Mr. Sonpal appearing for the respondents submits that th .....

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urisdiction as falsely contended. Mr. Sonpal urges that:- (a) Section 41D is not scheme specific and provides for restriction in respect of all schemes prior to and after the amendment. (b) The notice under section 57 does not refer to section 41D or Rule 13AAA. (c) The agreements, the eligibility certificate and entitlement read together clearly demonstrate that there is ceiling to the maximum quantity that can be covered for availment of incentives irrespective of section 41D or Rule 13AAA. (d .....

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certificate clearly provided for ceiling of maximum production. (g) The provisions in the present context are statutory incorporation of the conditions of the scheme, agreement, eligibility certificate and entitlement certificate. (i) The insertion of Rule 31AAA is for benefit of the dealers inasmuch as it has given weighted ceiling from the basic available to the dealers. The Rule provides for no ceiling for SSI Units and weighted additional allowance of 110 to 125 of maximum production capaci .....

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y certificate and entitlement certificate clearly and in no ambiguous terms, unequivocally and explicitly provide that the availment of deferral shall be subject to the quantitative limits fixed in the eligibility and entitlement certificates. Thus, there is no curtailment contrary to the scheme. The scheme, agreement, eligibility certificate and entitlement certificate nowhere provide that the incentives can be claimed without any ceiling. Therefore, there is no question of once promising to gr .....

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ntitled to 25% more production over the licenced capacity or approved production as mentioned in application, agreement, eligibility and entitlement certificate and amendment cannot be said to prejudice but benefit the petitioners. (n) There cannot be estoppel against the statute. (o) The power to grant exemption incorporates in itself the power to withdraw in public interest. (p) The public interest is paramount. (q) The incentives available are unit based and not company based incentives that .....

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of two lacs is also petitioners specific and not unit specific. (s) It is not the case of the petitioners that excess production over 5 lacs CKM is related only to the Urse unit. (t) The principle of promissory estoppel is not applicable in the present facts and circumstances as supported by the judicial precedents. 39. With the assistance of both counsel appearing for both sides, we have perused the writ petition and the annexures thereto. We have also perused the affidavits placed on record. W .....

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in the developing regions of the State since 1964 under a scheme popularly known as Package Scheme of Incentives. 42. This scheme was continued up to 31st March, 1983 with amendments from time to time. In the light of experience gained during the period, a modified 1983 package Scheme of Incentives has been introduced from 1st April, 1983, rationalising the scope, various scales and mode of release of incentives particularly with a view to ensure that incentives are made available to the intendi .....

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nit, edible oil industry, incentives. We are concerned here with some features and would refer to those in details. As far as classification of areas is concerned, the areas in the State have been classified into four groups as detailed in the annexure to the scheme. Bombay Metropolitan Area and Pune Metropolitan Area being considered as developed areas, are covered under Group 'A', where no incentives are available. Rest of the State is divided in three groups, namely, Group 'B' .....

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in the same taluka where the existing unit is located, will also be considered eligible for incentives under the 1983 Scheme if it satisfies the conditions set out at internal page 4 running page 78 of the paper book. The units which may have filed on or before 31st March, 1983 applications for eligibility under the 1979 Scheme are advised to approach the concerned implementing agencies regarding their eligibility. Such units may not be considered eligible under the 1983 scheme. However, decisi .....

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- INCENTIVES UNDER PART I For New Units (including a Pioneer Unit which is a New Unit) A new eligible unit under Part I will be entitled to: (i) Sales Tax Incentive either by way of exemption or by way of deferral; and (ii) Special Capital Incentive. For Expansion/Diversification (including ' Expansion/Diversification qualifying as a Pioneer Unit' with Fixed Capital Investment exceeding ₹ 25 crores) In the case of Expansion/Diversification the eligible unit will be entitled to; Sal .....

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of inter-State trade or commerce. SALES TAX DEFERRAL An eligible unit will be entitled to defer the payment of following taxes: (a) Purchase tax payable under the Bombay Sales Tax Act, 1959, on the purchases of raw materials; (b) Sales tax payable under the Bombay Sales Tax Act, 1959, on the sales of finished products of the eligible unit; and (c) Central sales tax payable under the Central Sales Tax Act, 1956, on the sales of finished products of the eligible unit effected in the course of inte .....

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reached 80 per cent of fixed capital investment Group 'D' 7 years or earlier if the ceiling is reached 85 per cent of fixed capital investment Pioneer units 9 years or earlier if the ceiling is reached 90 per cent of fixed capital investment For Small Scale Units As per the scales in B/C/D areas respectively depending on location of the unit 100 per cent of fixed capital investment 45. These features, as elaborately pointed out, would indicate as to how the policy was devised so as to en .....

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application that they are public limited company. It is a light engineering industry and project, for which, registration is obtained for manufacture of jelly filled telephone cables. The petitioners also pointed out that they are informally in possession of land. Agreement for sale has already been signed, sale deed and conveyance will be effected on 29th February, 1998. The permission for non agricultural use has been granted by the Government. They pointed out that their registration authori .....

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this application. This application is made on 1st February, 1988 and the above details can be found in the Form, which is prescribed and filled in and copy of which is available at page 103 to 111 of the paper book. 46. Then, what we have on record is the letter of the Government of India, Ministry of Industry, Department of Industrial Development, which is on the subject of grant of industrial licence under the Industries (Development and Regulation) Act, 1951. This suggests that the existing c .....

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. Annexure 'K' at page 143 is the agreement by the petitioners with the Governor of Maharashtra. 47. We would refer to the necessary details of this agreement. 48. The agreement was entered into after the petitioners approached the Government for sales tax incentives under the said 1983 Scheme and requested the Government to permit them to avail the sales tax incentives by way of deferral of the sales tax liability under the deferral scheme as outlined in the Government Resolution dated .....

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usives to the eligible unit and only for the products and for maximum production at the eligible unit as considered admissible under the Eligible Certificate to be issued to him. 49. A bare perusal thereof would indicate that the petitioners have confirmed that they are aware of the incentives available under this scheme are relating only and exclusively to the eligible unit and only for the products and for maximum production at the eligible unit as considered admissible under the eligibility c .....

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1) that maximum entitlement of sales tax incentive by way of deferral not to exceed ₹ 1338.32 lacs. The validity period was stipulated as 1st May, 1990 to 30th April, 1995. The terms and conditions, based on which the eligibility certificate is issued, are found in the document itself and at page 180 of the paper book, clause (vii) reads as under:- (vii) During the Operative Period of Agreement(s) entered into by the Holder of this Eligibility Certificate for Incentives under the 1983, 198 .....

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any other location; (d) change or alter the constitution/ management/constituents comprising the ownership of the unit; (e) where the unit is owned by a limited company/co-operative society/trust, the limited company, co-operative society, trust as the case may be shall not merge or amalgamate with any other limited company/co-operative society/trust or permit or cause any other limited company/co- operative society/trust to be merged with the existing company/co-operative society/trust. 51. Th .....

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nt orders passed under the BST Act and the CST Act, copies of which are at Annexures 'O' and 'P'. The petitioners having carried the matter in appeal before the Deputy Commissioner of Sales Tax, Mumbai (Appeals), he did not disturb the findings of the Assessing Officer in respect of the sales tax incentives claimed and allowed. So, both the appeals were disposed of by orders, copies of which are at Annexures 'Q' and 'R'. 53. However, the retrospective amendments t .....

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B.S.T. Act 1959 and No.DC/APP/PN/ CA-66/95-96/762 dated 18.3.96 passed by the Dy. Commr. Of Sales Tax (Appeals) Pune, it is observed that while assessing the dealer total sales of jelly filled telephone cable products for value of ₹ 75,75,47,016/- were allowed for deferent under 31-B whereas the admissible sales as per the Entitlement Certificate (Capacity 5 lakhs K. M.) for which the sale value arrives only at ₹ 45,45,00,000/-. Thus the sales of jelly filled telephone cable produced .....

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000 K. M. capacity. The Assessment order passed by the Sr. Asstt. Commr. Of Sales Tax (Assessment) A-22, Pune is not just and proper. The Dy. Commr. Of Sales Tax (Appeals), Pune has not taken corrective action to set right the defect and salvage loss of Govt. Revenue and hence his order in Appeal is also not proper. I therefore propose to revise the Assessment order and appeal order disallowing the excess benefit of defertment and to levy interest 36(3)(b) & penalty u/s 36(2)(c) Expl. II by .....

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der disallowing the excess benefit of deferral amount is proposed to be made and even interest would be levied. 55. The petitioners have submitted, as already noted above, that the attempt is a retrospective tax effect, for the first time. That is sought to be given and that is impermissible. 56. That is relying upon the two provisions. Section 41D of the BST Act and Rule 31AAA of the BST Rules read as under:- 41D. Annual ceiling on benefits to be availed of under Package Scheme of Incentives. ( .....

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censing provisions of the Industries (Development and Regulation) Act, 1951. (2) The benefits availed of by any eligible unit in contravention of sub-section (1) shall be and shall be deemed to have been withdrawn and such Unit shall be liable to pay the tax n respect of sales or purchases, in so far as they relate to such excess production referred to in sub-section (1). Rule 31AAA. Appraisal of annual production capacity. - The annual production capacity of an eligible unit to whom the eligibi .....

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eans 125 per cent of the capacity as indicated in the registration certificate or licence issued by the competent authority under the Scheme or the capacity as appraised by the term lending financial institution or bank whichever is less. 2 1984 Scheme (a) Small-scale industrial units including (a) small-scale units manufacturing electronics equipments; (b) Medium scale and large scale units. No ceiling in respect of annual production capacity. (b) Capacity means 125 per cent of the capacity as .....

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cate or licence issued by the competent authority under the Scheme or the capacity as appraised by the term lending financial institution or bank whichever is less. 57. Mr. Sonpal relies upon these provisions to submit that this opens with a non obstante clause. It overrides any contrary stipulation in any of the package scheme incentives. No eligible unit to whom the eligibility certificate has been granted shall be eligible to draw the benefits in any year, whether preceding or succeeding the .....

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nything prior thereto, particularly the period under consideration in this petition. 59. As far as Rule 31AAA is concerned, that Rule deals with a situation of appraisal of the annual production capacity of an eligible unit to whom the eligibility certificate has been granted under any package scheme of incentives in respect of any period commencing on or after the 1st January, 1980. That would be taken in terms of the table shown above. Mr. Joshi appearing for the petitioners has placed relianc .....

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ax exemption for 398.963 MT for period from 01.07.1986 to 30.06.1989, 612.812 MT for period from 01.07.1987 to 30.06.1988, 557.261 MT for period from 01.07.1988 to 30.06.1989. Thus, in the three years amount of excess sales tax exemption incentive availed was ₹ 2.11 lacs for 98.963 MT in the first year, ₹ 6.03 lacs for 312.802 MT in the second year and ₹ 7.38 lacs for 257.261 MT in the third year, in all ₹ 15.52 lacs. It is not in dispute that the total exemption availed .....

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mpleted and in fact Assessing Officer had held the petitioner entitled to a refund. However, the Assistant Commissioner of Sales Tax issued a notice on 26.11.1992 along with a gist of order indicating that the petitioner was liable to pay tax as well as penalty. Notice and the gist of order showed that the Assistant Commissioner intended to exercise his revisional jurisdiction under Section 57 of the Bombay sales Tax act. 9. Reliance on judgment of the Supreme Court in State Bank of India Vs. Ch .....

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for the Advocate to seek adjournment for fourth time on the ground that he was busy in attending to some other cases. Even before Civil Courts the counsel being busy in other courts is no ground for adjournment and there is no reason why before the Revenue Authorities such a ground should be entertained. It cannot be said that the petitioner was denied reasonable opportunity of being heard. The opportunity which was available, was squandered away by the petitioner, for which he must blame himsel .....

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heme of Incentives (hereinafter referred to as :the 1979 Scheme:) is hereby issued to M/s. Semi Conductor Packages Private Limited for their new unit set up at Village : Moregaon, Dist : Bhandara for manufacture of Pyrotechnic Aluminium Powder, 300 M.T. Per annum involving Fixed Capital Investment of ₹ 82.45 lacs approved as detailed on prepage. 2. The period of this Eligibility Certificate shall stand automatically curtailed (i) from the point of time when the total sales tax incentive ad .....

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he Commissioner of Sales Tax is cancelled or revoked, whichever event occur earlier. 60. Then, the court dealt with the rival contentions from para 20 and held thus:- 20. I have considered the contention of the learned Assistant Government Pleader about applicability of this Rule 6.2 and find that it has no relevance to the petitioner s case, since the petitioner s unit is not a Near New Unit or unit which was already existing sought to be expanded or diversified under 1979 Scheme. This clause w .....

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acity. It does not put a restriction on augmentation of the capacity as such. It must be borne in mind that an enabling provision has to be distinguished with a restrictive covenant. Rule 6.2 is an enabling provision and not a restrictive provision. 21. Thus, the conditions incorporated in eligibility certificate, certificate of entitlement, indentures, two schemes of 1979 and 1982 do not show that there was either any restriction on augmentation of capacity by a new unit for claiming incentive .....

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idity was over, the unit would not be entitled to seek incentives beyond that period. Except for these two conditions, there is no third condition about annual ceiling on production. Reference to annual production in the certificate of eligibility in Clause 5 is only in the nature of enumeration of facts about the unit. At the cost of repetition it has to be pointed out that Clause (1) of the certificate names the holder of the certificate, clause (2) gives address of the unit, clause (3) gives .....

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descriptive of the goods to be produced and is not a condition of eligibility. The conditions, subject to which Eligibility Certificate was granted, are enumerated separately in the certificate itself and those do not refer conditions to any ceiling on production. 23. The revenue would have been entitled to deny the benefits of the incentive granted to the petitioner only upon showing that there was a condition putting ceiling on the annual production and that such condition was breached. In the .....

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. 62. We find much substance in the contentions of the petitioners. Once there was no embargo or prohibition on augmentation or increase in the production capacity and the expansion has been sanctioned, then, the impugned notice, which totally disregards all this, cannot be sustained. The petitioners have pointed out that there is a promise and contained in this package scheme of incentives, which promise can be culled out from the various terms and conditions. The petitioners have submitted and .....

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on 36(3)(b) and penalty under section 36(2)(c) read with Explanation II. Respondent no. 3 has observed that the incentives have to be restricted in view of the annual licence/registration/production capacity, which was never envisaged in the package scheme of incentives, the agreement entered in pursuance thereof, the eligibility certificate and the certificate of entitlement. That is why the petitioners have rightly submitted that the revisional powers cannot be exercised so as to defeat the sc .....

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the benefits under the scheme would be curtailed or denied in the manner done. The period of eligibility was reckoned as from 1st April, 1990 to 30th April, 1995 and the quantum of incentives was 1338.32 lacs. It is in these circumstances that they have challenged the legality and validity of the legal provisions referred above. 64. The petitioners have also relied upon a Division Bench judgment of this court in the case of Commissioner of Sales Tax, Mumbai vs. PCE VEE Textile Ltd. (2009) 26 VST .....

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: (i) New Fixed Assets - The value of new Fixed Assets acquired at site and paid for Explanation- (a) ......... (b) ......... (c) Any acquisition of new Fixed Assets outside the project scheme accepted by the Implementing Agency can be considered for the purposes of proportionate incentives during the residual eligible period provided such acquisition is not less than 25% of the Gross Fixed Capital Investment at the end of the previous financial year of the Eligible Unit." Thus, para 3.8 (I .....

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) 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% 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 .....

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y such units is not less than 25% of the Gross Fixed Investment at the end of the previous year. " As per the newly substituted para 3.8(I) (i)(c) not only the units acquiring new fixed assets outside the project scheme but also the existing units acquiring new fixed assets not less than 25% of the gross fixed assets became entitled to the incentives under the 1993 scheme irrespective of the fact that the acquisition of the new fixed assets resulted in increase in the production capacity or .....

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be availed. Neither para 3.8(I)(i)(c) nor any other provision under the 1993 scheme nor any provision under the BST Act / CST Act provide for utilization of the incentives in each year proportionately on the finished products attributable to the fixed assets newly acquired by the Existing Unit. 17. In these circumstances, the question to be considered is, whether the Deputy Commissioner of Sales Tax after determining the quantum of incentives and the time period during which the said incentives .....

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ailed proportionately to the production of the finished products attributable to the newly acquired fixed assets? 18. While admitting that there is no specific provision in the 1993 scheme for availing the incentives on proportionate 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 t .....

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attributable to the newly acquired fixed assets at 59.84% of the total production and accordingly direct the assessee to avail the incentives on 59.84% 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 are exhausted, whichever is earlier. 19. We see no merit in the above contentions. Admittedly, there is no provision in the entire 1993 scheme as amended on 6/7/1994 requiring the existing unit to av .....

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the quantum of incentives under the 1993 scheme proportionately to the products attributable to the newly acquired fixed assets. In the present case, admittedly, the acquisition of new fixed assets has not resulted in increase in the production capacity of the existing unit. In such a case, the question of availing the incentives on the finished products attributable to the newly acquired fixed assets does not arise at all. 20. It is pertinent to note that para 3.8 I (i)(c) as it stood original .....

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is but on the total production of the Existing Unit. In these circumstances, imposing conditions for availing the incentives on prorata basis would be contrary to the 1993 scheme of incentives. 21. It is, however, contended by the learned A.G.P. that since the incentives as per para 5.1 (I)(A)(iii) of the 1993 scheme are available on the finished products and definition of the term finished products contained in para 3.6 of the 1993 scheme read with Rule 31B of the Bombay Sales Tax Rules, 1959, .....

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g the impugned conditions in the Entitlement Certificate. 26. It is pertinent to note that with a view to impose ceiling on the utilization of incentives by an eligible unit under different schemes, by Finance Act, 2001 section 41BB has been inserted into the BST Act, thereby empowering the State Government to prescribe different ratios for different classes of dealers under different schemes. In the Statement of Objects & Reasons for inserting Section 41BB in the B.S.T. Act, it is clearly s .....

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entives under the 1993 scheme in proportion to the production attributable to the newly acquired fixed assets cannot be accepted. 27. It is contended by the learned A.G.P. that Section 41BB is a general provision and is not relevant in the context of availing incentives under the 1993 scheme. Relying upon the decision of the Apex Court in the case of Mahim Patram Private Limited V/s. Union of India reported in (2007) 6 VST 248 (S.C.), it is contended that even though the State Government has not .....

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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 B.S.T. Act nor the B.S.T. Rules contain a provision for availing the incentives on prorata basis. Moreover, Section 41BB inserted to the B.S.T. Act by Finance Act, 2001 specifically requires the State Government to prescribe the ratio for availing of the incentives on prorata basis and admittedly, till date the State Government has not presc .....

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the 1993 scheme in proportion to the production attributable to the newly acquired fixed assets. 65. The only argument of Mr. Sonpal is that clause 2 of the agreement entered into with the Governor of Maharashtra Annexure 'K' dated 18th August, 1988 would enable the respondents to exercise the power as is sought to be exercised by the impugned notice. Mr. Sonpal has relied upon this clause to urge that the amendment does not impose any fresh levy, but throughout there was a ceiling of ma .....

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rs specific which expanded present capacity from 5 lacs at Pimpri in Haveli Taluka to additional 5 lacs at Urse Village at Maval Taluka totaling to 10 lacs. Another expansion of two lacs is also petitioner specific and not unit specific. Therefore, the excess production over 5 lacs CKM cannot be said to be for the Urse unit. If the above argument is noted, then, implicit therein is the admission that there is no ceiling on the maximum production. Mr. Sonpal then submits, relying upon the judgmen .....

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he Hon'ble Supreme Court was considering a different controversy altogether. There was no issue as the present one. Therefore, we do not think that any assistance can be derived from the principle therein. 67. Mr. Joshi is right in contending that the petitioners were entitled to defer the tax payable in the periodical returns as well as the dues on assessment as per Rule 31B/C as against the validity period of the entitlement and eligibility certificate from 1st May, 1990 to 30th April, 199 .....

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the order passed by the Nagpur Bench of this court in Letters Patent Appeal No. 305 of 2011 decided on 24th November, 2015. In the view thereof, column 5 of the eligibility certificate cannot be relied upon. The Division Bench held thus:- 1. Heard Ms Bharti Dangre, learned Government Pleader for appellant and Mr S. P. Dharmadhikari, learned Senior Advocate for respondent at length. Perused the eligibility certificate and impugned judgment delivered by the learned single Judge. 2. Learned Governm .....

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ent cannot be held to be prohibited under paragraph 5.1 of the 1979 Package Scheme of Incentives. Respondent-Unit is admittedly a New Unit and para 5.1 explains that incentive under Part-I will not be available to a Near New Unit or for Expansion/Diversification of the Existing unit. Once we find that respondent-Unit is a new unit and it is nether a near new unit nor an existing unit, the conclusion of learned single Judge that it would be impermissible to say that the respondent-Unit could not .....

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Package Incentive Scheme. Consideration by learned single Judge in this respect also does not show any error or perversity. 5. We, therefore, find no case made out for interference. Letters Patent Appeals are, therefore, dismissed. No costs. 68. A somewhat identical issue was dealt with by this court in the case of Prasad Power Control (supra) followed in the case of Shakti Arora Expert Ltd. (supra). Following these two judgments and applying them to a case of the present nature, which was some .....

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m.) wherein identical question of law relating to the Package Scheme of 1988 was raised. 25. In that case also, the challenge was raised to the Constitutional validity of Section 41B read with Rule 31AA to the extent, it was found repugnant to the industrial policy contained in 1988 Package Scheme. Identical arguments were advanced by these very learned counsels for parties appearing in those proceedings also. Facts of these proceedings are more or less similar to the facts of the said case. In .....

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Mumbai-Pune-Thane belt. To attract these units to the under developed and developing areas, the State Government had evolved a Package Scheme of Incentives to new units set up in the developing regions. 26. In view of introduction of Rule 31AA to the Act and Rules having effect from 1st January, 1980, petitioners in that case had challenged the Constitutional validity of Section 41B and Rule 31AA by contending that the petitioners' vested right in computing the CQB as per para 2.11 of 1988 .....

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: "A plain reading of para 2.11 of the 1988 GR clearly shows that the quantum of benefits availed of by a unit covered under the 1988 scheme has to be calculated with reference to the tax that would have been payable by a unit if not covered under the 1988 Scheme on assessment at the maximum rates of tax specified under the local sales tax law as applicable from time to time. Sales tax/purchase tax are levied on sale/purchase of certain goods at the rates specified in the Schedule to the BS .....

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t the maximum rate arises only when the sales/purchases are covered under the exemption provisions. Where the sales/purchases are not covered under the exemption provisions, the tax is payable at the rate prescribed under the Schedule to the BST Act and there is no question of paying taxes at the maximum rates of tax. 31. Para 2.11 of the 1988 GR neither directly nor indirectly provides that in calculating the CQB availed of by a unit covered under the 1988 Scheme, the exemption provisions conta .....

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e by a unit not covered under the 1988 Scheme as per the provisions including the exemption provisions contained in the BST Act/BST Rules. 32. The expression "computed at the maximum rates of tax under the local sales tax law" clearly denotes that the computation is not referable to the rate of tax specified in the Schedule to the BST Act, but is referable to the maximum rate of tax payable in view of the exemption provisions contained under local sales tax law. By using the wider expr .....

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ial exemption, then the tax payable pursuant to the notification is the maximum rate of tax payable on sale/purchase of goods referred to in the notification. There is nothing in para 2.11 to suggest that the tax payable by a unit in the light of notification issued under section 41 of the BST Act should not be treated as the maximum rate of tax payable under local sales tax law. As noted earlier, the Schedule to the BST Act does not prescribe maximum/minimum rate of tax. It is only when partial .....

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ra 2.11 of the 1988 GR refers to the tax payable by a unit not covered under the 1988 Scheme at the maximum rate of tax specified under the local sales tax law. If a unit not covered under the 1988 Scheme sells the electrical goods exclusively to a undertaking engaged in the generation and distribution of electrical energy, then the maximum rate of tax payable by that unit would be at six per cent or four per cent depending upon the period of sales/purchases, in spite of the fact that the rate o .....

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mption provisions under the BST Act/BST Rules have to be ignored nor does it stipulate that the sales to the undertakings engaged in the generation and distribution of electrical energy should be treated as sales to undertakings which are not engaged in the generation and distribution of electrical energy. Therefore, in our opinion, the expression "computed at the maximum rates of tax" in para 2.11 of 1988 GR simply refers to the tax actually payable by a unit not covered under the 198 .....

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o the extent it directs the Commissioner to compute the CQB by ignoring the exemption provisions is bad in law. The reason being that the petitioners had established a unit in the backward area on the assurance contained in the 1988 GR to the effect that the CQB would be computed at the maximum rates specified under the local sales tax law and not at the rate specified in the Schedule to the BST Act. The said terms and conditions which forms the basis for entering into a contract between the Sta .....

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