2017 (2) TMI 42 - HC - VAT and Sales Tax

Exemption in luxury and sales tax as granted by the Government Resolution dated 8th July, 1999 - the petitioner holds, controls and manages a tourism unit in B class category - whether the petitioner would be classified under B class category or A class category? Held that - The units were categorized on the basis of their investment and that is how the ceiling limit in regard to exemption was fixed. There has to be, therefore, a correlation as between the location, the investment and other factors peculiar as far as the petitioner is concerned. The petitioner was under TIS, 1999, but its investment was under TIS 1993. The new Tourism Policy was thus the triggering point and that is how the State decided to notify its Package Scheme of Incentives. The petitioner s request for conversion also cannot be considered as these two schemes are separate and their features are not identical. Similar is the position with regard to their application - when there is a valid explanation placed on record for the classification or distinction that is made and it entirely being a policy decision, we see no reason to grant any relief to the petitioner - petition dismissed - decided against petitioner.

Issues:
1. Eligibility for the extension of exemption under Government Resolutions of 2004 and 1999.
2. Claim for exemption in luxury and sales tax under the 1999 Resolution.
3. Consideration of petitioner's application for exemption in luxury and sales tax.
4. Violation of Article 14 of the Constitution of India.
5. Legitimate expectation of benefits for 'B' class tourism unit.
6. Challenge of the 2004 Government Resolution.
7. Discrimination in classification under the Tourism Encouragement Policy, 1999.

Analysis:
1. The petitioner sought a declaration for extension of exemption under the Government Resolution of 2004. The petitioner, a private limited company managing tourism units, relied on the New Package Scheme of Incentives for Tourism Projects, 1999, and subsequent Resolutions. The petitioner claimed entitlement to exemption from sales tax and luxury tax based on registrations granted under the schemes until 2006. The petitioner argued that being a 'B' class unit, it should receive benefits similar to 'A' class units under the 2004 Resolution.

2. The petitioner also claimed exemption in luxury and sales tax under the 1999 Resolution, seeking a certificate for further six years. The petitioner highlighted the objectives of the scheme to boost the tourism sector and argued for the extension of benefits based on legitimate expectations. The petitioner's representation and clarifications sought from the respondents were emphasized as grounds for the relief sought.

3. The respondents contended that the petitioner was granted registration as a 'B' class unit under the 1993 scheme and was entitled to benefits within the stipulated period. The respondents argued that the classification of tourism units was based on various factors and policy decisions, justifying the distinction between 'A' and 'B' class units. The respondents maintained that the petitioner's plea lacked merit and should be dismissed.

4. The Court examined the Package Scheme of Incentives for Tourism introduced in 1993 and subsequent Resolutions, emphasizing the criteria for eligibility, incentives, and classifications of tourism units. The Court noted the introduction of the New Tourism Policy in 1999, resulting in the extension of benefits under the Package Scheme of Incentives. The Court analyzed the petitioner's grievance regarding the classification under the Tourism Encouragement Policy, 1999, and the alleged discrimination in benefits between 'A' and 'B' class units.

5. After reviewing the factual and legal aspects presented, the Court concluded that there was no basis for the petitioner's discrimination claim. The Court found the classification to be non-discriminatory, based on investment, location, and policy decisions. The Court emphasized the need for correlation between factors such as investment and location in determining benefits. The Court held that the petitioner's plea lacked legal grounds, and the writ petition was dismissed.

In conclusion, the Court dismissed the writ petition, ruling against the petitioner's claims of discrimination and entitlement to extended exemptions under the Government Resolutions of 2004 and 1999.

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