2007 (6) TMI 514 - HC - VAT and Sales Tax

Summary

Issues involved:
The judgment involves the interpretation of a Package Scheme of incentives by the Government of Maharashtra for industries in backward areas, specifically regarding the entitlement to sales tax exemption based on fixed capital investment.

Details of the Judgment:

Issue 1: Assessment of sales tax exemption eligibility
The petitioners, entrepreneurs in backward areas, sought sales tax exemption under the Scheme based on fixed capital investment. The Sales Tax Department passed an assessment order ignoring the fixed capital investment, leading to disputes. The petitioners claimed entitlement to exemption based on additional capital investments made beyond the initial investment mentioned in the eligibility certificate.

Issue 2: Interpretation of Scheme provisions
The Court examined the original Scheme and its modifications, focusing on clauses related to fixed assets and gross fixed capital investment. The Scheme allowed for cumulative gross fixed capital investment, indicating that the exemption was not restricted to the initial capital investment mentioned in the eligibility certificate.

Issue 3: Legal precedent and government representations
The Court referred to legal judgments emphasizing that once eligibility for exemption is earned, it cannot be altered by subsequent notifications. The government's representations regarding tax concessions were deemed binding, and conditions for exemption could not be changed arbitrarily.

Conclusion:
The Court quashed the adverse communications from the Sales Tax Department and SICOM, stating that the petitioners were entitled to claim exemption based on cumulative capital investment during the specified period. The principle underlying entitlement was clarified, and the authorities were directed to assess the actual cumulative capital investment before granting exemptions. The rule was made absolute with no order as to costs.