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TMI Blog1998 (12) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner established another unit for manufacturing of paper on the remaining plots Nos. 189 and 190 which commenced production on June 1/4, 1993. The period of operation of Sales Tax Incentive Scheme for Industries, 1986 which was originally to last up to March 31, 1991 had been extended to June 30, 1993, that is to say, the eligible units which commenced production before June 30, 1993 became eligible units to avail the benefit under the scheme. For establishing its unit for the manufacture of paper which commenced production on June 1, 1993, the petitioner made an application for grant of exemption certificate in respect of it as new unit on July 4, 1993. On September 18, 1996, the petitioner were granted eligibility certificate for exemption as new industrial unit by the competent authority. In the first instance by his order dated March 25, 1997, the Additional Industries Commissioner issued an amendment in the certificate for sales tax exemption in the case of the petitioner by substituting the exemption in respect of a new industrial unit that the company is an existing unit which has carried out diversification involving an increase in the value of fixed capital investment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m sales tax which is levy authorised by the Sales Tax Act is also creature of statute and flows from provisions of the Act itself, notwithstanding that the policy in the matter of grant of exemption may be formulated by different Government authorities according to the requirement of State policy. The Government resolution dated May 6, 1986 delineating the Sales Tax Incentive Scheme for Industries, 1986 offered two alternative incentive, firstly, exempting from payment of tax and secondly deferring the payment of tax. Both operate in different fields. So far as the exemption from payment of tax is concerned, it squarely comes within the provisions of section 49 of the Sales Tax Act. Section 49(1) are exemptions granted by legislative fiat itself. Sub-section (2) of section 49 enables the Government, if it considers necessary to do so in the public interest, to exempt in specified class of sales or of specified sales or of purchases from payment of the whole or any part of the tax payable under the provisions of this Act by notification under official gazette. 4.. Pursuant to the resolution of the Government laying down the policy for granting exemption, notification under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishing certain facts it is envisaged that before the eligibility certificate is issued by the Industries Department stating the date on which the eligible unit has commenced production, the correctness of facts stated in the application as to the date of commencement of production, the investments made therein including in the case of expansion or diversification of existing unit whether such expansion or diversification has taken place after commencement of the scheme, are scrutinised. On the verification of these facts on scrutiny, the Industries Commissioner issues a certificate of eligibility that a new industry has commenced production on such and such date. On receipt of this eligibility certificate, acting on that the Commissioner issues exemption certificate. It is on communication of that exemption certificate to the concerned dealer that he becomes entitled to avail of exemption in the course of his assessments. 6.. In our considered opinion, the exemption certificate thus being in the nature of an order passed by the Commissioner as to the eligibility and exemption available to a dealer, under section 49 it is within jurisdiction of Commissioner of Sales Tax under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a person in the State of Gujarat who establishes the new industry on or after April 1, 1986, but not after March 31, 1991 in any of the designated areas. As we have noticed earlier that the terminal date of March 31, 1991 has since been extended from time to time up to June 30, 1993. Clause (b) of annexure II makes expression of new industry to mean an industry which has been commissioned at any time during the period beginning April 1, 1986 and ending with the terminals of the scheme and includes expression of diversification. Thus for the purpose of eligibility consideration the expansion or diversification both are also termed as new industry as well as the unit which has newly been established and commenced production for the commencement of the scheme. Within the span of term new industry three classes have been formed, namely, the new unit, the expansion and the diversification . Both the terms expansion and diversification have been defined under Explanation (1) appended to clause (b) of annexure II appended to entry 175. Explanation (2) has also same bearing on the controversy raised before us. Reproduced hereinbelow is clause (b) with Explanation 1 and Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been redundant. If manufacture of any new product was to fall into diversification, it would have been sufficient to state that diversification means commencing of manufacture of new product by the specified manufacturer. In any event the capital investment whether for new unit or for expansion or diversification that would have been taken into consideration for the purpose of fixing exemption limit would have been new investment and not the existing investment. Moreover, as we have noticed that the definition of expansion does not extend to establishing a new unit which has no relation to enhancement in the installed capacity of existing project. Such new unit is eligible for benefit as new industry and not an expansion of existing project leads to irresistible conclusion that if a specified manufacturer establishes a new unit of the same product he is entitled to claim full exemption as eligible new unit. If the construction suggested by the learned counsel for the revenue is accepted that the diversification means manufacturer of any product, unconnected with the original project, it would lead to startling result that while establishing a new unit for manufacturing the same pr ..... 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