2009 (9) TMI 890 - HC - VAT and Sales Tax

Whether the respondent-company can be termed to be a pipeline industry to derive the advantage of the notification dated July 21, 2000 Held that - It has not been disputed by the appellant, Government of Pondicherry, that the Commercial Taxes Department, by its letter dated September 19, 2000, held that IMFL units would also be eligible, if they satisfy the other conditions specified in G.O. Ms. No. 36/2000/F2 dated July 21, 2000. It has also been seen that such exemptions having been given to other IMFL companies. Apart from the fact that the company has been provided with no objection certificate for construction of the distillery, registration certificate, etc., it will be also evident that the respondent-company filed its monthly return in form A2 of the Pondicherry General Sales Tax Act before the Deputy Commissioner of Commercial Taxes, Pondicherry, reporting its turnover and claimed exemption on the same. The assessing authority originally issued provisional assessment notice dated December 11, 2000 and February 2, 2001 for the month of September to December, 2000, proposing to disallow the claim of the exemption on the ground that the exemption was made available in view of notification dated March 30, 1999. In response to the said notice, the respondent-company, through their letter dated February 12, 2001, filed its objection and claimed exemption under notification dated July 21, 2000. Thereafter, no order of provisional assessment was made, but, however the assessing authority chose to issue pre-assessment notice dated August 13, 2000 proposing to disallow the claim for exemption for the year 2000-01, which was confirmed by assessment order dated October 1, 2000. Thereby, the authority did not choose to apply its mind with regard to exemption to which one or other industry was entitled under G.O. Ms. No. 36/2000/F2 dated July 21, 2000. Appeal dismissed.

Summary

Issues Involved:
1. Validity of Notification No. 35/99 dated September 30, 1999.
2. Assessment order for the assessment year 2000-01 and request for sales tax exemption.
3. Direction to produce a copy of pipeline industries in the Union Territory of Pondicherry.

Issue-wise Detailed Analysis:

1. Validity of Notification No. 35/99 dated September 30, 1999:
The appellants, referred to as the Government of Pondicherry, issued a notification allowing certain industries to have sales tax exemption for five years, which was later amended. The respondents, referred to as the company, challenged the validity of Notification No. 35/99 dated September 30, 1999, through W.P. No. 14435 of 2002. The learned single judge, however, found that there was no need to grant any relief in W.P. No. 14435 of 2002 due to the decision made in W.P. No. 14436 of 2002.

2. Assessment Order for the Assessment Year 2000-01 and Request for Sales Tax Exemption:
W.P. No. 14436 of 2002 was filed challenging the assessment order for the assessment year 2000-01 and seeking a writ of mandamus to grant exemption as per Government Order dated July 21, 2000. The learned single judge referred to the Government orders and the letter from the Sales Tax Department, concluding that Indian-made foreign liquor (IMFL) industries in the pipeline were eligible for exemption under Policy No. 36 of 2000 dated July 21, 2000. The Government of Pondicherry argued that the exemption was withdrawn by Notification No. 36/2000/F2 dated July 21, 2000, and that the IMFL industry was specifically excluded from the scheme of exemption. However, the court found that the respondent-company met the conditions to be considered a pipeline industry and thus was entitled to sales tax exemption.

3. Direction to Produce a Copy of Pipeline Industries in the Union Territory of Pondicherry:
W.P. No. 38572 of 2003 was filed for a direction to produce a copy of pipeline industries in the Union Territory of Pondicherry. The learned single judge concluded that there was no need to grant any relief in this writ petition due to the decision made in W.P. No. 14436 of 2002.

Analysis of Notifications and Policy Decisions:
The court reviewed various notifications issued by the Government of Pondicherry, starting from G.O. Ms. No. 15/74 dated June 25, 1974, which granted sales tax exemption to all industries for five years. Subsequent notifications, including G.O. Ms. No. 164/86/F6 dated September 29, 1986, and G.O. Ms. No. 35/99/F2 dated March 30, 1999, amended the exemptions, specifically excluding IMFL, gensets, and soaps from the exemption scheme. The pivotal notification, G.O. Ms. No. 36/2000/F2 dated July 21, 2000, discontinued the exemption but allowed industries in the pipeline to retain the benefit if they met certain conditions.

Conclusion:
The court determined that the respondent-company was an industry in the pipeline, fulfilling the conditions set forth in G.O. Ms. No. 36/2000/F2 dated July 21, 2000. Despite the Government of Pondicherry's argument that the IMFL industry was excluded from the exemption scheme, the court found that the company was entitled to the sales tax exemption. The appeals were dismissed, and the decision of the learned single judge was upheld. There was no order as to costs.