9911796707
TMI Blog1998 (11) TMI 636X X X X Extracts X X X X X X X X Extracts X X X X ..... taluk and new unit at Tirumandankudi, Papanasam taluk. In order to encourage investment in backward area and in order to correct the regional imbalances in the industrialisation of the State, the Government of Tamil Nadu issued G.O. Ms. No. 500 dated May 14, 1990. Paragraphs 2 and 3 of the Government Order offer different incentive schemes for new industries and expansion/diversification of the existing units, set up in the most backward taluk as against less, backward taluk. In the annexure to the said Government Order. the list of most backward taluks has been notified. The petitioners have set up the new sugar mill at Tirumandankudi, Papanasam taluk, Thanjavur district, which is notified as, coming under most backward taluk being mentioned as Sl. No. 14 under the head "Taluks" in Thanjavur district. The total investment on the fixed assets of this new unit was Rs. 3,333.92 lakhs. 3. It is further stated that the petitioners made an application for the grant of eligibility certificate before the State Industries Promotion Corporation of Tamil Nadu Limited/first respondent herein by application dated November 19, 1991. After obtaining so many particulars from the petitioner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent passed an order on September 29, 1992 stating that the request of the petitioner for sales tax waiver on the purchase tax cannot be conferred, since under the present scheme the sugar mills are not eligible for the waiver on purchase tax. The petitioner herein filed W.P. No. 19395 of 1993 before this Court to quash the communication dated September 29, 1992 by the respondent. This Court allowed the writ petition with a direction to the SIPCOT to consider the case of the petitioner in the light of the decision of a Division Bench of this Court in [1995] 98 STC 125 [Sulochana Cotton Spinning Mills (P) Ltd. v. State of Tamil Nadu]. As directed by the Division Bench of this Court, the first respondent conducted a personal enquiry on September 24, 1996, and after considering the various documents filed by the petitioner, passed an order on November 8, 1996 rejecting the claim of the petitioner on the ground that the petitioner-company is not a new industry and not eligible for waiver of purchase tax on raw materials under the abovesaid Government Order. The order of the first respondent is legal, just and proper. As per their application, the petitioner had started a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry and is only an another unit of the existing industry at Vadapathimangalam, the petitioner is not entitled to the benefit under G.O. Ms. No. 500 dated May 14, 1990; accordingly the first respondent is justified in passing the impugned order rejecting the claim of the petitioner; (ii) Inasmuch as the benefit of the said Government Order is available only to new industries started by new entrepreneurs in the most backward taluks, the sugar unit of the petitioner at Papanasam taluk is an expansion of the old industry functioning at Vadapathimangalam is not entitled to the benefits of the said Government Order applicable to new industry. As the first respondent, after affording adequate opportunity to the petitioner as directed by the division Bench of this Court, passed a considered order on merits, there is no merit in the writ petition. 8.. I have carefully considered the rival submissions. 9.. In order to appreciate the rival submissions, we have to look into the relevant Government Order, namely, G.O. Ms. No. 500 dated May 14, 1990. Since the relief claimed is based only on the said Government Order, the same is extracted hereunder: ORDER: The Government in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as to the starting of new industries (part II) in the other areas also where this scheme was not in vogue hitherto. The deferral of sales tax for the industries in these areas will be for five years subject to a minimum of 60 per cent of the total investment made in fixed assets in the case of new industries and 50 per cent of the additional investment in fixed assets made in the case of expansion/diversification of the existing industries. (c) As a gesture to the industries to be set up in any part of Tamil Nadu with an investment in fixed assets of more than Rs. 50 crores, a special incentive of deferral of sales tax for a period of 9 years to the extent of total investment made in fixed assets will be given. This deferral concession will also be available to the existing industries going in for expansion/diversification with an additional investment in fixed assets for more than Rs. 50 crores. 5.. The sales tax deferral/waiver of expansion/diversification ordered in paras 3-4 above is subject to the sales tax payable on products manufactured by the capacity created by expansion/diversification units only. 6.. The industries in the most backward taluks and in the SI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r immediately after the full availment of eligible waiver amount, whichever is earlier. However the deferred amount of sales tax for 5 years or 9 years as the case may be has to be paid after the completion of the deferral period along with the current dues, i.e., in the case of deferral of 9 years the amount deferred in the first year being payable along with the sales tax due in the 10th year, the amount deferred in the second year being payable along with sales tax due in the 11th year and so on. 10.. All eligible units which have commenced production before the date of issue of this order will be eligible for interest-free sales tax loan/deferral as per the orders existing on the date of commencement of production. Units which have availed interest-free sales tax loan under existing schemes, may opt for the deferral facility to the extent of uncompleted period and unutilised amount of the earlier scheme. 11.. The original project in a taluk may go in for expansion/diversification in the same taluk where the original project is located or in any other taluk and avail the interest-free sales tax deferral/waiver concession. However, this concession would be granted for one exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vit filed in support of the writ petition shows that after setting up a new industry in the most backward taluk, they prayed for full waiver and other concessions as per G.O. Ms. No. 500 dated May 14, 1990. It is also seen from the counter-affidavit filed in that writ petition by the first respondent that the petitioners were not entitled to the benefits of the said Government Order, since the new unit of the petitioners was no more than an expansion activity. In this regard, Mr. Parasaran, learned Senior Counsel for the petitioner has brought to my notice that in the light of the specific plea made by the petitioner, and the averments in the counter-affidavit coupled with additional information furnished by the petitioners before the Division Bench, the Division Bench ultimately by order dated August 7, 1996 directed the first respondent/SIPCOT to consider the case of the petitioner that the sugar mills at Tirumandankudi is a new industry, entitled to the benefits of G.O. Ms. No. 500 dated May 14, 1990 in the light of the decision of the division Bench reported in [1995] 98 STC 125 (Mad.) [Sulochana Cotton Spinning Mills (P) Ltd. v. State of Tamil Nadu] and pass orders after heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of G.O. Ms. No. 500 dated May 14, 1990 in the light of the earlier Division Bench decision in [1995] 98 STC 125 [Sulochana Cotton Spinning Mills (P) Ltd. v. State of Tamil Nadu] and pass appropriate orders after affording adequate opportunity, In such circumstance, I am unable to accept the argument of the learned Senior Counsel that the decision rendered by the Division Bench would operate as res judicata and could not be reopened by the first respondent. No doubt the learned Senior Counsel has very much relied on the following passage of their Lordships of the Supreme Court reported in Sobhag Singh v. Jai Singh AIR 1968 SC 1328: ".............All questions which had been expressly decided by the High Court on contest between the parties and other questions which must be deemed by necessary implication to have been decided were res judicata and could not be reopened before the Board of Revenue.............." As stated earlier, it is true that the stand of the first respondent in the earlier proceedings that the unit set up by the petitioner in Papanasam taluk is not a new industry has not been accepted by the division Bench in the said decision. However, their Lordships h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are only one, as both the plants are under the same company. 11.. I have already extracted the entire Government Order No. 500, Industries Department dated May 14, 1990. It is clear that in order to promote more industries in the backward areas, even in the year 1989, the Government of Tamil Nadu had declared 105 taluks as industrially backward for the purposes of grant of interest-free sales tax loan, interest free sales tax deferral, State capital subsidy, etc. With a view to correct regional imbalances in the industrialisation in the State, the Government decided to give further incentive to more backward areas; accordingly identified 30 taluks from among 105 industrially backward taluks and declared as industrially most backward taluks. The names of 30 taluks are annexed to the said Government Order. The first limb of para 3 of the Government Order makes it clear that if new industry is set up in any one of the 30 most backward taluks and in the 3 industrial complexes of SIPCOT, the said industry is eligible apart from other existing concessions for full waiver of sales tax due for a period of 5 years up to a ceiling of the total investment made in the fixed assets. The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as commenced production for the first time on March 31, 1990 in the sugar year 1989-90 and is eligible to avail of incentives in accordance with the sugar incentive scheme announced by the Directorate of Sugar Letter No. F3(6)88-PC dated 26th December, 1988 and (2) that the sugar factory has been sanctioned free sale quota for 7 (seven) years as per details given below commencing from the sugar year 1990-91 and pending with sugar year 1996-97. Sr. No. Sugar year Percentage of total free sale quota. 1 1990-91 90 (Ninety) 2 1991-92 92 (Ninety-two) 3 1992-93 92 (Ninety-two) 4 1993-94 92 (Ninety-two) 5 1994-95 92 (Ninety-two) 6 1995-96 93(Ninety-three) 7 1996-97 93 (Ninety-three). Place: New Delhi, Sd/..... Date: 29th October, 1991. (Kanti Deb) Director (Sugar Administration) Sd/-.... Sd/-..... (D.P. Rangan) (R.P. Singhal) Director (Cost) Director (Sugar Technical)." It is clear that the sugar factory at Tirumandankudi of Thiru Arooran Sugars (petitioner herein) is a new unit with licens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taluk. namely, Needamangalam taluk and a new unit in a most backward taluk, namely. Papanasam taluk. After perusing G.O. Ms. No. 500 dated May 14, 1990, I am of the view that the said Government Order does not speak about the present setting up of new unit or expansion unit. In other words, as rightly contended by Mr. Parasaran, learned Senior Counsel for the petitioner, the notification considered as irrelevant the entity of the personality of the entrepreneur. Accordingly, the first respondent is misconceived in staling that the petitioner being an existing company running an old unit could never have set up a new unit for the company since the company was an existing industry. The said conclusion cannot be appreciated. 15.. It is also clear from the particulars furnished by the petitioner-company before the first respondent that the new industry at Tirumandankudi is a selfcontained new sugar mill with its own plant and machinery, infra-structure. independent personnel, including officers and staff for the management of the new factory, separate excise records and separate electricity licence for the consumption of power, etc. The above particulars strengthened the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that the steel foundry division was an industrial undertaking to which section 15C of the Indian Income-tax Act, 1922, applied?; and whether the Tribunal was right in holding that the jute mill division set up by the assessee-company was an industrial undertaking to which section 15C of the Indian Income-tax Act, 1922 applied? The following discussion and conclusion of their Lordships are relevant: "The principal object of section 15C is to encourage setting up of new industrial undertakings by offering tax incentives within a period of 13 years from April 1, 1948. Section 15C provides for a fractional exemption from tax of profits of a newly established undertaking for five assessment years as specified therein. This section was inserted in the Act in 1949 by section 13 of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949 (Act 67 of 1949), extending the benefit to the actual manufacture or production of articles commencing from a prior date, namely, April 1, 1948. After the country had gained independence in 1947 it was most essential to give fillip to trade and industry from all quarters. That seems to be the background for insertion of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From this it clearly follows that substantial investment of new capital is imperative. The words 'the capital employed' in the principal clause of section 15C are significant, for fresh capital must be employed in the new undertaking claiming exemption. There must be a new undertaking where substantial investment of fresh capital must be made in order to enable earning of profits attributable to that new capital." Again their Lordships have pointed out thus: "................For the purpose of section 15C the industrial units set up must be new in the sense that new plants and machinery are erected for producing either the same commodities or some distinct commodities. In order to deny the benefit of section 15C the new undertaking must be formed by reconstruction of the old business. Now, in the instant case, there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking. There is no such transfer of assets in the two cases with which we are concerned." Again their Lordships have observed thus: "..................The two new undertaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice bran oil in the manufacture of soap in its factory first converts the oil into hydrogenated oil or fatty acid and then manufactures soap out of the latter. So far as (a) is concerned, the object of the notification-as even the Tribunal finds-is to grant a concession to a manufacturer of soap who manufactures soap from rice bran oil to a substantial extent and thus discourage the use of edible oils in the manufacture. If these two aspects are considered together, it is clear that the emphasis in the notification is not that rice bran oil should be used as raw material in the very factory which produce the soap. The requirement is that the soap manufacture should, to a prescribed extent, be from rice bran oil as contrasted with other types of oil. The contrast is not between the use of rice bran oil as opposed to rice bran fatty acid or hydrogenated rice bran oil; the contrast is between the use of rice bran oil as opposed to other oils. That is the ordinary meaning of the words used. These words may be construed literally but should be given their fullest amplitude and interpreted in the context of the process of soap manufacture. There are no words in the notification to restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth the mills and above all treatment by the company of both the units as one in certain matters, such as opening of bank accounts except in the State Bank where it was in the name of the company, Regmal section, and the products of both the units bearing the name of the company. The submission is sought to be reinforced by reference to some earlier awards of Tribunals in certain adjudications where it is pointed out that the Tribunal had held that the standing orders of the company were applicable to the R. Mill and the workmen's terms of conditions of service were the same in both the units. 17.. On the other hand the circumstances pointed out in favour of the respondent are 'that the two units are separate. Both factories are registered separately under the Factories Act and they are in separate premises. The raw materials used in the two factories are different and it is obtained from different sources. Electricity is obtained by the two factories from different sources, the sale of products manufactured in the respective units is effected from their respective offices, the staff of the two mills is separate and wages are paid separately. The accounts of the two mills are mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ager designating as occupier for the purposes of Factories Act, separate registration for Central excise, separate licence under the Factories Act; and (v) The certificate of the Government of India dated October 29, 1991 recognising the sugar factory at Tirumandankudi as a new unit which is eligible to avail of incentives in accordance with the Sugar Incentive Scheme announced by the Directorate of Sugar. 22.. It is also clear from the particulars furnished that the new sugar unit set up at Tirumandankudi, Papanasam taluk geographically and physically is a new industry set up in the most backward taluk in terms of G.O. Ms. No. 500 dated May 14, 1990. It is a well-settled rule of construction that the purpose of the notification to promote industrialisation must be paramount in the interpretation. Accordingly, G.O. Ms. No. 500 dated May 14, 1990 is to encourage new industry and to remove regional imbalance. In the light of the said object, the same should be construed liberally. In many decisions, this Court as well as the apex Court have held that since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
