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TMI Blog2009 (4) TMI 847X X X X Extracts X X X X X X X X Extracts X X X X ..... any financial limit, the same could not have been incorporated in the notification. Thus, the orders passed by the BIFR and AAIFR are just and proper and there is no warrant of interference. - Writ Petition No. 1318 of 2008 - - - Dated:- 24-4-2009 - DIPAK MISRA AND GUPTA R.K. , JJ. ORDER:- The order of the court was made by DIPAK MISRA J. Invoking the extraordinary jurisdiction of this court under articles 226 and 227 of the Constitution of India, the petitioner, Commissioner, Commercial Tax, Government of Madhya Pradesh, has prayed for issue of a writ of certiorari for quashment of the order dated December 12, 2007 passed by the Appellate Authority for Industrial and Financial Reconstruction, New Delhi in Appeal No. 238 of 2007 and order dated May 17, 2007 passed by the Board for Industrial and Financial Reconstruction in Case No. 48 of 1994 M/s. S.M.P.L. and to grant any other appropriate relief as deemed fit in the facts and circumstances of the case. The facts as have been uncurtained are that respondent No. 1, M/s. Saurabh Metals Pvt. Ltd., moved an application before the Board for Industrial and Financial Reconstruction, New Delhi (for short, the BIFR ) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablish. The revival scheme approved by the BIFR, as set forth, was placed before the High Power Committee of the State Government for further directions in terms of the Policy Package of 1988; and in a meeting held on May 24, 2002 the said committee accepted the reasons shown by the company and decided to grant exemption in respect of the rolling mills from levying commercial tax/entry tax for a period of nine years from April, 2002. The said minutes of the meeting of the Higher Power Committee, dated May 24, 2002 have been brought on record as annexure P1. Keeping in view the decision of the committee and the revival scheme approved by the BIFR a notification was issued by the Department of Commercial Tax on February 1, 2003 as per annexure P5. By the said notification the State Government exempted respondent No. 1 from payment of tax in respect of goods manufactured by it in its rolling mill unit established in the new industrial area, Mandideep, Raisen in the prescribed manner. In the Schedule appended to the notification in column No. 2 the extent of maximum exemption of cumulative quantum of tax was prescribed up to limit of Rs. 4.10 crores or to the extent of tax payable unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid order passed by the BIFR was assailed before the Appellate Authority for Industrial and Financial Reconstruction, New Delhi (for short, the AAIFR ). The appellate authority rejected the objection raised by the petitioner. The basic objection was that if the company was not manufacturing rolled-products it could not have been allowed exemption. It is submitted that the appellate authority failed to appreciate that respondent No. 1 did not establish any revival rolling mill unit in terms of the notification dated February 1, 2003 and as such it is not entitled to any sort of exemption. The appellate authority further relaxed the limit of maximum exemption of cumulative quantum of tax which was fixed to be Rs. 4.10 crores in the notification dated February 1, 2003 and directed that in view of enforcement of VAT Act, 2002 a fresh notification is required to be issued providing for continuation of relief in favour of respondent No. 1 company till January 31, 2012 without any monetary limit as per the terms envisaged in the sanction scheme of 1996. It is contended that there was no justification for revival of the scheme and grant of benefit of VAT by directing issue of a notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the said letter the State Government through its Commerce and Industry Department had communicated that respondent No. 1 should be granted exemption under the VAT Act. A similar communication was also sent in January, 2007 by the Commerce and Industry Department to the Principal Secretary, Government of Madhya Pradesh. The said communications have been brought on record as annexure R6 and annexure R7, respectively. The BIFR took note of the fact that the Government of Madhya Pradesh had not complied with the sanctioned scheme dated August 21, 1996 and expressed the view that the scheme was a lawful order and the State Government was bound to follow the same and accordingly directed the State Government to extend the necessary relief and concession as per the Scheme. There was non-compliance of the sanctioned scheme and the order dated July 4, 2006, annexure R8. The company filed a petition for issue of directions before the BIFR for the removal of monetary limit imposed in the notification and for extension of the benefit under the VAT Act. The BIFR considered the memorandum filed by respondent No. 1 and hearing the operating agency directed the State Government to grant exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shukla, learned Deputy Advocate-General for the petitioner-State and Mr. H.S. Shrivastava, learned Senior Advocate and Mr. Sumit Nema, learned counsel for the respondents. Mr. V.K. Shukla, learned counsel for the State has raised the following grounds: (a) The respondent did not establish any rolling mill and did not manufacture any rolling product and, therefore, it cannot claim any exemption from the sales tax. (b) The BIFR had not taken any consent from the State Government while granting exemption and, therefore, the order is unsustainable. (c) The BIFR has not afforded an opportunity of hearing to the State Government before issuing any direction and the order is vulnerable. (d) The BIFR as well as the appellate forum, AAIFR has committed grave error by deleting the maximum exemption cumulative of quantum of tax which was prescribed by the Department. (e) The BIFR has erroneously extended the benefit of VAT Act to the respondents and hence, the order deserves to be cancelled. Mr. H.S. Shrivastava, learned Senior Counsel and Mr. Sumit Nema, Advocate for the respondent, advanced the following proponements: (i) The BIFR has passed an order by accepting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to economise on costs and in the process working capital funds continued to be diverted resulting into acute shortage of working capital. As a consequence, the overall production and the capacity utilization continued to remain at extremely low level on account of which the company's financial position deteriorated. The non-availability of uninterrupted power supply due to power shortage, recession in industry and lack of product standardization further added to company's problems. 1.4 The company made a reference to BIFR in 1994. At that time it had accumulated losses to Rs. 522 lakhs which had made its nets worth negative by Rs. 469 lakhs. Bank of India (BOI) was appointed as the Operating Agency (OA) in the hearing held on June 13, 1994 with directions to examine the viability and prepare a report for revival of the company. The company proposed in 1995 to settle the dues of BOI and MPFC under OTS by selling two floors of the building owned by company and its promoter in parts. The M.P. Government by then agreed to grant the company the status of a relief undertaking. Thereafter, adverting to other facts the BIFR addressed the reliefs and concessions. Paragraph 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cidental goods consumed or used in the manufacture of goods, and (iii) packing material used in the packing of goods manufactured, in such unit. After the said notification was issued the respondent submitted various representations but as nothing ensued, it approached BIFR again. The BIFR took note of the approved Scheme sanctioned by the Board under section 18(4) of the Act vide order dated August 21, 1996 and stated the facts in paragraph 4(i) to (ii) as under: 4(i) The company, vide their subsequent letter dated February 15, 2007, intimated that, in terms of the provision(s), vide para 3.5(d) of the SS-96, the Sales Tax Department of the Government of Madhya Pradesh (GOMP) is to extend the sales tax benefits for a period of 9 (nine) years, in respect of the rolling mill unit, which was pending due to settlement of dispute of land with MPAVN, Bhopal. The company also brought-out therein that the GOMP, vide their notification dated February 1, 2003, extended the reliefs/concessions in respect of the sales tax, for a period of 9 (nine) years, i.e., as envisaged in the SS-96, subject to a limit of Rs. 4.10 crs., although the SS-96 does not stipulate any m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deep, Raisen but the company has not established the rolling mill and had not manufactured rolled products. It was also urged that the company manufactured steel casting products. It was also contended that the State could not be directed to extend the benefit to continue grant of exemption to the respondent-company under the M.P. VAT Act, 2002. It was also urged that in the notification upperlimit of Rs. 4.10 crores was fixed and the company had already availed of the same and hence, was not entitled to further relief for its rolling mill unit. In addition to this it was submitted that the State was not heard in the matter before the impugned order came to be passed. The appellate authority took into consideration the rival stands and stances and narrated the same and eventually expressed the view as follows: 4. We have heard the submissions of the appellant and the respondent-company. It is evident from the submissions made by the counsel of the appellant and M/s. Saurabh Metals Pvt. Ltd. (whose rolling mills unit is situated at 22, New Industrial Area, Mandideep) as also the material placed on record that the BIFR by its order dated May 17, 2007 has issued directions t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the sanctioned scheme, wherein the consent of all the parties including the Government of Madhya Pradesh was in place. 5.. Therefore, there is no infirmity in the impugned order whereby the BIFR while deregistering M/s. Saurabh Metals Pvt. Ltd. from the purview of the SICA has directed the appellant to grant the requisite reliefs and concession in line with para 3.5 of the Sanctioned Scheme, 1996 and the notification issued by the appellant in this regard on February 1, 2003. However, it is noticed that there was an infirmity in the notification issued on February 1, 2003 as it quantified the amount at Rs. 4.10 crores. The said quantification is erroneous and contrary to the Sanctioned Scheme, 1996. In such a scenario, there is a requirement for issuance of a fresh notification. We accordingly, direct that in terms of the Notification No. A-3-195-2005-1-V(31), dated March 31, 2006 a fresh notification be issued providing for continuation of the relief and concession under MPVAT Act, 2002 till January 31, 2012 without any monetary limit, as per the terms envisaged in para 3.5, page 6 of the Sanctioned Scheme, 1996. We have referred to the aforesaid order in extenso to u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) The Sales Tax Deptt., GOMP keeping in view the long-term profitability/viability of the company M/s. SMPL, to grant exemption of sales tax to the company up to March 31, 2006 and, in view of the substitution of applicability of sales tax by VAT with effect from April 1, 2006 the GOMP, in terms of their notification dated February 1, 2003, to also grant exemption to the company from the applicability of VAT for the remaining period, i.e., up to January 31, 2012, as contained in the notification dated February 1, 2003 issued by the GOMP in this regard without any monetary limit, as envisaged in para 3.5, page 6 of the SS-96. We have quoted this paragraph again to get a clear picture frescoed and projected. In view of the aforesaid, we are of the considered opinion that the direction issued by the BIFR is in conformity with the original scheme and it has not travelled beyond the mandate of the original scheme. Be it placed on record, we have also asked Mr. Shukla as to which stand of the petitioner would dislodge the order. Except stating that they have not entered into production, the learned Deputy Advocate General for the State, could not enlighten us. It is demonstr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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