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TMI Blog2015 (1) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter to the authorities under the Sales Tax Act to determine whether the process carried out by the petitioner amounts to manufacturing activities - Firstly, the sales tax authorities while assessing the petitioner have passed assessment orders consistently from the year 2001-02 onwards holding that the petitioner is manufacturer of HR sheets as per customers requirement – the assessment orders passed by the AO over a period of four years under the Sales Tax Act has not been challenged in appeal/ revision by the Revenue - Therefore, there has been a determination that the petitioner's activity/process of slitting, pickling and cutting to length of HR/CR coils into sheets is a manufacturing activity – earlier also, it has been held that where an eligibility certificate is issued by the implementing agency, then it would be just and proper for the sales tax authority to issue an entitlement certificate – thus, the question whether or not the activity for which the entitlement certificate has been issued would amount to manufacture could be determined at the stage of assessment - there is no reason not to issue the entitlement certificate in line/accordance with the eligibility c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DHAR J.P. AND SANKLECHA M.S., JJ. For the Appellant : Ms. N.R. Badheka with B.C. Joshi For the Respondents : Vinay Sonpal The judgment of the court was delivered by M.S. SANKLECHA J.- This petition under article 226 of the Constitution of India challenges the order dated February 26, 2010 of the Joint Commissioner of Sales Tax (H. Q.) (respondent No. 3) refusing to amend the entitlement certificate dated August 27, 2008 in accordance with the eligibility certificate dated October 4, 2008 as amended by an addenda/ amendment dated January 20, 2009 issued by the State Government under the Package Scheme of Incentive, 1993 (the 1993 Scheme) for the benefit of deferral of sales tax. The issue which arises for consideration in the present petition is: Whether the Commissioner of Sales Tax is bound/obliged to amend the entitlement certificate to include within it such processes which have been amended in the eligibility certificate as process of manufacture and therefore eligible to the benefit of deferral of sales tax? Briefly, the facts leading to this petition are as follows: (a) On May 7, 1993, the Government of Maharashtra issued a Package Scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate on December 22, 1999 to the petitioner under the 1993 Scheme. In spite of SICOM having issued an eligibility certificate, the Deputy Commissioner of Sales Tax by an order dated September 2, 2002 refused to issue an entitlement certificate by stating that as the activity carried out by the appellant has been held by the order dated January 12, 2000 of Commissioner of Sales Tax not a manufacturing activity. Being aggrieved by the failure of sales tax authorities to issue entitlement certificate the petitioner preferred an appeal being Appeal No. 172 of 2000 to the Tribunal. (f) On July 30, 2004, the Tribunal by a common order disposed of Appeal No. 31 of 2000 (from the Commissioner's order dated January 12, 2000 under section 52 of the Sales Tax Act holding that subject-process does not amount to manufacture) and Appeal No. 172 of 2000 (from the Deputy Commissioner's order dated September 2, 2002 holding that the petitioner is not entitled to entitlement certificate). So far as, Appeal No. 31 of 2000 is concerned, the Tribunal set aside the order of the Commissioner of Sales Tax dated January 12, 2000 and remanded the matter to the Commissioner for fresh decision under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to length of (HR/CR) coils into sheets would not amount to a manufacturing process. In support of the petition, Mrs. N.R. Badheka, counsel appearing for the petitioner, submits as under: (a) The petitioner runs an industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 being registered thereunder. In terms of the 1993 Incentive Scheme the industries listed in the First Schedule to the Industries (Development and Regulation) Act, 1951 are covered by the 1993 Scheme. Therefore, in terms of the 1993 Incentive Scheme and the agreement, once an eligibility certificate has been issued by the implementing agency under the 1993 Scheme, the Sales Tax Department is duty-bound/obliged to issue an entitlement certificate for the deferral of sales tax benefit. It is, inter alia, on the basis of the representation made in the 1993 Scheme that the unit was set up in a developing area. Thus it would be unfair to deprive the petitioner of the promised benefit; (b) The Government of Maharashtra through its agent SICOM on January 20, 2009, has issued addenda/amendment to the eligibility certificate dated October 4, 2008 by which slit, pickled and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal has mandated the Commissioner of Sales Tax to issue an entitlement certificate wherever an eligibility certificate has been issued. In view of the above Mrs. Badheka submits that the order dated February 26, 2010 of the Joint Commissioner of Sales Tax is arbitrary and bad in law. As against the above Mr. Sonpal, counsel on behalf of the Revenue, submits as under: (a) The petition should not be entertained as there is an alternative remedy of an appeal to the Sales Tax Tribunal provided under section 55 of the Sales Tax Act from the impugned order dated February 26, 2010; (b) There has been no determination on whether the activity of the petitioner of slitting, pickling, oiling and cutting to length of CR and HR sheets amounts to manufacture. This can only be done by an investigation into facts and whether the trade regards the resultant end-product differently from the inputs/raw materials used in the process. This investigation of fact cannot be gone into by this court and therefore the matter be remanded to the Joint Commissioner of Sales Tax (H.Q.) for determining the same on the submission of evidence by the petitioner; (c) The issue of eligibility certificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, the authorities under the Act have been assessing the petitioner as manufacturer regularly in assessment orders and the same has been accepted by the Sales Tax Department. Therefore, not granting of entitlement certificate by order dated February 26, 2010 at the very threshold is an action completely without jurisdiction as the issue whether or not manufacture has taken place can be examined at the time of assessment as held by the Tribunal in its order dated July 30, 2004 in Appeal No. 172 of 2000. Therefore, on these facts, we do not find any merit in the plea of alternative remedy and would examine the matter on merits for the purpose of exercise of our jurisdiction under article 226 of the Constitution of India. The Revenue contends that the issue whether the activity/process of slitting, pickling, cutting to length CR/HR coils into sheets carried out by the petitioner amounts to a manufacturing process needs to be determined by the authorities and for that purpose the matter be remanded to the Joint Commissioner of Sales Tax. We are not impressed. We are of the view that in the present facts no occasion arises to remand the matter to the authorities under the Sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct or rule 31B of the Sales Tax Rules at all support the respondent's contention. In terms of section 89 of the MVAT Act, the Commissioner of Sales Tax is obliged to issue an entitlement certificate wherever an eligibility certificate has been issued by the implementing agency in an incentive scheme. The only condition provided under section 89 of the MVAT Act is that the same can be issued subject to such conditions as may be prescribed. In this case, the only condition prescribed is under rule 83 of the MVAT Rules. The above rule provides that the entitlement certificate would be issued to a unit which has paid its tax, interest and penalty if any, payable under the Act and also has filed due returns for the period ending before the grant of entitlement certificate. It is not the case of the Revenue that the requirements of rule 83 of the MVAT Rules have not been satisfied by the petitioner. In the circumstances, the petitioner is entitled to a grant of the entitlement certificate, no sooner it has received the eligibility certificate from the implementing agency under the 1993 Scheme. It would therefore be noticed that the petitioner is entitled to grant of an addenda to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncentive scheme for setting up new industries then the Sales Tax Department cannot ignore the eligibility certificate and deny the benefit available to the assessee. If we accept the Revenue's contention it would only mean that the eligibility certificate issued by the implementing agency is being cancelled by the sales tax authority. Such a suggestion has in fact been negatived by the apex court in the matter of Vadilal Chemicals Ltd. [2005] 142 STC 76 (SC). Similarly, in the matter of Pondicherry State Cooperative Consumer Federation Ltd. v. Union Territory of Pondicherry reported in [2007] 10 VST 630 (SC), the apex court has held that once an exemption is granted by the Department of industry and a certificate issued by it, then it is not open to the sales tax authorities to ignore the certificate on the ground that there was no manufacture involved and deny a benefit otherwise available to an assessee. In the circumstances, we quash the order dated February 26, 2010 of the Joint Commissioner of Sales Tax. The Joint Commissioner of Sales Tax (H.Q.) is directed to issue addenda to the entitlement certificate dated August 27, 2008 in line with the addenda dated January 20, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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