2006 (3) TMI 725 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Withdrawal of Sales Tax Incentive Scheme benefits.
2. Compliance with Clause 7(f) of the Scheme.
3. Impact of natural calamity on compliance.
4. Legal interpretation of the Scheme's provisions.
5. Availability and efficacy of alternative remedies.

Issue-wise Detailed Analysis:

1. Withdrawal of Sales Tax Incentive Scheme benefits:
The petitioner was aggrieved by the withdrawal of benefits under the Sales Tax Incentive Scheme for Wind Power Generation, 1993, by orders dated January 30, 2004, and January 31, 2004, and the demand to pay Rs. 1,05,82,588 due to non-fulfillment of conditions. The court found that the petitioner had initially met all conditions and that the benefits were withdrawn due to the destruction caused by a cyclone, which was beyond the petitioner's control.

2. Compliance with Clause 7(f) of the Scheme:
Clause 7(f) required the wind farm to run satisfactorily for six years from commissioning. The court noted that the petitioner's wind farm was operational and supplying electricity until the cyclone hit on June 9, 1998. The petitioner argued that the cyclone, an act of God, made it impossible to comply with this clause. The court agreed that the petitioner had no intention to discontinue electricity generation and that the disruption was due to a natural calamity.

3. Impact of natural calamity on compliance:
The court emphasized that the cyclone was a vis major (act of God) and that the petitioner could not be penalized for circumstances beyond its control. The legal maxim "lex non cogit ad impossibilia" (the law does not compel the impossible) was applied, indicating that the law would not expect compliance with an obligation made impossible by external factors.

4. Legal interpretation of the Scheme's provisions:
The court interpreted Clause 7(f) in the context of the Scheme's objective to encourage electricity generation. It held that the clause should be read liberally to support the Scheme's purpose and not in a way that would penalize the petitioner for an unavoidable natural disaster. The court underscored that the Scheme should be treated as beneficial legislation and interpreted to help beneficiaries rather than frustrate the Scheme's objectives.

5. Availability and efficacy of alternative remedies:
Though the petitioner had filed an appeal under the Gujarat Sales Tax Act, the court chose to exercise its jurisdiction under Article 226 of the Constitution of India. It reasoned that the petitioner's bank account had been attached, causing significant hardship, and that the statutory appeal might not provide adequate relief in a timely manner. The court concluded that the authorities should not have treated the discontinuation of electricity generation due to a natural calamity as a breach of Clause 7(f).

Conclusion:
The court quashed the impugned orders dated January 30 and 31, 2004, and February 12, 2004, and ruled in favor of the petitioner, stating that the petitioner could not be deprived of the benefits due to an act of God. The petition was allowed, and the rule was made absolute with no order as to costs.