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TMI Blog2001 (9) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... es tax on the additional production above the production which was being made prior to expansion by it. 2.. The factual matrix necessary for disposal of the present application are that the State Government with a view to accelerate the pace of industrial development, achieve dispersal of industries outside the urban industrialised areas and to attract them to the under-developed and developing areas of the State, came out with a policy of sales tax incentives scheme for industrialisation of Bihar. The said scheme is known as Sales Tax Deferment Scheme. Under the aforesaid scheme, incentives were given to the new industrial units which would start commercial production from April 1, 1989 and thereafter, or to the existing industrial unit undertaking for expansion. Regarding existing industrial units undertaking clause 4 of the said Policy provides that the existing industrial units undertaking expansion of 50 per cent of their capacity with a minimum fixed capital investment of Rs. 20 lakhs in fixed assets will also be eligible for deferment of payment of sales tax. A copy of the English version of the said policy has been annexed as annexure 1 to the writ application, and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Policy that the benefit of sales tax deferment scheme, will be available to the existing industrial unit on its additional production over and above the installed capacity. Later on, the State Government framed Rules which published on 11th February, 1991 in the gazette wherein provisions were made with regard to eligibility for grant of deferred payment of tax and the matters connected therewith. The State Government by the aforesaid Rules has narrowed down the scope of the Industrial Policy announced in the year 1989 as it is mentioned in clause 3(b)(iv) that the facility of deferment of sales tax will be limited to the incremental production which was not at all mentioned in the Industrial Policy. The Rules also contain an Explanatory Note to the aforesaid clause defining the incremental production means the production over and above the installed capacity. Thus, the provision contained in the Rules putting restriction to the extent that the benefit of deferred sales tax will be available to the industrial unit on its additional production only over and above the installed capacity is contrary to the Industrial Policy and the same cannot negate the incentives and benefit thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional production over and above the installed capacity prior to its expansion. 8.. The answer to this question depends upon the scope of the policy decision of 1989 and the relevant provisions of the Rules framed to give effect to the aforesaid policy. In that view of the matter, it is necessary to refer to the relevant provisions. 9.. The relevant clause 4 of the aforesaid Industrial Policy of 1989 in English version runs as follows: "Existing industrial units undertaking expansion of 50 per cent of their capacity with a minimum fixed capital investment of Rs. 20 lakhs in fixed assets will also be eligible for the deferment of payment of sales tax". The Hindi version of clause 4 of the aforesaid policy runs as follows: 10.. From perusal of the aforesaid industrial policy as contained in both versions, it appears that in Hindi version apart from the matters which have been stated in clause 4 in English version of the said Policy, it is further stated that the benefit of the scheme will be available to the existing industrial unit undertaking expansion only with regard to additional production and not with regard to entire production of the unit. 11.. Clause 3 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary to the Policy decision and as such the same should be declared ultra vires and consequently that part of the decision taken by the State Level Committee granting benefit of the scheme on additional production above the installed production be quashed and a direction be given to issue eligibility certificate for giving the benefit of the scheme on the additional production above the production prior to its expansion. In support of his submission, he has relied upon a decision of the apex Court in the case of State of Bihar v. Suprabhat Steel Ltd. reported in [1999] 112 STC 258; (1999) 1 SCC 31. 13.. Learned counsel appearing for the State on the other hand submitted that there is no conflict between the Policy and Rules. The Rules were framed to give effect to the provisions of the Policy. The Policy decision was silent to the determination of additional or increased production and contained only a broad and general policy. It was not expected for the State Government to give each and every detail in its policy decision and accordingly Rules were framed laying down the detailed procedure for eligibility and extent of deferred payment of tax. It defined additional or incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.. The very purpose of giving the incentives to the industrial unit was to accelerate the pace of industrial growth. The Policy decision of 1989 laid down the broad principles. The Rules were framed to give benefit to the said policy wherein the said policy has been explained, and detailed provisions for eligibility and extent of deferment of tax has been provided. So far as the existing industrial units are concerned, the State Government decided to give benefit of the scheme only to those units who after expansion increased their capacity up to 50 per cent of their installed capacity and as a result of which the additional production was over and above the installed capacity. The provision contained under the Rules cannot be said to be either arbitrary or impermissible in law. The same cannot be said to be contrary to the policy decision of 1989. The said decision, as stated above, laid down broad principles and the Rules contained an elaborate procedure regarding eligibility for grant of such scheme and other matters. I am further of the opinion deferment of sales tax is only with reference to production beyond the installed capacity on account of extension flows from clause 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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