2007 (12) TMI 420 - HC - VAT and Sales Tax

Certificate of exemption from payment of octroi in terms of Industrial Policy Resolution, 1996 - Held that - Since in the present case the commercial production of the petitioner s unit started from August 26, 1997 the unit is entitled to exemption from payment of octroi, for a period of five years from the date of commercial production, i.e., from August 26, 1997 on entry of machinery, equipments, spare parts of machinery, raw materials and packing materials into the local area of municipality. Vide annexure 10 the petitioner has given a list showing payment of octroi amounting to ₹ 1,31,211.35 starting from June 10, 1997 and made a prayer for refund of the same. Since the petitioner started its commercial production from August 26, 1997 it is entitled to get exemption from payment of octroi for a period of five years from that date and not prior to that. In view of the above, the petitioner is entitled to get to exemption from payment of octroi on machinery, equipments, spare parts of machinery, raw materials and packing materials for a period of five years from the date of commercial production, i.e., August 26, 1997 and octroi collected from the petitioner during the said period of five years from August 26, 1997 shall be refunded to it.

Issues Involved:
1. Inaction of municipal authorities in granting exemption from octroi.
2. Entitlement of the petitioner to octroi exemption under the Industrial Policy Resolution, 1996 (I.P.R. 1996).
3. Validity and applicability of the government notification dated June 25, 1997.
4. Period and scope of exemption from octroi.

Detailed Analysis:

1. Inaction of Municipal Authorities in Granting Exemption from Octroi:
The petitioner, a private limited company, challenged the inaction of the Executive Officer, Administrator, and Octroi Superintendent of Berhampur Municipality in granting an exemption certificate from octroi payment as per the I.P.R. 1996. The petitioner had complied with all necessary formalities, including obtaining various certificates and permissions for setting up a new industrial unit for manufacturing PVC pipes. Despite a request from the General Manager, District Industries Centre, Ganjam, Berhampur, the municipal authorities did not act, prompting the petitioner to file this writ petition.

2. Entitlement of the Petitioner to Octroi Exemption under I.P.R. 1996:
The petitioner argued that under the I.P.R. 1996, machinery and equipment required to set up new industrial units are exempt from octroi. The petitioner had commenced commercial production on August 26, 1997, and claimed entitlement to exemption based on the I.P.R. 1996 and a subsequent government notification dated June 25, 1997, which confirmed such exemptions.

3. Validity and Applicability of the Government Notification dated June 25, 1997:
The municipal authorities contended that under Sections 131A and 188A of the Orissa Municipal Act, 1950, only the Government, after prior consultation with the Municipal Council, could grant octroi exemptions. They argued that no such notification had been annexed by the petitioner. However, the petitioner provided a notification dated June 25, 1997, issued by the Government of Orissa, which exempted machinery and equipment for new industrial units set up on or after March 1, 1996, from octroi. This notification was issued under Section 188A of the Orissa Municipal Act, confirming the exemption.

4. Period and Scope of Exemption from Octroi:
The court examined Section 188A of the Orissa Municipal Act and the notification dated June 25, 1997, concluding that:
- New industrial units set up on or after March 1, 1996, are entitled to octroi exemption.
- The exemption period is five years from the date of commencement of commercial production.
- The exempted goods include machinery, equipment, spare parts, raw materials, and packing materials.

The court determined that the petitioner's unit, having started commercial production on August 26, 1997, was entitled to octroi exemption for five years from that date. The petitioner was eligible for a refund of octroi collected during this period, amounting to Rs. 1,31,211.35, as detailed in annexure 10.

Conclusion:
The court concluded that the petitioner was entitled to octroi exemption on machinery, equipment, spare parts, raw materials, and packing materials for five years from the date of commercial production, i.e., August 26, 1997. The municipal authorities were directed to refund the octroi collected during this period. The writ petition was disposed of with no costs.

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