1998 (9) TMI 637 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for deferred payment of sales tax benefits.
2. Requirement of separate registration for industrial units under the Bihar Finance Act.
3. Rejection of the registration application for the cement division.
4. Interpretation of Rule 14 of the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990.

Issue-Wise Detailed Analysis:

1. Eligibility for Deferred Payment of Sales Tax Benefits:
The dispute centers on the eligibility of the petitioner for the benefits of deferred payment of sales tax under the Industrial Policy Resolution of the Government of Bihar dated September 6, 1989, and the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990. The Industrial Policy of 1986 provided incentives such as exemption from payment of tax on raw materials and interest-free sales tax loans, which were replaced by the Deferment of Sales Tax Scheme in the Industrial Policy of 1989. Rule 5 of the Deferment Rules allows the State Government to permit an industrial unit to defer the payment of sales tax for a specified period.

2. Requirement of Separate Registration for Industrial Units:
Rule 14 of the Deferment Rules mandates that an industrial unit opting for the deferred payment of tax must be a separate entity for sales tax registration purposes. Despite this, the petitioner's application for separate registration of its cement division was rejected, and the division was included in the original registration certificate of TISCO by way of amendment. The petitioner argued that the cement division should be treated as a separate industrial unit eligible for deferred tax benefits.

3. Rejection of the Registration Application for the Cement Division:
The State Level Committee rejected the petitioner's application for deferred tax benefits on the grounds that the cement division was part of TISCO and thus not eligible for separate registration. The Deputy Commissioner of Commercial Taxes had earlier directed the petitioner to amend its existing registration certificate to include the cement division, which was done under protest. The court found that the rejection of the application for separate registration was pivotal in denying the petitioner the benefits of the deferment scheme.

4. Interpretation of Rule 14 of the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990:
Rule 14 requires that an industrial unit opting for deferred tax benefits must obtain a separate registration certificate covering the specific business activity. The court noted that the term "industrial unit" includes new industrial units, existing units undertaking expansion, and sick units undertaking revival. The petitioner had obtained industrial licenses for its cement plants, fulfilling the qualifications for being called an "industrial unit" under Rule 2(iv) of the Deferment Rules. The court emphasized that the refusal to grant separate registration for the cement division effectively denied the petitioner the benefits of the deferred payment of sales tax.

Conclusion:
The court directed the respondents to reconsider the grant of a separate registration certificate for the petitioner's cement division under Section 14 of the Bihar Finance Act, 1981. The application for deferred tax benefits should be re-evaluated on its merits if the separate registration is granted. The orders rejecting the registration and denying the benefits were quashed, and the matter was remanded for fresh consideration in accordance with the court's observations and the law. The writ petition was allowed with no order as to costs.