1998 (11) TMI 616 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for Sales Tax Incentive under the 1987 Schemes based on diversification.
2. Simultaneous availing of benefits under the 1987 Schemes and the 1989 Schemes.
3. Review and reconsideration of the State Level Screening Committee's (SLSC) decision.

Issue-wise Detailed Analysis:

1. Eligibility for Sales Tax Incentive under the 1987 Schemes based on diversification:
The petitioner, a large-scale industrial unit, applied for benefits under the 1987 Schemes on July 21, 1987, based on diversification. The SLSC sanctioned benefits on January 8, 1991, subject to verification of the commencement date of commercial production, which was deemed to be April 27, 1987. The Director of Industries confirmed that the petitioner's unit met the criteria for diversification, having introduced a new product line and increased fixed capital investment by more than 25%. The SLSC's decision to reconsider the case based on expansion was not justified as the petitioner never opted for benefits on that basis. The petitioner's unit satisfied the requirements of the Schemes to qualify as a case of diversification eligible for benefits under the 1987 Schemes.

2. Simultaneous availing of benefits under the 1987 Schemes and the 1989 Schemes:
Clause 1(f) of the 1989 Schemes prohibits industrial units from availing benefits under both the 1987 Schemes and the 1989 Schemes simultaneously. The petitioner's unit was granted benefits under the 1989 Schemes as a sick unit. However, the Tribunal clarified that the petitioner's unit could avail of benefits under the 1987 Schemes based on diversification until the date it started receiving benefits under the 1989 Schemes. This ensures that benefits under both schemes are not availed of concurrently but consecutively, thus resolving the issue of simultaneous benefits.

3. Review and reconsideration of the State Level Screening Committee's (SLSC) decision:
The provision for review and reconsideration was introduced only on October 15, 1994. Therefore, the SLSC's decision on November 4, 1993, to reconsider the petitioner's case as one of expansion was without legal basis. Even after the introduction of the review provision, the SLSC could not have reconsidered its decision of January 8, 1991, as it was barred by time. The petitioner's application for benefits on the basis of diversification could not be rejected on the grounds of ineligibility for expansion, as the petitioner had not sought benefits on that basis.

Conclusion:
The Tribunal allowed the application, directing that the petitioner's unit is eligible for benefits under the 1987 Schemes based on diversification from the date of its application, i.e., July 31, 1987, until the date it started receiving benefits under the 1989 Schemes as a sick unit. This ensures compliance with the prohibition against simultaneous benefits under both schemes. The application was allowed with no order as to costs.