2001 (4) TMI 916 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to rejection of application under New Sales Tax Incentive Scheme 1989 due to unit being established in rented premises.

Analysis:
The petition challenged the cancellation of the certificate of completion of application for a new unit established on rented premises under the New Sales Tax Incentive Scheme 1989. The petitioner argued that the scheme does not require the industrial unit to be on self-owned land, and imposing such a condition is unwarranted. The rejection of the application was deemed unjustified as it went beyond the scheme's specified conditions.

The Revenue contended that rented premises might not ensure continuity of production for the required five-year period, raising concerns about the viability of the application. However, the court noted that the scheme did not explicitly prohibit units on rented premises and emphasized that additional eligibility conditions cannot be imposed arbitrarily.

The judgment highlighted that Screening Committees lacked the authority to introduce new prohibitions or eligibility criteria beyond those outlined in the scheme. It was noted that many industrial lands in the state are leased, and excluding units on rented or leased premises not prohibited by the scheme was unjustified. The court stressed that leases often continue indefinitely unless legally terminated, and short-term leases do not necessarily lead to premature closure of businesses.

Moreover, the court referenced a previous case where the denial of scheme benefits to an industrial unit on rented premises was deemed improper. The court emphasized that decisions under the scheme must align with its provisions, and extraneous considerations should not influence such determinations. Consequently, the petition was allowed, and the rejection of the application based on the rented premises was overturned.

In conclusion, the judgment quashed the impugned communication and directed the authorities to reconsider the petitioner's case in accordance with the law and scheme provisions, without considering extraneous factors. The ruling underscored the importance of adhering to scheme requirements and refraining from imposing additional conditions not specified in the scheme.