2016 (7) TMI 285 - HC - VAT and Sales Tax

Sales tax exemption scheme - the case of the petitioner is that the total investment eligible for such sales tax incentive came to ₹ 94.49 crores (rounded off). As against this, the respondent authorities had granted eligibility certificate only to the extent of ₹ 28.73 crores against the claim of the petitioner of ₹ 47.25 crores for phse I . - Gujarat Sales Tax - Held that - When High Court in a judgment delivered in January, 2012 had directed the State authorities to take certain actions, the respondents could not have delayed such proceedings for over four years. In the judgment, the Court had granted time for 12 weeks. Even after the inspection team cleared further investment of ₹ 3.58 crores of the petitioner for eligibility, the State Level Committee has yet to take a decision. This stand of the respondents also is not very clear. If the exemptions scheme as amended from time to time envisaged granting exemption in relation to investments made even after 31.12.2005, subject to fulfilment of conditions, it is difficult to understand how State Level Committee can take a different decision and distinguish the same only on the ground that they have been in implementing the same uniformly. Under such circumstances, this petition is disposed of directing the respondents to take a final decision on the petitioner s eligibility for additional sum of ₹ 3.58 crores and convey the same to the petitioner latest by 30th July, 2016 briefly stating the investments which qualify for such further eligibility. The respondents shall also convey brief reasons why the petitioner s investment in second phase would not qualify for such eligibility certificate. - Decided partly in favor of petitioner.

Summary

Issues:
1. Grant of final eligibility certificate for project investment.
2. Delay in decision-making by respondent authorities.
3. Interpretation of eligibility criteria post-amendment.
4. Coercive recovery of sales tax dues pending eligibility decision.

Analysis:
1. The petitioner sought a direction for the grant of a final eligibility certificate for a project investment of ?94,49,84,000. The case involved investments made in two phases following a sales tax incentive scheme post an earthquake in the Kutch district. The petitioner alleged discrepancies in the eligibility certificate granted by the respondent authorities, leading to a fresh petition for the entire investment made in both phases.

2. Despite previous court directions, the respondent authorities delayed the grant of the final eligibility certificate. The Court criticized the prolonged delay, especially after an inspection team cleared further investment of ?3.58 crores for eligibility. The State Level Committee's inaction was noted, and the Court emphasized the need for timely decision-making in compliance with court orders.

3. The respondent authorities cited a decision by the High Power Committee to consider investments made only up to 31.12.2005 for eligibility, leading to a refusal to extend benefits for investments post that date. The Court questioned this stance, highlighting the need for consistent application of the exemption scheme and clear communication of decisions to the petitioner.

4. The Court directed the respondents to make a final decision on the petitioner's eligibility for the additional ?3.58 crores investment by a specified date, along with reasons for disqualifying the second phase investments. Pending this decision, coercive recovery of sales tax dues worth ?3.58 crores was prohibited. The Court emphasized the importance of prompt decision-making and communication to avoid unnecessary legal remedies and coercive actions.