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TMI Blog1988 (9) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Central Sales Tax Act, the State Government issued two notifications dated 23rd May, 1987 whereby it introduced two Schemes called the "Sales Tax Incentive Scheme for Industries, 1987" (hereinafter referred to as "the Incentive Schemes"). The Incentive Scheme under section 4(2) of the Rajasthan Sales Tax Act has been issued in order to exempt industrial units from payment of tax under the Rajasthan Sales Tax Act on the sales of the goods manufactured by them within the State, in the manner and to the extent and for the period as covered by the notification. The Incentive Scheme under section 8(5) of the Central Sales Tax Act has been issued in order to exempt industrial units from payment of tax under the Central Sales Tax Act on the sales made in the course of inter-State trade or commerce of the goods manufactured by them within the State, in the manner and to the extent and for the period as covered by the notification. Both the Incentive Schemes introduced by the said notifications came into operation with effect from 5th March, 1987 and are to remain in force up to 31st March, 1992. The provisions of the Incentive Schemes are identical and they are applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the Incentive Schemes lays down that the industrial unit covered by the Incentive Schemes shall be subject to all the provisions of the Act and the Rules made thereunder and the terms and conditions contained in the notification and of the assessing authority, after affording an opportunity of being heard to the industrial unit, is satisfied that the breach of any conditions has been committed, he shall, after obtaining prior permission of the Commissioner of Commercial Taxes, levy tax on the finished goods not taxed under the tax exemption scheme, as if there was no exemption and there was escapement of tax. In Writ Petitions Nos. 3141 of 1987, 3310 of 1987, 1157 of 1988 and 1169 of 1988, the petitioner is M/s. Om Shiv Shakti Cement Private Limited, a private limited company, having a small-scale unit at Sikar and it manufactures and sells Portland cement. The said unit of the said petitioner commenced production from 11th September, 1985. The said petitioner submitted applications for grant of eligibility certificates under both the Incentive Schemes on 12th June, 1987, on the basis that it is a "new industrial unit covered by 1985 dispensation". The case of the said pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57 of 1988 and 1169 of 1988 to challenge the said assessment orders dated 6th November, 1987 and the demand notice issued for the recovery of the tax assessed under these assessment orders. In these writ petitions the petitioner has submitted that the eligibility certificates issued to the petitioner under both the Incentive Schemes should be operative from 12th June, 1987, the date of submission of the applications by the petitioner and the petitioner is entitled to avail the exemption under the Incentive Schemes on the turnover subsequent to 12th June, 1987. Writ Petitions Nos. 3228 of 1987 and 6 of 1988 are composite petitions in relation to grant of eligibility certificates under both the Incentive Schemes wherein also the petitioners have challenged the assessment orders passed under section 7-B of the Rajasthan Sales Tax Act and under section 9 of the Central Sales Tax Act read with section 7-B of the Rajasthan Sales Tax Act and the demand notices issued for the recovery of the tax assessed under these assessment orders. The petitioners in both these writ petitions carry on business of manufacture of cement in a mini cement plant and they commenced commercial production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from the date of the grant of said certificate or with effect from the date of submission of the application. If the said question is answered in favour of the petitioners they would be entitled to claim exemption from tax under the Incentive Schemes with effect from the date of submission of the applications and the assessment orders passed under section 7-B of the Rajasthan Sales Tax Act and under section 9 of the Central Sales Tax Act read with section 7-B of the Rajasthan Sales Tax Act and the demand notices issued for the recovery of the tax assessed under those assessment orders will have to be quashed. The learned counsel for the petitioners have urged that taking into consideration the object and purpose underlying the grant of exemption under the Incentive Schemes and the various provisions in the Schemes as well as the forms that have been prescribed for application as well as for the eligibility certificate, the eligibility certificate is to be operative with effect from the date of submission of the application and not with effect from the date of grant of the certificate. In this connection it has been urged that in the Incentive Schemes no time-limit has been pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy various requirements contained in the Incentive Scheme and the application submitted by the unit has to be scrutinised by the screening committee and only after the screening committee is satisfied that the unit fulfils the requirements of the Incentive Scheme the screening committee sanctions the grant of the eligibility certificate and thereafter the assessing authority is required to issue the eligibility certificate and that a time-limit of seven days is prescribed for the assessing authority to issue the eligibility certificate from the date of the receipt of the sanction. Shri Bapna has also invited our attention to notifications of the Government (published in the Rajasthan Gazette dated 3rd March, 1988) dated 5th February, 1988 whereby both the Incentive Schemes notified under the notifications dated 23rd May, 1987 have been amended and sub-clause (d) has been inserted in clause 7 whereby it has been prescribed that the benefit of the Incentive Scheme shall be available from the date of issue of the eligibility certificate. The said amendment in clause 7 of the Incentive Schemes does not apply to these cases because here the eligibility certificates were granted on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners also that the eligibility certificate once granted is to be operative for the whole of the assessment year. Their case is that the eligibility certificate once granted is to be 'operative with effect from the date of submission of the application. The said decisions do not touch on this aspect and, therefore, they are not of much relevance. In the Assessing Authority v. Patiala Biscuits Manufacturers Pvt. Ltd. [1977] 39 STC 381 (SC), the question was as to whether the certificate of registration granted under the provisions of section 5 of the Punjab General Sales Tax Act, 1948 is to be given retrospective effect with effect from the date of filing of the application for registration or is to be operative from the date of grant of the certificate. After examining the provisions of the Punjab General Sales Tax Act, the Supreme Court held that the registration certificate granted under section 7 of the said Act was operative from the date of the application. In that case the learned counsel for the Assessing Authority placed reliance on sub-section (1) of section 7 of the Act which provided that "no dealer shall, while being liable to pay tax under this Act, carry on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect thereof. In that case the respondents before the Supreme Court had applied under section 4-B(2) to the prescribed authority in the prescribed form for the grant of the recognition certificate on 21st March, 1969 and the recognition certificate was granted on 5th December, 1969 and the tax relief was confined to the turnover of purchases made after 5th December, 1969 and relief in respect of the turnover prior to that date was refused on the basis of the condition in sub-rule (5) of rule 25-A which provided that such certificate shall take effect from the date of its issue. The Allahabad High Court had held that the efficacy of the recognition certificate becomes material and relevant at the time of quantification of the purchase tax, i.e., when the assessment order is being drawn up and that the requirements of section 4-B are substantially complied with if the certificate is available to the dealer at the time the liability to tax the turnover in question is sought to be determined subject to the requirement that the turnover is after the date of the application filed by the dealer for issue of a certificate. Before the Supreme Court the learned counsel appearing on beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible for sales tax exemption under the Incentive Scheme would be required to make an application in form A appended to this notification to the Member-Secretary of the appropriate screening committee as mentioned in clause 2(k) within 90 days of the publication of this notification or commencement of commercial production, whichever is later. (b) An industrial unit covered by clause 2(b) opting for the benefit under this Incentive Scheme would be required to convey its option in form A to the Member-Secretary of the appropriate 'screening committee' as mentioned in clause 2(k) within sixty days of the publication of this notification. (c) The screening committee may pass appropriate orders for sanction/ refusal of eligibility certificate. In case of sanction of eligibility certificate, such sanction shall be conveyed in writing to the assessing authority concerned who shall issue eligibility certificate in form B appended to this notification within a period of seven days from the date of the receipt of the sanction. Explanation.-Where an industrial unit opts for sales tax deferment, it shall not be entitled to get benefit under this notification." Clause 8 provides for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form the applicant has to indicate the period for which eligibility certificate or renewal is applied for. At S. No. 13 of the form the applicant has to indicate turnover/estimated turnover both under the Rajasthan Sales Tax Act and the Central Sales Tax Act for the period applied for and at S. No. 14 he has to indicate the tax liability from the commencement of the exemption till the expiry date of the last eligibility certificate (a) on the sales under the Rajasthan Sales Tax Act and (b) on the inter-State sales under the Central Sales Tax Act. A perusal of the aforesaid provisions in the Incentive Schemes shows that the application for the grant of eligibility certificate has to be considered by the appropriate screening committee and only after the screening committee has sanctioned the grant of the eligibility certificate, the certificates to be issued by the assessing authority. Under subclause (c) of clause 7 it is prescribed that the assessing authority concerned shall issue the eligibility certificate within a period of seven days from the date of receipt of sanction, but no time-limit is prescribed for the consideration of the applications by the screening committee. Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase in the value of fixed capital investment by not less than 25 per cent of the net fixed assets of the existing project, and accompanied by an increase in the production to the extent of at least 25 per cent of the original licensed/registered capacity; and (v) an industrial unit which has undertaken diversification by launching of new product line under the same company, firm or partnership provided that the total fixed capital investment in such a diversification exceeds at least 25 per cent of the value of the net fixed assets of the original project. The abovementioned categories of industrial units suffer from certain handicaps which place them at a disadvantage in comparison to the established industrial units. The tax concessions given under the Incentive Schemes are intended to enable these industrial units to get over these handicaps to a certain extent. A delay in the availability of the concessions under the Incentive Schemes is bound to have an adverse effect on the viability of these units because they will not be able to avail the said concession in the initial teething period when the need for such concessions is greater. Such delay in availability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of the screening committee was held on 27th January, 1988 for consideration of the applications of the petitioners. This shows that the petitioners cannot be held responsible for the delay in the grant of eligibility certificates and the said delay was on account of the time taken by the authorities in issuing the guidelines and in convening the meeting of the screening committee. If the eligibility certificate is to be operative with effect from the date of issue, the petitioners would be denied the benefit of the scheme for the period of nearly eight months taken in granting the said certificates even though the petitioners are in no way responsible for the said delay. In other words if the construction placed by the respondents is accepted and it is held that the eligibility certificate is to be operative from the date of issue, it would lead to oppressive, unreasonable and anomalous results which would be avoided if it is held that the eligibility certificate is to be operative with effect from the date of submission of the application. In our opinion the reasons which weighed with the Supreme Court in the Assessing Authority v. Patiala Biscuits Manufacturers Private Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the date of application and not from the date of issuance of the said certificate. As regards the amendment introduced in the Incentive Schemes by notification dated 5th February, 1988 whereby sub-clause (d) has been inserted in clause 7 of the Incentive Schemes, it may be stated that the said sub-clause (d) is similar to sub-rule (5) of rule 25-A of the U.P. Sales Tax Rules, 1948 which was struck down by the Supreme Court in State of U.P. v. Haji Ismail Noor Mohammad Co. [1988] 70 STC 101. Since in the present cases the eligibility certificates were issued on 8th February, 1988, i.e., prior to the publication in the Gazette dated 3rd March, 1988 of the notification dated 5th February, 1988 whereby sub-clause (d) has been inserted in clause 7 of the Incentive Schemes and the said amendment is not applicable to the eligibility certificates issued in the present cases, we have not considered it necessary to examine the validity of sub-clause (d) inserted in clause 7 of the Incentive Schemes. In the result the writ petitions are allowed and it is declared that the eligibility certificates that have been issued to the petitioners under the Incentive Schemes would be operat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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