2013 (5) TMI 231 - HC - VAT and Sales Tax

Writ Certiorari - Continuity of exemption even after reorganization of state - Petitioner was a registered dealer and is a trader of Cement, Cement Colors, etc. and was working in the erstwhile State of Madhya Pradesh which was prior to 1.11.2000 before reorganization of the State. He made certain purchases from M/s L & T Limited, Raipur, now known as M/s Lafarge India Pvt. Ltd., which was a new industrial undertaking exempted from the tax by Notification No.A-3-27/89-ST-V(15).The aforesaid exemption was granted before reorganization of the erstwhile State of Madhya Pradesh. The period in question in this petition is between 1.4.2002 and 31.3.2003. The question involved in the present petition is whether the purchases made by the petitioner after 1.11.2000 from an industry which was exempted after creation of the State of Chhattisgarh, petitioner was entitled for the same exemption or not which was available to the petitioner prior to 1.11.2000. The authorities have turned down the contention of the petitioner and subsequently he filed the Writ petition against the order. Held that - Relying on the decisions made by apex court in Commissioner of Commercial Tax and anr. Vs. Swaran Rekha Cokes and Coals Pvt.Ltd. & ors reported in 2004 (5) TMI 528 - SUPREME COURT all these petitions are allowed and it is held that the exemption which was granted shall remain applicable to the petitioner even after reorganization of the State.

Summary

Issues:
1. Interpretation of tax exemption notification pre and post reorganization of states.
2. Applicability of exemption benefits to units post-reorganization.
3. Challenge to assessment, appellate, and revision orders.
4. Continuation of exemption post-reorganization for purchases made from an exempted industry.

Issue 1: Interpretation of Tax Exemption Notification Pre and Post Reorganization of States:
The case involved a petitioner seeking relief to quash assessment, appellate, and revision orders while asserting the applicability of a tax exemption notification dated 19/02/1991 to purchases made between 2002-03. The dispute arose regarding whether the petitioner, a trader of Cement, was entitled to the exemption post the reorganization of the State of Madhya Pradesh. The core issue was whether the purchases made by the petitioner after 1.11.2000 from an industry exempted after the creation of the State of Chhattisgarh would still entitle the petitioner to the same exemption as before the reorganization.

Issue 2: Applicability of Exemption Benefits to Units Post-Reorganization:
The petitioner contended that the controversy was settled by the apex court in a similar case, emphasizing that the benefit available to an exempted unit prior to reorganization should continue even after reorganization. The respondent did not dispute the facts presented, aligning with the petitioner's position. The apex court's judgment in a comparable matter highlighted that the benefits of exemption from sales tax on raw material purchases for new industrial units should persist post-reorganization, as long as the relevant notification remained unaltered by the new state.

Issue 3: Challenge to Assessment, Appellate, and Revision Orders:
The petitioner challenged the orders passed by various authorities, seeking their quashment. The legal counsel for the petitioner referenced a specific judgment to support the contention that the petitions should be allowed based on settled legal principles. The respondent did not contest the facts, leading to a common order being passed for all petitions due to identical controversies.

Issue 4: Continuation of Exemption Post-Reorganization for Purchases Made from an Exempted Industry:
Based on the apex court's decision in a similar matter, the High Court ruled in favor of the petitioner, holding that the exemption granted to the respondent shall remain applicable even after the state's reorganization. The authorities were directed to reconsider the matter in line with the legal principles established by the apex court within a specified timeframe. The judgment emphasized the continuity of benefits for units eligible under the relevant notification, irrespective of state reorganization.

In conclusion, the High Court's judgment in this case clarified the interpretation of tax exemption notifications pre and post reorganization, ensuring the continuity of benefits for eligible units. The ruling provided a clear legal precedent for the applicability of exemption benefits post-state reorganization, highlighting the importance of adhering to established legal principles in similar disputes.