9911796707
TMI Blog1999 (4) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... as under: So as to see that certain underdeveloped areas of the State of Gujarat are developed and industries are established in such underdeveloped areas, the State of Gujarat, respondent No. 3 herein, has framed several policies so as to attract industrialists to establish their new industrial units in such areas. So as to encourage new industrial units to establish their manufacturing units in such areas, the State of Gujarat gives benefit under the Act either by way of deferment of payment of sales tax or exemptions from payment of sales tax. Such benefits are also given to industrial units already established in such areas if they enhance their production beyond certain limit or start manufacturing something different by way of diversification. According to the petitioner, it is entitled to benefit under one of such schemes framed by the respondent-Government under the provisions of section 49(2) of the Act. From time to time, the respondent-Government has issued notifications giving details of such schemes framed by it and one such notification has also been issued on May 6, 1986, a copy of which is annexed and marked annexure 1 to the affidavit-in-reply. Reading the said no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of manufacturing rolled rings the company had already obtained licence from the aforesaid department of the Government of India on November 28, 1980. The copies of relevant licences are annexed and marked as annexure 3 and annexure 2 respectively to the affidavit-in-reply filed on behalf of respondent No. 1. The said two licences clearly reveal that the products manufactured by the company were different and only due to the said fact the company was required to obtain another licence when the company wanted to start manufacturing forged rings. 5.. As per the provisions of the scheme, the petitioner-company was supposed to get an eligibility certificate from respondent No. 1 and on the strength of the eligibility certificate, respondent No. 2 was to furnish an exemption certificate so as to avail of an exemption from payment of sales tax under the Act. 6.. Certain relevant undisputed facts with regard to investment of the company are as under. For the purpose of manufacturing rolled rings the company had invested Rs. 3,60,53,337 for the purpose of purchase of machineries, land and building whereas for the purchase of new machinery for manufacturing forged rings, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue another licence for manufacture of forged rings. The fact that the petitioner-company had to approach the Ministry of Industry for obtaining another licence to manufacture forged rings and licence dated February 28, 1983 was issued to the petitioner-company for manufacturing 25 million forged rings clearly denote that rolled rings and forged rings are different products. 11. The petitioner-company has also placed on record certain details with regard to manufacture of rolled rings and forged rings manufactured by it during the period commencing from 1982 to 1998. Learned Advocate Shri Kamal Mehta appearing for the respondents has not objected to production of the said figures on record. Upon perusal of the said figures, the following facts emerge: Year Production of Total Rolled rings Forged rings 1982-83 7,32,229 ... 7,32,229 1983-84 10,31,900 ... 10,31,900 1984-85 9,78,827 ... 9,78,827 1985-86 15,58,525 ... 15,58,525 1986-87 13,25,942 ... 13,25,942 1987-88 15,12,229 14,04,521 29,16,750 1988-89 16,17,089 20,91,325 37,08,414 1989-90 12,73,811 18,26,060 30,99,871 1990-91 12,31,940 18,08,276 30,40,216 1991-92 15,58,776 20,12,289 35,71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. In the additional capacity set up also they manufacture inner and outer races. Both the products are same. It is not a case of diversification." So as to support the above referred observation or finding, the technical adviser (engineering) has not relied upon any material or has not placed on record anything. Looking to the above-stated report not supported by any material or any reasoning, we are not inclined to believe the said report. Normally whenever any expert gives his opinion, his opinion would always be supported by some reasoning. Learned Advocate Shri Mehta appearing for the respondents was also given some time to show how the rolled and forged rings were considered same in spite of a fact that as per the pleadings, both the products were different. He was also given an opportunity to state the basis on which the above referred remark was made by the technical expert but he frankly conceded that there was nothing on record to show that the technical adviser had any reason to make above referred statement. Moreover, he could not place any material on record to show that both the products were not different though sufficient time was given to him. In view of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta appearing for the respondents that the petitioner was claiming the exemption on the ground that there was an "expansion" by the petitioner-company. In view of the above facts, the said submission of Shri Mehta is not at all well-founded. Moreover, the petitioner never claimed any benefit on account of expansion of its project because in fact the petitioner-company wanted to launch a new product named forged rings and thereby it wanted a benefit under the Act on the ground of diversification. 14.. Looking to the term "diversification", a unit should start a new product line under the same company, firm or partnership and investment in new fixed capital for such a diversification should exceed 25 per cent of the value of the net fixed assets of the original project. It is not in dispute that the petitionercompany had launched a new product line for manufacturing forged rings and had also spent a further sum exceeding 25 per cent of the value of the net fixed assets of the original project because in the original project the petitioner-company had invested approximately Rs. 3.6 crores whereas for the purpose of diversification the company had purchased machineries worth Rs. 1.10 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinabove. Looking to the pleadings and peculiar facts and circumstances of the case, we are inclined to come to the conclusion that rolled rings and forged rings are different and in the instant case, there is a diversification as the petitioner-company has launched a new product line and therefore the petitioner-company is entitled to eligibility certificate from respondent No. 1. 17.. In normal circumstances, this Court would have asked respondent No. 1 to reconsider the decision in the light of the observations made hereinabove and on the basis of the facts submitted by the petitioner-company, but we do not think it proper to adopt such a course for the simple reason that the present petition was filed somewhere in 1989. The petitioner has already paid sales tax as it was not getting the benefit under the scheme referred to hereinabove. As the facts are very clear, we do not think it proper to remand the matter but it would be in the fitness of things to direct respondent No. 1 to grant eligibility certificate as prayed for by the petitioner-company so as to enable the petitioner-company to get the advantage of exemption on the basis of the said eligibility certificate by a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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