2005 (5) TMI 305 - SC - VAT and Sales Tax

Whether the appellants are entitled to the benefit of the incentive scheme which had been brought into effect by the State of Bihar in 1995? Held that - Appeal dismissed. The appellants have disentitled themselves to any relief by reason of delay. In any event, whether the appellants were in fact disabled from commencing production within the time granted by the first notification is a question of fact which this Court would not be in a position to resolve under article 226. We also do not think that this is an appropriate case for the exercise of our discretion under article 142.

Summary

Issues:
1. Entitlement to benefit of incentive scheme under Bihar's Industrial Policy.
2. Interpretation of notifications regarding exemption for new industrial units.
3. Delay in obtaining prior permission for production commencement.
4. Claim for sales tax exemption without prior permission.
5. Allegation of inaction by state authorities and its impact on benefit entitlement.
6. Compliance with exemption notification terms and conditions.
7. Discretionary powers of the court under article 226 and article 142.

Analysis:
1. The judgment deals with the entitlement of the appellants to the benefit of an incentive scheme introduced by the State of Bihar in 1995 under its Industrial Policy. The scheme aimed to attract capital investment, accelerate economic development, and generate employment by granting various perquisites to new industrial units established within a specified period.

2. The issue of interpretation arises concerning notifications granting exemptions to new industrial units. The first notification defined new industrial units and provided exemptions for raw materials and finished products. The second notification amended the time limit for production commencement, subject to obtaining prior permission. The criteria for obtaining such permission and the process involved were outlined in detail.

3. The delay in obtaining prior permission for production commencement within the specified period is a crucial aspect of the case. The appellant, a medium industry, applied for permission but faced delays in the response from the authorities. The subsequent establishment of the State of Jharkhand further complicated the situation.

4. The appellant's claim for sales tax exemption without having obtained prior permission led to a dispute with the tax authorities. The appellant argued that the delay was due to the inaction of state authorities in providing necessary infrastructure like electricity, which hindered production commencement within the stipulated period.

5. Allegations of inaction by state authorities and its impact on the appellants' entitlement to benefits were raised. The appellant contended that they should not be penalized for the authorities' inaction and should be granted the exemption based on precedents and compliance with the exemption procedure.

6. The court emphasized strict compliance with the terms of the exemption notification. It noted that the appellants failed to obtain prior permission, a prerequisite for availing benefits under the scheme. The court highlighted the need for due consideration by authorities before granting such permissions.

7. The court dismissed the appeals, citing the appellants' delay in seeking relief, lack of entitlement due to non-compliance with notification terms, and the absence of grounds for judicial intervention under article 226 and article 142. The decision was based on factual considerations and the appellants' failure to meet the necessary requirements for benefit entitlement.

This comprehensive analysis covers the key issues addressed in the judgment, highlighting the legal complexities and considerations involved in determining the appellants' entitlement to the incentive scheme benefits under Bihar's Industrial Policy.