TMI Blog2008 (4) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner Company from completing the project within the time limit and the consequent impact by denial of the benefits of the sales-tax incentives and the third part indicating how the petitioner Company could complete the project after the Hon ble Supreme Court removed the cloud. 3.0 The Project and the Sales Tax Incentive Scheme 3.1 The petitioner Company came forward to set up a major venture in Vadinar in Jamnagar District, Gujarat State as a 100% export oriented unit for refining of petroleum products with a capacity of 9 million tones per annum at an estimated project cost of ₹ 1900 crores. The State Government, therefore, requested the Central Government in the year 1990 to clear the petitioner Company s proposal for setting up the oil refinery. The clearance for setting up the oil refinery was granted by the Government of India. 3.2 On 10.11.1994, the petitioner filed an application for right of way for laying Submarine Crude Oil Pipeline, Cooling Water/Return Water Pipeline and Product Jetty for establishment of its Refinery Project at Vadinar, District Jamnagar, to the Conservator of Forests, Marine National Park, Jamnagar. On 13.02.1995, the State Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme. There is no dispute about the fact that the petitioner opted for sales-tax deferment scheme. As per clause 6(i)(B), the rate of incentive applicable to the petitioner company was the rate available for the most backward area. The extent of exemption was 125% of eligible fixed capital investment. 3.4 Since the petitioner company s investment was going to be more than ₹ 1,000 crores, the duration of incentive of sales-tax deferment was to be for a period of 17 years from the date of commercial production. Clause 6(v) of the said Scheme provided for effective steps for extending date of commercial production in the following terms : S(v) Effective steps for extending date of commercial production : The unit which cannot go into commercial production before expiry of the scheme will be allowed to go into commercial production beyond the last date of the scheme provided it has taken the following effective steps : (1) The industrial unit should have obtained provisional registration as a Prestigious/Premier unit before 15th August 2000. (2) 25% of project cost should have been incurred before 15th August 2000. The unit which has taken above effective ste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (to which one of us was a party Ravi R. Tripathi, J.) restrained the State Government from granting any more authorization and permission for laying down any pipeline in any part of the sanctuary of the National Park and in case any applications are pending, the same shall be decided keeping in view the interpretation placed by the Division Bench on Section 29 of the Wild Life (Protection) Act, 1972 in light of the observations made in the judgment. 4.2 The aforesaid Public Interest Litigation was commenced for making grievance against consideration of the application of Bharat Oman Refineries Ltd. for laying a pipeline in the Marine Park/Sanctuary area. The present petitioner Company was not a party to any of the above petitions. During the course of hearing, the Court had put a query to the learned counsel for the State Government as to whether any more applications of this nature (applications for laying pipeline through the National Marine Park/Sanctuary area) were pending before the State Government and whether the State Government was inclined to grant any more authorizations and permissions for laying such pipelines. In response to the query, the learned Government coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 29 of the Wild Life (Protection) Act, 1972, the petitioner could not commence the construction of jetty or laying down the pipeline in the National Marine Park/Sanctuary area and, therefore, could not commence commercial production. 4.5 The petitioner had already applied for registration before 15.08.2000 and had incurred more than 25% cost before 15.08.2000. On 18.07.2001, the petitioner was accordingly granted the pipeline registration valid upto 15.08.2003 within which the petitioner Company was required to start commercial production. The petitioner again made a representation to the Industries Commissioner on 07.05.2002 requesting him to grant the extension for a further period of three years i.e. upto August 2006 to commence commercial production for the purpose of availing the incentive benefit under the Scheme and pointed out that the delay in completing the project and consequent delay in starting commercial production was due to the factors beyond the control of the petitioner. By letter dated 28.05.2002, the Industries Commissioner rejected the request. The petitioner, therefore, submitted a representation dated 19.06.2002 to the Chief Minister pointi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e comprising of the Advisor to the Chief Minister, the then Additional Chief Secretary, Finance Department and the then Principal Secretary, Industries and Mines department. The Committee was constituted to consider various such representations of the petitioner Company and other Companies. It appears that no progress was made and the petitioner s representations remained undecided. 5.4 On 26.11.2006, the petitioner Company commenced production and started paying sales-tax on the products being sold by it. Ultimately, the present petition came to be filed on 18.09.2007 contending that for no fault of it, the petitioner Company was prevented from completing the project and that it was on account of the petitioner being so prevented for almost five years that the petitioner could not commence the commercial production within the time limit of 15.08.2003 which was the extended time limit stipulated by the Government generally, for the units which had applied before 15.08.2000 and which had incurred 25% of the project cost before 15.08.2000. 6.0 Submissions on behalf of the Petitioner Company At the hearing of this petition, Mr KS Nanavati, learned counsel for the petitioner C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk of laying of water intake jetty and product jetty in the Marine National Park and in the Marine Sanctuary area. The petitioners were not only prevented from doing so, but the Forest Department launched prosecution against the petitioners under various provisions of the Wild Life (Protection) Act and Environment Protection Act against the contractor doing the work on behalf of the Company and therefore, the petitioners had no other alternative but to stop the work and could not commence the work even after the Central Government granted its formal approval under the provisions of the Forests Conservation Act on 08.12.1999 and the CRZ permission was granted on 03.11.2000 and even thereafter, when the judgment dated 13th July/3rd August, 2000 of this Court was stayed by the Hon ble Supreme Court on 11.05.2001, no permission was granted by the Chief Wild Life Warden and in fact by letter dated 29.10.2001, the State Government informed the petitioner Company not to do any work without obtaining the requisite permissions and clearances under various statutes. The petitioner had done all that was required to be done by the petitioner for obtaining such permissions and clearances, but i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers, the period during which the work of construction has been stopped, has to be excluded while determining whether there was any breach of condition stipulated in the contract. 7. Submissions on behalf of the State Government On the other hand, Mr Kamal Trivedi, learned Advocate General assisted by Ms Sangeeta Vishen, learned AGP has opposed the petition and made the following submissions :- 7.1 The petition suffers from delay, laches and acquiescence. The petitioners were already informed by the Industries Commissioner as far back as on 28.05.2002 that it was not possible to accord any extension of the time limit for commencing commercial production as per the prevailing policy. Since no petition was filed at the relevant time, the present petition filed in September 2007 was delayed by more than five years. 7.2 The petitioner has not made reference to the earlier round of litigation, wherein another Division Bench of this Court had passed order dated 20.04.1999 directing the petitioner herein not to carry on any construction activity in Marine National Park/Marine Sanctuary area against the statutory provisions including the provisions contained in the Wild Life (Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention raised by the learned Advocate General is concerned, though the petition filed in September 2007 may appear to be prima facie delayed, the delay is sufficiently explained. After the Industries Commissioner rejected the application for extension on 28.5.2002, the petitioner Company made a representation to the Chief Minister on 19.6.2002 pointing out the circumstances which were delaying completion of the project. That was also the time when the litigation was pending before the Hon ble Supreme Court and the very fact that after the Supreme Court rendered the decision on 19.1.2004 and the Chief Wild Life Warden granted the permission on 27.2.2004, pursuant to the petitioner Company s representations in 2004, the State Government itself constituted a Committee on 10.05.2006 to look into, inter alia, the petitioner s grievance indicates that the issue was alive and the State Government was ready to consider the petitioner s request for suitable reliefs. But since the Committee constituted as far back as in May 2006 made no progress, the petitioner could not be expected to wait indefinitely because the very purpose of availing of the sales tax deferment incentive would be fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring to decide the question raised in the petition. 12. As regards the contention that the petitioner has already started paying tax and has acquiesced into the matter and therefore, the petition may not be entertained, the very fact that upon commencement of commercial production the petitioner has started paying tax is not a factor which could go against the petitioner. On the contrary, the petitioner s not paying the tax even after commencement of commercial production would have been an act contrary to the provisions of the statute because so far the petitioner has not been granted the benefit of sales-tax deferment and therefore, the petitioner s abiding by law cannot be a ground for denying it the benefit of sales-tax incentive as per the Scheme under which the petitioner is stated to have been found eligible because the petitioner was granted such provisional premier unit registration as far back as on 25.06.1999 (Annexure -I). Of course, the question whether the petitioner Company had incurred expenditure to the tune of 25% or more of the estimated project cost, which will be gone into by the State Government before taking any final decision in the matter because that wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . S.P. Rathinasami [ (1971) 1 MLJ 220]}. In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144. 28. That no one shall suffer by an act of the Court is not a rule confined to an erroneous act of the court; the act of the court embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the Court would not have so acted had it been correctly apprised of the facts and the law. The factor attracting applicability of restitution is not the act of the Court being wrongful or a mistake or error committed by the court; the test is whether on account of an act of the party persuading the Court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the Court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery should be cleared by the Government of India urgently. The clearance for setting up the oil refinery was accordingly granted by the Government of India. 15.2 The Apex Court then recorded the subsequent history leading upto the State Government permission on 16.10.1997 under Section 29 of the Wild Life (Protection) Act, 1972 and also the approval of the Central Government granted on 27.11.19997 and 08.12.1999. The Apex Court also observed in Para 52 of the judgment as under : S One would have thought that the clearance under the WPA (Wild Life Protection Act) was completed by this. In fact, according to the appellant, they had invested ₹ 5388.41 crores in setting up the project on 4500 acres of land in Jamnagar district. The labour colonies had been built up for 10,000 labourers and other constructions were well under way. It has also claimed that for the purposes of the project the appellant has obtained finances inter alia from IDBI, ICICI, nationalised banks, IFCI, LIC and GIC. 15.3 The Apex Court further noted that on 04.11.2000, the appellant wrote to the State Government that since all clearances had been received, it should be permitted to set up its proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neries Ltd. from laying down the pipeline. In case this Court had been informed by the State Government that the permission had already been granted to the present petitioner Company, this Court would have not issued any direction to the State Government not to grant permission in any other case i.e. Essar Oil Ltd. and another Company which were the only two cases shown to the Court as pending cases. When the present petitioner Company moved review application, this Court rejected that application as beyond the scope of review, and the Apex Court observed that the High Court rejected the opportunity of rectifying the error. We are, therefore, of the view that the test laid down by the Apex Court for attracting applicability of the principle of restitution is reasonably satisfied in the facts of the present case. It was on account of the above relevant facts not having been brought to the notice of the Division Bench of this Court that resulted into the petitioner Company being restrained by this Court from laying down any pipeline in the Marine National Park/Sanctuary area notwithstanding the permission which was already granted by the State Government under the Wild Life (Protecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also, the State Government had granted the permission on 16.10.1997 and the Central Government had granted the permission on 08.12.1999. The very fact that the Chief Wild Life Warden issued the permission on 27.02.2004 after the decision of the Apex Court on 19.01.2004 is itself sufficient to show that the request made by the petitioner for excluding the intervening period between 13th July/3rd August, 2000 and 27.02.2004 is reasonable. 18. At this stage, we may refer to one objection raised by the learned Advocate General. It was vehemently submitted that if the period from 13.07.2000 to 27.02.2004 is excluded as requested for by the petitioner, it would not only have the effect of extending the period within which the commercial production was required to be commenced, but it would also pro-tanto extend the 17 year period for availing of the tax deferment advantage. In other words, it was contended that if the commercial production had commenced by 15.08.2003, the 17 year period for sales-tax deferment benefit would have expired on 14.08.2020, but by acceding to the petitioner s request, that 17 year period would now expire in November 2023. 19. Apropos the above submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above concessions, Mr Nanavati has relied on the affidavit dated 15.4.2008 of the Sr. Vice President Corporate Legal of the petitioner Company. 21. In response to the above suggestions, Mr Kamal Trivedi, learned Advocate General has submitted that while the petitioner should not be refunded the sales-tax/VAT already paid by the petitioner or payable for the period upto today, assuming that the petitioner is found to be eligible under the Scheme, the amount otherwise computable on the basis of the eligible capital investment made by the petitioner in the unit under consideration should be reduced by ₹ 700 Crores i.e over and above non-refund of the amount of ₹ 300 Crores and odd amount paid by the petitioner towards sales-tax/VAT till today, the amount of sales-tax/VAT payment of which could be deferred by the petitioner under the Scheme should be reduced by ₹ 700 Crores. 22. In view of the above discussion, we direct the respondents to consider, within one month from the date of receipt of this judgment, the petitioner s application for granting the benefits of deferment of sales-tax/valued added tax under the Capital Investment Incentive Premier Presti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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