2000 (12) TMI 885 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Implementation of the Industrial Policy, 1996 and Industrial Incentive Code, 1996.
2. Grant of sales tax deferment on total production.
3. Withdrawal of notices for non-filing of sales tax returns.
4. Refund of excess sales tax deposited.
5. Applicability of the concept of incremental production.
6. Promissory/equitable estoppel.
7. Maintainability of the writ petition.

Issue-wise Detailed Analysis:

1. Implementation of the Industrial Policy, 1996 and Industrial Incentive Code, 1996:
The petitioner sought a writ of mandamus directing the respondents to implement the Industrial Policy, 1996, and the Industrial Incentive Code, 1996, and to grant sales tax deferment on total production. The court noted that the 1996 Policy made a clear departure from the 1989 Policy by omitting the concept of incremental production and introducing the benefit based on additional fixed capital investment for expansion. This change was incorporated into the 1991 Rules by inserting rule 4-B.

2. Grant of Sales Tax Deferment on Total Production:
The petitioner argued that it was entitled to sales tax deferment on total production, not just incremental production. The court held that the decision to grant the benefit of sales tax deferment by applying the concept of incremental production was ultra vires to the scheme of the 1996 Policy, the Incentive Code, 1996, and rule 4B(1)(ii) of the 1991 Rules. The court emphasized that the non obstante clause in rule 4-B(1) overrides the provisions of rule 4-A and rule 4(3) and (4), thus the concept of incremental production cannot be invoked for granting sales tax deferment to the petitioner.

3. Withdrawal of Notices for Non-Filing of Sales Tax Returns:
The petitioner challenged the proceedings initiated against it for alleged failure to file sales tax returns. The court declared the punitive action taken against the petitioner for non-filing the returns of sales tax as illegal and quashed the notices.

4. Refund of Excess Sales Tax Deposited:
The petitioner sought a refund of the excess sales tax deposited during the quarters ending in June 1999 and September 1999. The court directed that the excess sales tax, if any, paid by the petitioner shall be adjusted towards its future liability under the 1948 Act.

5. Applicability of the Concept of Incremental Production:
The respondents argued that the benefit of sales tax deferment was available only on incremental production. The court rejected this argument, stating that the 1996 Policy and the Incentive Code, 1996, did not include the concept of incremental production, which was a deliberate omission. The court held that the non obstante clause in rule 4-B(1) of the 1991 Rules overrides the provisions of rule 4-A and rule 4(3) and (4), thus the concept of incremental production cannot be applied.

6. Promissory/Equitable Estoppel:
The petitioner argued that the State Government cannot apply the concept of incremental production after inducing it to make a significant investment based on the promise of sales tax deferment on total production. The court did not find it necessary to decide on this plea due to the conclusion reached on other grounds.

7. Maintainability of the Writ Petition:
The respondents raised an objection to the maintainability of the writ petition on the ground of the petitioner's failure to avail the alternative remedy of appeal under section 20 of the 1948 Act. The court found no merit in this objection, noting that the appellate authority could not have decided the matter uninfluenced by the decision taken by the Officers' Committee.

Conclusion:
The writ petition was allowed. The court declared that the petitioner is entitled to the benefit of sales tax deferment on total production as per rule 4-B(1) of the 1991 Rules. The court directed respondent No. 3 to issue a fresh sales tax deferment certificate without applying the concept of incremental production. The punitive actions for non-filing returns were quashed, and any excess sales tax paid by the petitioner was to be adjusted towards future liability.