2020 (10) TMI 956 - HC - VAT and Sales Tax

Exemption from payment of entry tax - certificate granted to the petitioner under the Madhya Pradesh Udyog Nivesh Samvardhan Sahayta Yojna, 2004 and 2010 - contention of the petitioner is that the petitioner Company is engaged in the manufacturing of technical textile, chemicals, engineering, plastics packaging films, refrigerant gases at various locations in India and overseas - HELD THAT - The respondents have carried out the reassessment only in respect of five assessment years ie., 2004-05, 2006- 07 and 2011-12 to 2012-13 and exemption has been granted only in respect of five assessment years. The respondents ought to have re-assessed the assessment years w.e.f. 2007- 08 to 2010-11 also. The petitioner has submitted more than a dozen of applications to the Commissioner for granting exemption in respect of the remaining years and the Commissioner does have the power u/S. 47 of the M. P. VAT Act. The Commissioner is having a power of suo-moto revision also and this power could have been exercised by the Commissioner keeping in view Sec.5 of the Limitation Act. Thus, it is wrong on the part of the State Government to state that the statute does not provide for reopening of cases which are time barred even though reasonable explanation is provided - In the present case, as the exemption certificate has been granted in the year 2017 only, the petitioner was justified in immediately approaching the Authorities for grant of exemption and his request could not have been turned in the manner and method it has been done by the respondents. The inaction on the part of the Department is bad in law. The assessment orders passed by the Department for four years ie., 2007-08, 2008-09, 2009-10 and 2010-11 deserves to be set aside and are accordingly hereby set aside. It is nobody's case that the exemption certificate has been withdrawn or was erroneously granted and the respondent State has admitted grant of exemption certificate and, therefore, once exemption certificate was granted, the Department cannot take advantage of technicalities, especially when the certificate itself was granted in the year 2017 with retrospective effect. The respondents are directed to confer all benefits to the petitioner in terms of the Entry Tax Exemption Certificate dated 13/7/2017 and as a consequence the impugned assessment orders for four years ie., 2007-08, 2008-09, 2009-10 and 2010-11 are set aside - Petition allowed.

Issues Involved:
1. Exemption from payment of entry tax.
2. Retrospective effect of exemption certificate.
3. Limitation and alternative remedy.
4. Reassessment of tax for specific years.
5. Statutory provisions and powers of the Commissioner.

Detailed Analysis:

1. Exemption from Payment of Entry Tax:

The petitioner, a company registered under the Companies Act, 1956, sought exemption from payment of entry tax based on certificates granted under the Madhya Pradesh Udyog Nivesh Samvardhan Sahayta Yojna, 2004 and 2010. The company had established an industrial unit in Indore's Special Economic Zone (SEZ) in 2004, which was later expanded in 2009 and diversified in 2010. The petitioner argued that it was entitled to 100% exemption from entry tax for its principal, expansion, and diversified units as per the notifications dated 4/4/2005 and 13/12/2010.

2. Retrospective Effect of Exemption Certificate:

The exemption certificates were issued by the M.P. Trade and Investment Facilitation Corporation Ltd. on 13/2/2017 with retrospective effect from 23/7/2004 to 8/5/2015. This retrospective grant nullified all entry tax assessment orders from 2004 to 2013 and up to 2015. The petitioner contended that the Commercial Tax Department was obligated to grant 100% exemption from entry tax, interest, and penalties for the entire period of nine years.

3. Limitation and Alternative Remedy:

The respondent State argued that the petitioner had an alternative remedy and could appeal against the assessment orders. They cited the judgment in Assistant Collector of Central Excise Vs. Dullab India and others, emphasizing the availability of alternative remedies. They also contended that the petition was barred by delay and laches, as the cause of action accrued on 13/2/2017 when the exemption was granted. The respondents pointed out that various assessment orders were passed between 2010 and 2013, and the petitioner had not appealed or approached the appropriate court post-exemption.

4. Reassessment of Tax for Specific Years:

The respondents stated that the power to reopen assessments is provided under Section 13 of the Entry Tax Act read with Section 21(1) of the M.P. V.A.T. Act, 2002. They argued that reopening the assessment was not possible due to the statutory limitation under Section 21. The reassessment orders for certain years (2004-05, 2005-06, 2006-07, and 2011-12 to 2014-15) were passed, and exemption was granted accordingly. However, the petitioner sought exemption for the years 2007-08 to 2010-11, which the respondents did not reassess.

5. Statutory Provisions and Powers of the Commissioner:

Section 3 of the M.P. Entry Tax Act, 1976, and Section 10, which allows the State Government to exempt entry tax, were discussed. The court noted that the exemption certificate was granted on 13/2/2017, and the petitioner became entitled to exemption from entry tax for the period from 2004-05 to 2012-13. The petitioner made several applications for exemption, but the respondents only reassessed five years.

The court observed that the Commissioner had the power under Section 47 of the M.P. VAT Act to reassess and grant exemptions. The court held that the petitioner's request for reassessment was justified and should not have been denied based on technicalities, especially since the exemption certificate was granted with retrospective effect.

Conclusion:

The court allowed the writ petition, directing the respondents to grant all benefits to the petitioner as per the Entry Tax Exemption Certificate dated 13/2/2017. The impugned assessment orders for the years 2007-08, 2008-09, 2009-10, and 2010-11 were set aside. The Department was ordered to refund the amount recovered from the petitioner within 90 days from the receipt of the certified copy of the order. No order as to costs was made.

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