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2022 (11) TMI 745 - HC - Indian LawsExemption from payment of additional toll under the New Industrial Policy, 2004 and package of incentives for development of industries in Jammu Kashmir - violation of provisions of SRO 22 of 2004 dated 31.01.2004 or not - HELD THAT - The petitioner is not entitled to the benefit of exemption of additional toll on components, plants and machinery, building material and other equipments procured from outside the State for undertaking substantial expansion of the Unit either under the Industrial Policy, 2004 promulgated vide Government Order No.21-Ind of 2004 dated 27.01.2004 or under SRO 22 of 2004 dated 31.01.2004. This we say for the reasons given hereinafter. From a reading of Clause 3.11, it is clearly evident that the Industrial Policy envisages grant of exemption from payment of additional toll on components, plant and machinery and other equipments procured from outstate the State for building factory for a period of five years from the date of registration of the Unit as SSI, Medium or Large. Indisputably, the petitioner-Unit was registered with the Department of Industries in the year 1966 and, therefore, Clause-3.11 reproduced herein above was not in any way applicable - From a reading of Clause-3, it is abundantly clear that additional toll on components, plant and machinery, building material and other equipments imported from outside the State for construction of factory is exempted for a period of five years from the date of registration of the Units in Small, Medium or Large scale sector (including prestigious units). There is no denying the fact that as per the Industrial Policy, 2004, particularly Clause 3.14, the petitioner is entitled to toll tax exemption but Clause 3.14 is required to be read subject to SRO 22 of 2004. Levy of toll is regulated by the Act of legislation known as the Jammu and Kashmir Levy of Tolls Act, Samvat 1995. Section 3 of the Act is a charging Section and provides that levy of toll on various items brought in or taken out of the established check posts under the Act. Section 5 of the Act confers upon the Government power to grant exemption from payment of toll levied under the Act - with a view to give effect to the promises held out to the existing and prospective entrepreneurs in the Industrial Policy, 2004, the Government, inter alia, came up with a notification in exercise of the powers conferred by Section 5 of the Act as well. This was done by the Government in terms of SRO 22 of 2004. The impugned order of consideration is fully in consonance with law and the petitioner was rightly held not entitled to the benefit of exemption from payment of additional toll chargeable on capital goods imported by it for undertaking substantial expansion of its unit in the year 2006. Such exemption came to be provided only with the issuance of SRO 85 of 2008 and was to remain in operation w.e.f. 01.04.2008 to 31.03.2009 - The communications relied upon by the petitioner, particularly those made by the Department of Industries in favour of the petitioner are interdepartmental communications incapable of conferring any right on the petitioner to claim exemption from payment of additional toll under the Act and SRO 22 of 2004 issued thereunder. In terms of Article 265 of the Constitution of India, no taxes can be imposed, levied or collected save by authority of law. Petition dismissed.
Issues Involved:
1. Eligibility for exemption from payment of additional toll under the New Industrial Policy, 2004. 2. Validity of the impugned order rejecting the exemption claim. 3. Applicability of SRO 22 of 2004 and SRO 85 of 2008 to the petitioner's case. 4. Interpretation of the Industrial Policy, 2004, particularly Clauses 3.11 and 3.14. 5. Authority of interdepartmental communications in conferring tax exemption rights. Detailed Analysis: 1. Eligibility for exemption from payment of additional toll under the New Industrial Policy, 2004: The petitioner, an industrial unit registered in 1966, claimed exemption from additional toll for substantial expansion under the New Industrial Policy, 2004. The petitioner argued that they were entitled to this exemption based on their designation as a "prestigious unit" and the provisions of SRO 22 of 2004. However, the court found that the petitioner's registration date (1966) precluded them from benefiting from the five-year exemption period stipulated in Clause 3.11 of the Industrial Policy, 2004, which applies only to units registered within five years of the policy's implementation. 2. Validity of the impugned order rejecting the exemption claim: The court upheld the Deputy Excise Commissioner's order rejecting the petitioner's claim for toll exemption. The order was challenged on grounds of being non-speaking and a result of non-application of mind. However, the court determined that the order was valid, reasoned, and in line with SRO 22 of 2004, which did not support the petitioner's claim for exemption. 3. Applicability of SRO 22 of 2004 and SRO 85 of 2008 to the petitioner's case: SRO 22 of 2004, issued under Section 5 of the Jammu and Kashmir Levy of Tolls Act, provided a five-year exemption from additional toll for components, plant, and machinery from the date of unit registration. The court noted that since the petitioner was registered in 1966, they did not qualify for this exemption. Furthermore, SRO 85 of 2008 introduced a one-year exemption for substantial expansion effective from 01.04.2008 to 31.03.2009, which was not applicable to the petitioner's 2006 expansion. 4. Interpretation of the Industrial Policy, 2004, particularly Clauses 3.11 and 3.14: Clause 3.11 of the Industrial Policy, 2004, outlines toll tax exemptions for raw materials, finished goods, and components for new and existing units. The court emphasized that the five-year exemption period from the date of registration was not applicable to the petitioner. Clause 3.14, which pertains to "prestigious units," grants full exemption from GST and additional toll tax until 31.03.2015 or until the exemption amount reaches 150% of capital investment. However, the court clarified that this clause must be read in conjunction with SRO 22 of 2004, which did not support the petitioner's claim. 5. Authority of interdepartmental communications in conferring tax exemption rights: The petitioner relied on interdepartmental communications from the Department of Industries to support their exemption claim. The court ruled that such communications could not confer legal rights for tax exemptions, which must be authorized by legislation or delegated legislation. Article 265 of the Constitution of India mandates that taxes can only be levied or collected by authority of law, and exemptions must also be legally sanctioned. Conclusion: The court dismissed the petition, concluding that the petitioner was not entitled to the claimed exemption under the Industrial Policy, 2004, or SRO 22 of 2004. The impugned order was deemed lawful, and the petitioner's reliance on interdepartmental communications was found insufficient to establish a legal right to tax exemption.
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