2002 (2) TMI 1305 - HC - VAT and Sales Tax

Issues Involved:
1. Entitlement to special incentives under G.O. Ms. No. 498.
2. Validity of the amendment to G.O. Ms. No. 498 by G.O. Ms. No. 146.
3. Compliance with requirements for the issuance of the final eligibility certificate.
4. Rejection of the petitioner's claim based on alleged non-furnishing of documents.
5. Judicial intervention and directions under Article 226 of the Constitution of India.

Detailed Analysis:

1. Entitlement to Special Incentives under G.O. Ms. No. 498:
The petitioner, a resident of Adilabad town, was induced to establish a small-scale industry based on incentives offered by the State Government under G.O. Ms. No. 498 dated October 16, 1989. These incentives included a 20% capital investment subsidy and a five-year sales tax holiday. The petitioner complied with the necessary formalities, including obtaining approvals from various departments and submitting applications for the benefits under the G.O.

2. Validity of the Amendment to G.O. Ms. No. 498 by G.O. Ms. No. 146:
The State Government amended G.O. Ms. No. 498 via G.O. Ms. No. 146 dated April 25, 1991, removing industries involved in the production of cottonseed oil from the list of beneficiaries. However, the amendment provided an exemption for industries already commissioned or in the process of commissioning under the original G.O. The petitioner argued that her industry was in the process of commissioning and thus should still be eligible for the benefits.

3. Compliance with Requirements for the Issuance of the Final Eligibility Certificate:
The petitioner claimed to have made significant investments in machinery and civil construction, totaling Rs. 12,80,034.42. Despite submitting all necessary documents, including audited accounts and certificates from a chartered accountant, the respondents issued a final eligibility certificate for only Rs. 2,86,240. The petitioner filed multiple writ petitions seeking the full benefits, but the respondents repeatedly rejected her claims, citing non-furnishing of documents.

4. Rejection of the Petitioner's Claim Based on Alleged Non-Furnishing of Documents:
The respondents argued that the petitioner failed to provide correct information and documentary evidence about the suppliers and proof of payment for the machinery. Despite the petitioner's efforts to clarify and submit the required documents, the respondents continued to reject her claims. The court noted that the petitioner had indeed furnished all relevant documents and that the respondents' rejections were based on flimsy grounds.

5. Judicial Intervention and Directions under Article 226 of the Constitution of India:
The court observed that the petitioner's efforts to obtain the benefits under G.O. Ms. No. 498 had been met with repeated rejections by the respondents, despite multiple court directions. The court held that the respondents' actions were arbitrary and violative of Articles 14 and 21 of the Constitution of India. Given the circumstances, the court decided to issue a positive direction to grant the final eligibility certificate for the total capital investment of Rs. 12,80,034.42, rather than remanding the matter for further consideration.

Conclusion:
The court quashed the impugned proceedings dated April 19, 2000, and directed the respondents to issue a final eligibility certificate for Rs. 12,80,034.42 and grant exemption of sales tax on the said amount. The writ petition was allowed, and the rule nisi was made absolute.

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