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TMI Blog2013 (3) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... o 31.03.1997. The State also came out with another incentive scheme known as Sales Tax Incentive Scheme, 1989, also the operative period of which was was 05.03.1987 to 3103.1998. The allegation against the petitioner company is that it made branch transfers of goods beyond 20% of its production capacity for the financial year 2005-06. Admittedly and indisputably, the period of eligibility certificate of the petitioner company ended on 20.01.2005. Thus, it was apparently a total misinterpretation and wrong application of Clause (ii) of Clause 4 (e) of the Incentive Scheme of 1987 by the respondent authorities, to initiate proceedings of recovery of the tax from the petitioner denying the benefit of Incentive Scheme for the past period of which it had already availed the exemption of incentive scheme under a validly granted Eligibility Certificate in its favour - in favour of assessee appellant. - Civil Writ Petition No.9644/2009 - - - Dated:- 16-1-2013 - Vineet Kothari,J. Mr. Tribhuvan Gupta, for the petitioner- Mr. V.K. Mathur, for the respondents- JUDGMENT 1. The petitioner company, Rama Phosphates Ltd., has the present writ petition challenging the impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first instance submits that he does not press the challenge made to the validity of the said Clause 4 (e) of the Incentive Scheme, 1987 vide prayer Clause No. (b) made in the writ petition since he has already made a prayer in the alternative in prayer Clause No. (c) that the Condition No.4(e) deserves to be interpreted in the manner that it was only effective for the period of the scheme itself. 6. He further submitted that the Scheme does not restrict prohibit the extent of branch transfers or sales outside the State of Rajasthan of more than 20% of its production beyond the period of scheme itself. Admittedly, the Incentive Scheme, 1987, had the operative period up to 31.03.1997. He also urged that in the rehabilitation scheme framed by the BIFR under the provisions of SICA Act, 1985, the State Government has, inter-alia also undertaken to exempt the petitioner company from the provisions of Clause 4 (e) (ii) of the Rajasthan Sales Tax Incentive Scheme, 1987, copy of the said rehabilitation scheme is Annex.3 to the writ petition. Mr. Gupta, therefore, urged that since the Clause 4 (e) of the Incentive Scheme does not put any such restriction of not making the branch tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the beneficiary industrial unit after having availed the benefits of the Incentive Scheme, (i) shall continue its production at least for the next 5 years not below the level of average production for the preceding 5 years; and (ii) shall not make sales outside the State including branch transfers of the goods manufactured by it exceeding 20% of its total production. Explanation: The expression sales outside the State does not include the sales made in the course of inter-State trade of commerce. 10. The condition as per Clause 4 (e) for availing the benefit under the said Incentive Scheme is in two folds. Firstly, that the eligible unit shall continue its production at least for next five years not below the average production for the preceding five years; and secondly that the units shall not make sales outside the State including the branch transfer of goods manufactured by them exceeding 20% of its total production. The purpose of the twin conditions stipulated in this clause is obvious, namely, requiring the industrial unit in question to maintain the average production, so that the industrial investment does not go waste and the average production brings conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operative period of which was was 05.03.1987 to 3103.1998. 12. Since the goods are obviously sold upon its production during the contemporary period only, the restriction under Clause (ii) of Clause 4 (e) can be held to be operative only for the period of eligibility certificate itself and not beyond that. The initiation of the proceedings against the petitioner company in the present case is apparently based on a foundation, which was not available to the respondent authorities at all. The allegation against the petitioner company is that it made branch transfers of goods beyond 20% of its production capacity for the financial year 2005-06. Admittedly and indisputably, the period of eligibility certificate of the petitioner company ended on 20.01.2005. Thus, it was apparently a total misinterpretation and wrong application of Clause (ii) of Clause 4 (e) of the Incentive Scheme of 1987 by the respondent authorities, to initiate proceedings of recovery of the tax from the petitioner denying the benefit of Incentive Scheme for the past period of which it had already availed the exemption of incentive scheme under a validly granted Eligibility Certificate in its favour. 13. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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