1988 (9) TMI 326 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Validity and applicability of eligibility certificates under the "Sales Tax Incentive Scheme for Industries, 1987".
2. Effective date of eligibility certificates under the Incentive Schemes.
3. Legality of assessment orders and demand notices issued prior to the grant of eligibility certificates.

Issue-wise Detailed Analysis

1. Validity and Applicability of Eligibility Certificates
The petitions were filed to challenge the assessment orders and demand notices issued under the Rajasthan Sales Tax Act and the Central Sales Tax Act. The petitioners sought eligibility certificates under the "Sales Tax Incentive Scheme for Industries, 1987" to avail tax exemptions. The State Government had issued notifications introducing the Incentive Schemes under section 4(2) of the Rajasthan Sales Tax Act and section 8(5) of the Central Sales Tax Act to exempt industrial units from tax on sales of goods manufactured within the State. The eligibility certificates were granted to the petitioners effective from 8th February 1988, but the petitioners contended that these should be operative from the date of their application submissions.

2. Effective Date of Eligibility Certificates
The crux of the petitions was whether the eligibility certificates should be operative from the date of application submission or from the date of issuance. The petitioners argued that the certificates should be effective from the date of application to avoid undue hardship and to fulfill the objectives of the Incentive Schemes, which aim to make industrial units competitive. The respondents contended that the certificates should be effective from the date of issuance, as no time limit was prescribed for the screening committee to grant the certificates.

The Court examined various precedents, including Supreme Court decisions in Mathra Parshad and Sons v. State of Punjab, Assessing Authority v. Patiala Biscuits Manufacturers Pvt. Ltd., and State of U.P. v. Haji Ismail Noor Mohammad & Co., which supported the petitioners' view that certificates should be effective from the date of application to avoid unreasonable and oppressive results. The Court also noted that the Incentive Schemes did not prescribe a time limit for the screening committee's decision, leading to potential delays that could disadvantage new industrial units.

3. Legality of Assessment Orders and Demand Notices
The petitioners challenged the assessment orders and demand notices issued before the eligibility certificates were granted. The Court found that the delay in granting the certificates was not attributable to the petitioners but to the authorities' procedural delays. The Court held that if the eligibility certificates were made effective from the date of issuance, it would result in undue hardship and defeat the purpose of the Incentive Schemes.

Conclusion
The Court concluded that the eligibility certificates under the Incentive Schemes should be operative from the date of application submission. Consequently, the petitioners were entitled to tax exemptions from the date of their application submissions. The assessment orders and demand notices issued for periods subsequent to the application dates were quashed. The parties were directed to bear their own costs.

Summary
The Rajasthan High Court ruled that eligibility certificates under the "Sales Tax Incentive Scheme for Industries, 1987" should be effective from the date of application submission to avoid undue hardship and fulfill the schemes' objectives. The assessment orders and demand notices issued before the certificates were granted were quashed. The Court emphasized the need to avoid unreasonable and oppressive results, aligning with precedents that support retrospective applicability of such certificates.