TMI Blog2016 (8) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Maharashtra Act No. XVI of 1995 called the Maharashtra Tax Laws (Levy and Amendment) Act, 1995 as also Rule 31AAA of the Bombay Sales Tax Rules, 1959 as ultra vires the constitution of India being beyond legislative competence of the Maharashtra State legislature, void and of no legal effect. 2. The declaration is claimed, according to the petitioners, because these provisions curtail/restrict/withdraw the sale tax incentives by way of deferral availed by the petitioners. 3. In the alternative and 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in para 12(i) of the writ petition. It is the case of the petitioners that they are registered under the Bombay Sales Tax Act, 1959 (for short the BST Act ) and the Central Sales Tax Act, 1956 (for short the CST Act ). They have been regularly assessed to tax. 7. The petitioners made Application No. 2166(86)-TL dated 31st December, 1986 to the Government of India, Ministry of Industry, Department of Industrial Development, for grant of Industrial Licence under the Industries (Development and Regulation) Act, 1951 for the expansion in manufacture of jelly filled telephone 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 letter dated 7th February, 1991 re-endorsed the capacity of the petitioners' industrial undertaking at village Urse, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 Maharashtra by way of deferment of sales tax liability. The terms and conditions set out in the certificate of entitlement with regard to the incentives are identical to those set out in the eligibility certificate. 14. The petitioners are a large/medium scale industrial unit qualified under the caption new unit under the Package Scheme of Incentives, 1983. The petitioners' unit fell in Group 'C'. The incentives available under the Package Scheme of Incentives, 1983 were that the petitioners 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of India, void, invalid and inoperative and/or otherwise not attracted to the case of the petitioners and in violation of the doctrine of promissory estoppel. The petitioners further say and submit that the notice dated 3rd October, 1997 in Form 40 issued by respondent no. 3 under section 57 of the BST Act read with Rule 62 of the Bombay Sales Tax Rules, 1959 together with the gist or order is without jurisdiction 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 petition at page 143. Relying upon page 4 para 1 at page 146 of the petition that the petitioners had agreed for maximum production in their unit for manufacture of jelly filled telephone cables not exceeding 5 lakh CKMs per annum and the petitioner being aware the stipulations that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loped 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 Government can modify the package scheme of incentive in the public interest and also withdraw some concessions given earlier. In this respect I rely on the Supreme Court decision in the case of M /s. Arvind Industries and others Vs. State of Gujrat and others (Civil Appeal No. 951 of 1976 and M/s. Vijay Oil Mills Co. Vs. Commissioner of Sales Tax and others (Civil Appeal No. 1011 of 1977) decided on 23.8.1995 and reported in 99 STC 333 . It is held by the Supreme Court that the Government is entitled 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioners. I say that Respondents reliance on the decision of the Honourable Supreme Court in the case of Arvind Industries and Others 99 STC 33 is misplaced. In that case the Honourable Supreme Court had observed that the appellant had failed 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. Physical inspection of the eligible Unit was also carried out. Eligibility Certificate and Certificate of Entitlement were issued by the Respondents. I say that the doctrine of promissory estoppel is clearly applicable in the instant case and the Respondents cannot take actions at variance with the prescribed conditions, which are to the detriment of the petitioners. I say that the Petitioners have acted on the representations made by the respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 terms of the scheme and not in contravention thereof. 25. Thereafter, a detailed affidavit in reply has been filed by the respondents, after the writ petition was admitted. In this detailed affidavit, apart from denials, in para 10, this is what is stated:- 10. With reference to grounds of the Petition in Para A, I say that the amendments in question do not in any manner levy fresh taxes for the first time as falsely alleged. If the Package Scheme of Incentives is read in its proper perspective, 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 time to time. Without admitting that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally concentrate the industries in backward areas and perhaps even unjustifiable 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 respondents are entitled to recover the excess sum as per the provisions of the scheme. However, the respondents have permitted, by the impugned amendment, higher level of production to the extent of 125% instead of restricting to the limit specified in the eligibility certificate. It is, therefore, unwarranted on the part of the petitioners to challenge the amendment, which, in fact, confer additional benefits on them rather than curtailment thereof. It is stated that the continuation or curtailment of the incentives is sole discretion of the respondents considering the facts and circumstances, keeping in view its bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said to be erroneous or improper for justifying any revisional action under challenge before this Court. 30. By the action of revision, the later inserted section 41D is sought to be applied in a discriminatory and arbitrary manner. If the petitioners were not holding any entitlement certificate, there would have been no restriction on the quantity of product to be manufactured while the revision action on the basis of section 41D an artificial restriction not intended nor contemplated 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 the order of assessment for the period 1991-92 and the appellate authority followed Rule 31B/C that prevailed during the relevant period. 32. Mr. Joshi further submitted that Section 41D was inserted on 1st Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 the writ petition has no merit and must be dismissed. He would submit that the petitioners are not entitled to any relief and for the reasons more particularly and elaborately set out in the affidavit filed in reply. There is absolutely no foundation laid for the constitutional challenge. The petitioners do not have a vested right in claiming any relief much less in terms of the prayers of this writ petition. Mr. Sonpal summarised his contentions by urging that the impugned notice is not without jurisdiction 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to avail sales tax incentives by way of deferral in respect of the quantum specified in those certificates. Thus, the amendment in no way affects the petitioners whereby the availment is reduced below the licenced capacity or the capacity mentioned in the application, agreement, eligibility certificate or entitlement certificate. (m) The petitioners are entitled 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 is to say incentives are in respect of the eligible unit of the petitioners as approved and not for whole turnover of the petitioners from every unit other than at the village Urse. (r) The permission of Central Government to increase production from 5 lacs to 10 lacs was not a project specific at Urse village bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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', Group 'C' and Group 'D' depending on the industrial backwardness of the area concerned the incentives are offered in these areas on a graded scale. The minimum amount of incentives is available in Group 'B' and maximum amount is available in areas covered under Group 'D'. 44. As far as expansion/diversification is concerned, an existing unit in any of the areas under Group 'B', Group 'C' and Group 'D' desirous of expansion/diversification 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 agenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntives under Part I either by way of Exemption/Deferral will be as follows: Eligible Units in Area Period Ceilings For Medium/Large Scale Units Group 'B' and Resource-based units 3 years or earlier if the ceiling is reached 75 per cent of fixed capital investment Group 'C' 5 years or earlier if the ceiling is 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, wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document. The copies of this are to be found at pages 129 to 140 of the paper book. Then, what we have is the other details in respect of of cash flow statement. 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 5th July, 1982, which, the Government agreed to provide. The Government has called upon the entrepreneur to enter into a general agreement as required under the said scheme and the procedure which the entrepreneur has agreed to is then appearing in the clauses of the agreement. Since reliance is placed on clause (2) of the agreement, we reproduce it as under:- 2. The Entrepreneur hereby confirms that he is aware of that the incentives available to him under this scheme are relating only and exclusives to the eligible unit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company/co- operative society/trust to be merged with the existing company/co-operative society/trust. 51. Thereafter, an addendum was issued to this eligibility certificate and that is to be found on 3rd March, 1992. Thus, there was an eligibility certificate dated 14th January, 1992 to which an addendum is issued on 3rd March, 1992. 52. That there is an assessment order, which has a clear reference to all this and what the petitioners are aggrieved by is not the assessment order, but their returns filed for the year 1991-92, which is the subject matter of this petition, was assessed by these assessment 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 to the statute resulted in the notice at Annexure 'A'. The gist of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune Dated : 54. The petitioners submit that the revision in the assessment order and the appellate order 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. (1) Notwithstanding anything contrary contained in any of the package Scheme of 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 date of commencement of the Maharashtra Tax Laws (Levy and amendment) Act, 1995 (Mah. XVI of 1995), in respect of the production in excess of the annual production capacity of that unit as may be prescribed by the State government, having regard to licensing provisions of the Industries (Development and Regulation) Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending 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 date of commencement of the Maharashtra Tax Laws (Levy and amendment) Act, 1995, in respect of the production in excess of the annual production capacity of that unit as may be prescribed by the State Government, having regard to licensing provisions of the Industries (Development and Regulation Act, 1951. These benefits are deemed to have been withdrawn. 58. The argument before us is that this section was inserted by the above amendment w.e.f. 1st October, 1995 and therefore, would not govern anything 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground for rejecting the adjournment, which was finally sought. Such prayer for adjournment would have been considered only on the ground on which it was sought. It may be seen that even so viewed adjournment, sought on the ground that the Advocate was busy before other authorities, could not have been granted. It was improper 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 himself. Therefore, no interference is called for in the order on this ground. 12. In order to examine these rival contentions it would be necessary to find out what were the terms on which this incentive was made available to the petitioner. The eligibility certificate issued by SICOM on 05.09.1983 gives details about the petitioner company, its plant and investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by way of exemption for such additional production, so long as the total incentive claimed did not exceed the monetary ceiling as also the time restriction. 22. At the cost of repetition it has to be stated that if a unit exhausted monetary ceiling before the time period elapsed the incentive was to come to an end, irrespective of the fact that the period of validity was still available. Likewise, even if the unit did not exhaust the entire monetary ceiling on the incentives if the period of validity 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly examining the record. Even the appellate order confirms this position. Now, the third respondent desires to restrict the incentives availed of by the petitioners and levy interest under section 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 scheme and such a scheme which contains clear assurances and promises on behalf of the State provided the petitioners fulfill the conditions thereof cannot be set at naught by the process undertaken. 63. The petitioners have pointed out that they have set up their unit in a backward area of Pune District, which is categorised as 'C' zone in the Package Scheme of Incentives, 1983. That was on the basis of the incentives available to them. The petitioners never apprehended at that time that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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% 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 this clause more than twice. Explanation : Existing units will also be entitled for benefits under this clause, provided acquisition of new Fixed Assets by 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 not. However, in such cases, the quantum of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in determining the proportionate quantity of finished products 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 avail the incentives proportionate to the finished products attributable to the newly acquired fixed assets. In fact, unlike in the 1988 scheme, where the basis for grant of incentives was increase in the installed capacity, in the 1993 scheme, the basis for grant of incentives is acquisition of new fixed assets and not increase in the production capacity. If increase in the production capacity is not the criteria for grant of incentives under the 1993 scheme, then there is no question of availing the quantum of incentives under the 1993 scheme proportionately to the products attributable to the newly acquired fixed assets. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Section is introduced with a view to restrict grant of incentives in proportion to the goods manufactured in the expansion unit located in the backward areas of the State. However, for the reasons best known to the State Government, till date no Rules have been framed prescribing different ratios for different class of dealers under different schemes. In these circumstances, the argument that the Dy. Commissioner was justified in imposing ceiling on the utilization of the incentives 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 framed the Rules and prescribed the ratio for availing the incentives, the Dy. Commissioner was justified in imposing ceiling for availing the incentives under the 1993 scheme on prorata basis. We see no merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 judgment of the Hon'ble Supreme Court of India in the case of J. K. Spinning and Weaving Mills Ltd. vs. Union of India 1987(32) ELT 234 (SC), that there could be fresh or additional levy of taxes retrospectively and such legislation can be invoked. We do not think that any of these submissions can be accepted. Even the argument on the incentives being unit specific, there has to be a specific term based on which the same can be canvassed. That is absent. 66. In the case of J. K. Spinning (supra), the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n capacity. In Certificate issued to respondent-Unit on 5th September 1983, name of product is mentioned against column no. 5 and thereafter production capacity of 300 MT per annum has been recorded. There is nothing on record to show that production capacity was an essential term or condition of eligibility under 1979 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 somewhat similar to the case before us (Rajesh Steel Industries and Anr. vs. Development Corporation of Konkan Ltd. and Anr. Writ Petition No. 3862 of 1996 decided on 12th July, 2016), the Division Bench of this court held as under:- 24. .. We are having completely at our disposal the legal position elucidated and set at rest by the judgment of the Division Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 988 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 BST Act. Where the sales/purchases are covered under the partial/total exemptions granted under the BST Act/BST Rules, then, the sales tax/purchase tax in respect of those sales/purchases becomes payable at the rates prescribed under the exemption provisions. In respect of sales/purchases covered under the exemption provisions, the rate of tax applicable is the rate of tax set out in the exemption provisions and not the rate of tax set out in the Schedule to the BST Act. Thus, computation of tax at 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of tax payable under the sales tax law including the exemption provisions contained in the sales tax law. 33. As noted earlier, para 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 of tax prescribed under the Schedule to the BST Act is 10 per cent. Similarly, if the unit which is not covered under the 1988 Scheme makes sales/purchases to the undertakings which are not engaged in the generation and distribution of electrical energy, then the exemption provisions would not be applicable and the tax payable by that unit would be at 10 per cent as per the Schedule to the BST Act. Para 2.11 of the 1988 GR neither stipulates that in determining the notional tax liability, the exemption provisions under the BST Act/BST Rules have to be ignore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. In the end, it was concluded that, .......calculation of CQB availed of by a unit covered under the 1988 Scheme as per para 2.11 of the 1988 GR had to be made with reference to the tax payable by a unit not covered under the 1988 Scheme at the maximum rates of tax specified under the local sales tax, which includes the exemption provisions contained in the BST Act/BST Rules and, therefore, rule 31AA inserted to the BST Rules with effect from March 24, 1995 to the extent it provides that the calculation of CQB under the 1988 Scheme has to be made by ignoring the exemption provisions contained under the sales tax law is illegal and contrary to law. 69. Therefore, after following the above principles and applying them to the present case, we do not think that any larger question much less about the legality and validity of the provisions needs to be considered. We are of the view that the petition must succeed without examining the issue as to whether section 41D and Rule 31AAA can be held to be unconstitutional and ultra vires Articles 14 and 265 of the Constitution of India. We are of the opinion that the amended provisions cannot be invoked and applied in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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