2007 (11) TMI 564 - HC - VAT and Sales Tax

Sales Tax Incentive Scheme - interpretation - Proceedings under clause 9(b) of the Incentive Scheme, 1987 - breach of conditions contained in clause 4(e)(i) - Held that - In view of the subsequent amendment in the Scheme, the very foundation of the recovery proceedings initiated against the petitioner vide communication dated September 15, 2007 issued by the Additional Commissioner (VAT and IT), Commercial Taxes, Jaipur, for alleged breach of condition does not survive. The impugned communication/notice issued by the Additional Commissioner (VAT and IT) and District Level Screening Committee ignoring the said amendment is not sustainable in the eye of law - petition allowed.

Summary

Issues:
1. Benefit of exemption under the Sales Tax Incentive Scheme, 1987.
2. Breach of conditions under clause 4(e)(i) of the Incentive Scheme.
3. Proceedings initiated against the petitioner.
4. Impact of subsequent amendment on recovery proceedings.
5. Legality of the communication and notice issued by authorities.

Analysis:
1. The judgment concerns the benefit of exemption granted to an industrial unit under the Sales Tax Incentive Scheme, 1987. The petitioner was exempted from tax payment on sales within the State and in inter-State trade of manufactured goods. The exemption was subject to conditions outlined in the Scheme.

2. The issue of breach of conditions arises as the petitioner failed to maintain production levels as required by clause 4(e)(i) of the Incentive Scheme. This breach led to initiation of proceedings under clause 9(b) of the Scheme against the petitioner by the authorities.

3. The proceedings initiated against the petitioner were based on the alleged breach of conditions specified in the Scheme. The Additional Commissioner and District Level Screening Committee were involved in the process of reviewing and taking action against the petitioner for non-compliance.

4. A significant development was the subsequent amendment to the Incentive Scheme in April 2007, which deleted a specific condition, impacting recovery proceedings for breaches prior to the amendment. The judgment highlighted that the recovery proceedings initiated against the petitioner were no longer valid post the amendment.

5. The legality of the communication and notice issued by the authorities, particularly the Additional Commissioner and District Level Screening Committee, was questioned in the judgment. The court found that the actions taken against the petitioner disregarded the amendment to the Scheme, rendering them unsustainable in the eyes of the law.

In conclusion, the writ petition was allowed, and the proceedings initiated against the petitioner based on the alleged breach of conditions were quashed. The judgment emphasized the importance of considering subsequent amendments to legal frameworks while taking enforcement actions.