2015 (3) TMI 175 - HC - VAT and Sales Tax

Benefit for unavailed tax at the shifted premises - Notification dated March 24, 2005 - eligibility certificate under the New Incentive Scheme, 1989 for sales tax exemption - Rajasthan Sales Tax Act, 1994 - Held that - Since incentive was granted to the new industrial unit, for a period of seven years, therefore, the benefits ought to have been allowed to the petitioner till the intervening period. Since, many units which were established in such remote area or district head quarter or otherwise were facing problems relating to irregular/defective supply of power, non-availability of skilled labourers and also lack of infrastructure facility which was not envisaged by the petitioner and others therefore, on account of several representations, from different corners the Government of Rajasthan issued a notification bearing No. 394 dated March 24, 2005 - The honourable apex court in the case of R.B. Jodha Mal Kuthiala v. Commissioner of Income-tax, Punjab, Jammu & Kashmir and Himachal Pradesh 1971 (9) TMI 2 - SUPREME Court , the Allahabad High Court in the case of Anand Gramodyog Samiti v. Commissioner of Trade Tax 2005 (5) TMI 613 - ALLAHABAD HIGH COURT and the Kerala High Court in the case of Commissioner of Income-tax v. Peermade Tea Co. Ltd. 1994 (10) TMI 23 - KERALA High Court also came to the conclusion. Considering the facts and circumstances of the case in the light of the above judgments, looking to the purpose, objective and intention of the Notification No. 394 dated March 24, 2005 it is held that the notification is retrospective in operation and applicable to all matters pending and it is clear that the petitioner is entitled to claim benefits of the notification. It was submitted by the learned counsel for the petitioner that the petitioner fulfils all the criteria laid down in this notification. Since, the subsequent notification dated March 24, 2005 bearing SO No. 394, was not available before the Tax Board, therefore, the matter is being remitted back to the Tax Board, who will consider the same afresh in the light of the aforesaid notification in accordance with law. If the terms and conditions specified in the notification stand complied with by the petitioner, the claim deserves to be allowed. - Decided partly in favour of assessee.

Issues Involved:
1. Interpretation of law and scheme regarding the benefit of unavailed tax exemption at new premises.
2. Entitlement to the benefit for unavailed tax at the shifted premises based on the correct interpretation of the Scheme.
3. Retrospective nature of the notification dated March 24, 2005, prescribing the procedure for claiming the unavailed benefit of tax.
4. Justification of the Rajasthan Tax Board's decision that the benefit cannot be given to a unit at shifted premises as per clause 3(3).

Issue-wise Analysis:

1. Interpretation of Law and Scheme for Unavailed Tax Exemption at New Premises:
The petitioner, a private limited company, established a new industry and was granted an eligibility certificate under the New Incentive Scheme, 1989, for sales tax exemption from June 24, 1996, to June 23, 2003. Due to various operational difficulties, the unit was declared sick and subsequently shifted to a new location. The petitioner sought to avail the remaining tax benefits at the new location, but the District Level Screening Committee rejected the claim. The petitioner argued that the incentive should be allowed irrespective of the location, as the eligibility certificate did not specify that the benefit was tied to the original location.

2. Entitlement to Benefit for Unavailed Tax at Shifted Premises:
The petitioner contended that the benefit of the incentive scheme should continue at the new location since the shift was necessitated by operational challenges and not a change in the business's nature or management. The petitioner highlighted that other departments, including RIICO and the Excise Department, had permitted the shift, and there would be no loss to the government by allowing the incentive at the new premises. The petitioner also referenced a notification issued by the State Government on March 24, 2005, which allowed the benefit to units shifting within the state, arguing that this should apply retrospectively to their case.

3. Retrospective Nature of Notification Dated March 24, 2005:
The petitioner argued that the notification dated March 24, 2005, which allowed the benefit of unavailed tax exemption to units shifting within the state, should be considered retrospective. The petitioner cited several Supreme Court judgments indicating that clarificatory notifications, which aim to resolve disputes and clarify existing laws, should be applied retrospectively. The court agreed with this view, noting that the notification was intended to address issues faced by units like the petitioner's and was therefore clarificatory in nature.

4. Justification of Rajasthan Tax Board's Decision:
The Rajasthan Tax Board had previously held that the benefit could not be given to the unit at the shifted premises as per clause 3(3) of the incentive scheme. However, the court found that the Board had not considered the subsequent notification dated March 24, 2005, which allowed such benefits. The court directed the Tax Board to reconsider the matter in light of this notification, emphasizing that if the petitioner met the conditions specified in the notification, the claim for the benefit should be allowed.

Conclusion:
The court concluded that the notification dated March 24, 2005, should be applied retrospectively and that the petitioner is entitled to claim the benefits of the notification. The matter was remitted back to the Tax Board for reconsideration, with instructions to decide the matter expeditiously within four months. The revision petition was partly allowed, and no order as to costs was made.

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