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TMI Blog2012 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... AGP for Respondent(s) : 1, NOTICE SERVED for Respondent(s) : 1 - 4. CAV JUDGMENT (Per : HONOURABLE MS JUSTICE SONIA GOKANI) The petitionerCompany has challenged the action of the respondent authorities by way of the present writ petition alleging the action of the respondents contrary to the objects and provisions of the Scheme for Economic Development of Kutch District, 2001 [ Scheme for short] and the Gujarat Sales Tax Act, 1969 { Act for short}. 2. The facts, bereft of the details, need to be recapitulated thus : 2.1 The petitionerCompany is conducting its business of manufacturing and trading of Steel products. The petitioner no.2 is the shareholder of the petitioner no. 1Company, and therefore, is concerned with the daytoday affairs of the petitioner no.1Company. 2.2 On 26th January 2001, the State of Gujarat, the district of Kutch in particular, was hit hard by the devastating earthquake bringing the economic activities of the entire district to a standstill. The State Government vide its Resolution no. INC102009031, had promulgated the Scheme for the economic development of Kutch district encouraging the new industrial units to establish their un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits. It is also further urged to quash and set aside the final Eligibility Certificate dated 28th July 2009 and to consider the actual investment at ₹ 4725 lacs, as eligible investment for the purpose of sales tax benefits. 5. On issuance of notice, the respondents appeared and filed affidavit in reply, inter alia, urging that the unit is entitled to sales tax incentive for the assets acquired and paid upto 18 months from the date of commercial production or 31st December 2005 whichever is earlier, and therefore, any assets acquired subsequent to 31st December 2005 would not be entitled for considering for the purpose of sales tax incentive. It is also the say of the respondents that ad hoc eligibility certificate was granted upto 25% of the assets to the tune of ₹ 942 lacs, for the period from 27th December 2005 to 26th December 2012, without verification of the assets at actual site. On the basis of certificate of Chartered Accountant, however, after detailed verification as per the government resolution by the team of officers the recommendation for the purpose of final eligibility certificate was made to the tune of ₹ 2873.10 lacs as the resolution dated 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is only one registration certificate for the entire project and for unitII, there is no separate registration. Those companies who applied and requested for separate registration before 31st December 2005 have been granted such registration.. 7.1 It is emphatically contended that as per para 3.8 of the Government Resolution, the unit is entitled to Sales Tax incentives for the assets acquired and paid upto 18 months from the date of commencement of production, or 31st December 2005; whichever is earlier, and therefore, any acquisition of assets in post 31st December 2005 period could not be considered for the purpose of availing sales tax benefit. The total investment of ₹ 4825.82 lacs has been considered by the team out of which the eligible investment was ₹ 2873.10 lacs and the proposed capital investment as per registration certificate was ₹ 5525 lacs and the total investment in fact was made upto 31st December 2005 is ₹ 4725 lacs and petitioner has thus almost exhausted the ceiling mentioned at the time of proposal. 8. It is also contended further that the petitioner company made application in the prescribed format on 16th September 2005 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me granting sales tax incentive was either for exemption or for deferment of sales tax on eligible fixed capital investment. Such sales tax benefits were granted under section 49(2) of the Gujarat Sales Tax Act, 1969 as mentioned hereinabove. Initially, as per declaration, the scheme was notified from 31st July to 2001 to 31st October 2004, however, the applicability of the scheme was extended upto 31st December 2005 by issuance of the notification dated 13th September 2004 and 7th January 2004. Thus those industrialists who were desirous to avail the benefit of either deferment or exemption were required to put forth and get themselves registered. Whenever industrial houses, or individual industrialists chose to set up a unit in Kutch district, it would be necessary for it to get itself registered and as per the different clauses of the scheme, when such specified fixed capital investments may provide under the scheme the same was to be held eligible for the benefit of sales tax exemption or sales tax differment. The scheme states thus 12.2 Clause 2 provides for operative period and states that the scheme shall come into force from 31st July 2001 and shall remain in force till ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the date of commencement of production. Alongwith the application, details of fixed capital assets installed up to the date of commencement of commercial production will have to be furnished. [c] In the case of the unit applying later than 120 days from the date of commencement of commercial production, such period will be considered as the period of delay and the amount of eligible incentives will be reduced in proportion and the eligibility period will be reduced to the extent of delay. However, the units will have the option to avail of the benefit either from the date of commencement of commercial production or from the date of application. [d] If the project of the unit is not completed, the Industries Commissioner / General Manager, District Industries Center shall issue provisional eligibility upto 25% of the eligible amount after considering installation of fixed assets. [e] On completion of the project, the industrial unit shall have to furnish all the details to Industries Commissioner/General Manager, District Industries Center. The fixed assets will be inspected at the location. 13.2 Clause 8 provides for various conditions claiming exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Certificate Ineligible Amount as per Team 1. Land 4.82 4.82 1.88 2.94 2. Building 298.18 19.76 278.42 270.33 27.85 3. Advance Payment for Building 34.78 34.78 34.78 4. Electrification 697.27 60.75 636.52 60.75 5. Plant Machineries 3613.66 628.84 2984.83 1697.03 1649.30 6. Preoperate Preliminary expenses 77.07 0.68 76.38 77.06 Total Rs. (Lacs) 4725.78 710.03 4015.75 2873.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that the Committee should consider all the investment made upto 31st December 2007 as eligible investment and the total investment made is of ₹ 9449.84/lacs. (B) Building : The total investment is of ₹ 298.18 lacs and advanced payment was made to the tune of ₹ 34.78 lacs. Out of this, total amount of ₹ 298.18 lacs, only sum treated as eligible is ₹ 270.33 lacs. Whereas, ₹ 27.85 lacs and the advanced payment given for the building to the tune of ₹ 34.78 lacs has been denied. Thus, the total sum under this heading which becomes ineligible is the sum of ₹ 62.63 lacs. The committee has bifurcated this head under construction plants building and nonplant machinery . It treated the eligibility for the construction of plant building in the main factory building. It can be noticed that a sum of ₹ 27.85 lacs out of the total investment in the building of ₹ 298.18 lacs is considered to be ineligible. However, the advanced payment made for the building in its entirety is treated as ineligible, Unpaid amount of ₹ 19.84 lacs and ₹ 8.08 lacs, per government resolution, are considered ineligible. No reasons are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court that despite there being no doubt with regard to the investment being made of such huge amount, by giving cryptic finding, this huge sum has been held ineligible. It is further pointed out that the vouchers may not have been made available at the relevant point of time, but the petitioner is in possession of all those vouchers and can be produced which had also been communicated to the respondents. 17. In light of the discussion held hereinabove, as far as the first Unit of M.S Ingots is concerned, we are of the opinion that when the unit had started production within the stipulated time period and when there is no doubt with regard to making of investment merely on technical grounds, the denial on the part of the respondent to treat such investment as ineligible for the purpose of tax benefit requires reconsideration. This of course is not to suggest that those investments which are not falling within the stipulations made under the scheme or which are considered ineligible specifically by virtue of government resolution are not to be treated as eligible. However, on technical ground or on nonproduction of the document when eligibility is denied that requires the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted and communications made subsequent thereto, petitioner reiteratively spoke of grievances concerning non eligibility of ₹ 1852.68 lacs out of the total investment made in fixed assets of ₹ 4725.78 lacs. Although the Scheme insists on pipeline unit to be separately registered within the time period as mentioned hereinabove, it does not speak of separate registration for the same undertaking, if the unit chooses to get the same set up in two phases. As can be noted from record, MS Ingot and other products are mentioned in final eligibility certificate, likewise at Sr. No. 6 in this certificate, forging Steel is also mentioned and on the basis thereof, even if it is presumed that production of forging steel is only an extension of earlier setup plant, petitioner is required to fulfill the criteria setout in the Scheme for investing in fixed capital, for such investment to be held eligible for the purpose of tax benefit by the authority. 21. In light of the discussion made hereinabove, as can be further seen from the record and submissions of the learned counsel for the petitioner, the amount disallowed being [i] GEB [Rs. 3,20,42,000/=] deposit [ii] second ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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