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TMI Blog2014 (11) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... s wrongly granted nor did he have the jurisdiction under section 20 of the State Act to go behind the eligibility certificate and embark upon a fresh enquiry with regard to the appellant's eligibility for the grant of the benefits. - sales tax authorities had no jurisdiction to call in question grant of eligibility certificates issued by the District Industries Centre. - Decided in favor of assessee. Scope and purpose of the term 'Unit' - Scanning of the purpose with which the 1989 Policy and 1991 Rules have been formulated - Held that:- The definition of the term "unit" in a restrictive manner as has been sought to be canvassed by learned State counsel does not spell out from the reading of rule 2(xxvii) defining "unit" and justify the tenor of the policy and the rules framed. Under the circumstances, the State could not restrict the benefit of 1991 Rules to only one unit of the petitioner. - respondent No. 4 directed to issue eligibility certificate to the petitioner in respect of two other units as well - Decided in favor of assessee. - CWP No. 17685 of 1994 - - - Dated:- 12-1-2012 - KUMAR M.M. AND AJAY KUMAR MITTAL, JJ. For the Appellant : L. Nageshwara Rao, Senio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) on March 20, 1991. The petitioner set up three independent industrial units at different places and obtained eligibility certificates from the Department of industries vide annexures P2, P5 and P6, in respect of each of the three units. The quantum of sales tax incentives to which the petitioner was entitled was also quantified by the Department of Industries at the maximum amount of ₹ 6 crores for each of the three units in terms of the 1989 Policy. It applied for exemption certificate in respect of first unit. The Assistant Excise and Taxation Commissioner, Sangrur, granted the exemption certificate vide order dated June 3, 1993, annexure P4. When application was filed by the petitioner for issuance of exemption certificate in respect of other two units, the Assistant Excise and Taxation Commissioner vide order dated November 22, 1993, annexure P10 rejected the same on the ground that separate exemption certificate could not be granted in view of rules 2 (xxvii) and 3(1)(i) of the 1991 Rules. The petitioner filed an appeal before the Deputy Excise and Taxation Commissioner (Appeals), Patiala, who dismissed the same vide order dated February 1, 1994, annexure P11. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13(1)(b) of the 1981 Act refer to a dealer and section 14 thereof refers to registration of dealers mandating filing of return in respect of its activities, the same would not mean that the State cannot grant the same or different benefits to different units producing different products of the same assessee. The State has the power not only to grant exemptions, but also direct such grant relating to a class or description of goods. If the State has the power to issue a notification, it has the power to amend, vary or rescind the same and exercise such power from time to time as and when occasion arises therefor. 37. The notifications in question, however, are not exemption notifications. They provide for set off or adjustment of tax. A dealer in terms of the 1981 Act must be taxed but it may be granted exemption therefrom in respect of certain items or adjustment or set off thereof in relation to its particular products manufactured in a new or existing industry. A notification may be issued under section 22 or 23 in respect of one or more products or in respect of one or more units. However, whether a dealer would be entitled to the benefit of set off unitwise or not will de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g an exemption notification, no condition should be read into it when there is none. If an entrepreneur is entitled to the benefit thereof, the same should not be denied. (See Commissioner of Sales Tax v. Industrial Coal Enterprises [1999] 114 STC 365 (SC); [1999] 2 SCC 607)). 9. Furthermore, support was gathered from para 7 of the decision of this court in Maurya Timbers v. State of Haryana [1997] 104 STC 243 (P H); [1996] 114 PLR 609, which is to the following effect (pages 248 and 249 in 104 STC): 7. The learned counsel for the petitioner has argued that the eligibility certificate had been issued to the petitioner on January 25, 1990 but had been made effective from the date of commencement of production. Similarly, exemption certificate had been issued on May 26, 1990 but it was also made operational from the date of commencement of production. Both the certificates had been issued by two competent authorities and there was no occasion for the revisional authority to exercise powers under section 40 of the Act so as to modify or withdraw the certificates. The revisional authority, while revising the assessment order, chose a dubious method, not permissible in law, to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overting the submissions made by learned senior counsel for the petitioner, Mr. Jain, learned counsel for the State, submitted that the unit has been defined under rule 2(xxvii) to mean an industrial unit which was registered as a dealer under the Act. A dealer has been defined under section 2(d) of the Act and registered means registered under the Act in terms of section 2(g) of the Act. The petitioner being a dealer which was registered could not avail of separate exemption in respect of three units. According to the State counsel, maximum incentive that was available was rupees six crores and by the method so adopted by the petitioner, the said limit had been enhanced to rupees 18 crores which was not the policy of the Government. It was further submitted that the policy though was liberalized in 1998 and definition of unit under rule 2(xxvii) expanded but it was effective from 1992 and therefore, the same was not applicable to the petitioner. Support was sought to be gathered from the judgment of the honourable Supreme Court in State of Haryana v. Mahabir Vegetable Oils Pvt. Ltd. [2011] 38 VST 514 (SC); [2011] 3 SCC 778, urging that doctrine of promissory estoppel is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation by and decision of Secretary Industries shall be final. Deferment and Exemption under 1991 Rules (1) Short title, commencement and application. (1) These Rules may be called the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991. (2) . . . (3) they shall apply to the units which came into production for the first time, on or after the first day of April 1989 or wherein modernization, expansion or diversification, in terms of the Industrial Policy is carried out. 2. Definitions. In these Rules, unless the context otherwise requires (i) to (ix). . . (x) 'eligible unit' means a unit in respect of which eligibility certificate has been granted by the district officer of the Department of Industries under the Industrial Policy; (xi) 'eligibility certificate' means a certificate granted by the competent authority of the Department of Industries; (xii) 'exemption certificate' means a certificate granted in form ST (D and E) II by the prescribed authority in respect of an eligible unit for availing exemption from the payment of sales tax excluding purchase tax on goods specified in Schedule C appended to the Act, and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate has been obtained by fraud, deceit, misrepresentation, misstatement or concealment of material facts; (ii) to (vi) . . . (vii) that the competent authority of the Department of Industries competent to grant eligibility certificate has recommended that the deferment or exemption certificate be cancelled. (2) ... 14. On a conjoint reading of the aforesaid rules, it transpires that it mandates the dealer to fulfil the following conditions before it can claim exemption from sales tax under 1991 Rules: (a) Application is in the prescribed form, i.e., form ST (D E) 1 (rule 5(1)). (b) Application has been filed within 30 days of the grant of eligibility certificate by the Department of Industries under the Rules (rule 5(1)). (c) The application is accompanied with eligibility certificate issued by the Department of Industries under the Rules and other documents as specified in the application (rule 5(2)). The rules do not empower the sales tax authority to sit over the judgment of the State Government in the matter of grant of eligibility certificate. The Sales Tax Department cannot probe into the eligibility of the dealer in respect of any additional unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the eligibility certificate and embark upon a fresh enquiry with regard to the appellant's eligibility for the grant of the benefits. The counteraffidavit filed by the respondents-sales tax authorities is telling. It is said that the Sales Tax Department had decided to cancel the eligibility certificates for sales tax incentives. As we have said the eligibility certificates were issued by the Department of Industries and Commerce and could not be cancelled by the sales tax authorities (See in this connection: Apollo Tyres v. Commissioner of Income-tax, Kochi [2002] 255 ITR 273 (SC). 17. The Allahabad High Court delving into similar issue in Kumar Fuels's case [1986] 63 STC 467 (All) recorded as under (pages 473, 474 and 476 in 63 STC): The next question to be considered is as to who is entitled to grant exemption under section 4A of the Act and whether the Sales Tax Officer has any competency to sit in judgment over the grant of eligibility certificate. The exemption under section 4A is to be granted by the State Government or by any officer so authorized. Section 4A was amended substantially with effect from October 12, 1983, by U.P. Ordinance No. 46 of 1983. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is relevant to mention here that in none of the notices issued by the sales tax authorities it has been mentioned that the person who granted the eligibility certificate was not empowered to grant it or in granting it he has not followed the procedure prescribed. In fact these notices mention such irregularities which are to be considered and are in the exclusive domain of the State Government while granting such certificate is beyond his jurisdiction. 18. Thus, we conclude that the sales tax authorities had no jurisdiction to call in question grant of eligibility certificates issued by the District Industries Centre. 19. Examining the second issue, it would be necessary to scan the purpose with which the 1989 Policy and 1991 Rules have been formulated. These are incentives which had been conferred on an entrepreneur so as to give him incentive to establish his unit/industry in a backward area. The petitioner had acted on the basis of this assurance. Even Director of Industries vide communication dated June 4, 1993 (annexure P3) addressed to the Excise and Taxation Commissioner had clarified that three units of the petitioner were independent manufacturing different items i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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