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TMI Blog2016 (3) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted on the finished products which do not undergo any change. The appellate authority has also gone into the depth of the interpretation of the industrial unit and also other aspects of the case to unveil the real truth. It is clear from the impugned order that IPR-1989 is not at all applicable to the facts of the case of the present petitioner and his case is governed under IPR-1986 and IPR-1986 is clear to the effect that the incentive can be availed of for exemption of the payment of sales tax for a period of five years and it has been availed of as observed in the impugned order, that is from April 14, 1989 to April 13, 1984. So far as the footnote to the notification dated April 28, 1992 (annexure 12) is concerned, the exemption will not be available to the petitioner as the said industrial unit of the petitioner is not covered under IPR-1989. The present petitioner being a spice making unit is only eligible for exemption for a period of five years from the date of manufacture and it cannot avail of the exemption for the years 1994-95, 1995-96 and 1996-97 - Since the dispute for 1996-1997 is not raised before us, we limit this order to the period of 1994-95 and 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect one. It is further stated that opp. party No. 2 in exercise of suo motu revision under section 23(4)(a) of the OST Act read with rule 80 of the Orissa Sales Tax Rules, 1947 (hereinafter called the Rules ) initiated suo motu revision for the periods 1989-90 and 1990-91. Opp. party No. 2 by order dated July 22, 1994 dropped the suo motu revision proceeding by observing that the petitioner has purchased the pulverizing unit from M/s. Jayems Engineering Co. Pvt. Ltd., Kolkata. Ultimately opp. party No. 2 found the petitioner's pulverizing unit eligible to tax exemption as per IPR-86 on the sale of its products. The petitioner has narrated about the good effect of pulverizers. It is further averred that the petitioner claimed exemption in original assessment completed under section 12(4) of the Act for the periods 1995-96 and 1996-97 in the reassessment notice issued by the authorities dated January 12, 2001 vide annexure 3. It is alleged, inter alia, that opp. party No. 3 observing that there was no escaped turnover or under assessment turnover, dropped the reassessment proceeding by order dated May 10, 2002 although such order was actually passed on March 30, 2002. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned order of demand is wrong, illegal and not proper. In view of an amendment of entry No. 30FF under section 6 of the OST Act, the demand of duty by the impugned order is unjustified. Moreover, the exemption period has been allowed for seven years from the date of commencement of commercial production, but the impugned order has lost sight of such period of seven years. According to him, the commercial production started on April 18, 1989 and it should cover up to 1996 according to the revised circular issued by the State Government. He further submitted that when the assessing officer has not found fault with the statement submitted under section 12(4) and 12(8) of the OST Act and subsequent proceeding also went in favour of the petitioner, the suo motu revision proceeding by opp. party No. 2 under section 23(4)(a) of the OST Act read with rule 80 of the Orissa Sales Tax Rules, 1980 (hereinafter called the Rules ) is illegal, arbitrary and unsustainable. It is submitted that the impugned orders passed by the authority are erroneous because the pulverizing unit although notified to be ineligible at Sl. No. 51 vide notification dated April 28, 1992, the industrial unit run ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s failed to show any document stating that the DIC has already certified it to be covered under IPR-1989. So he submitted that the present impugned orders suffer from no illegality and the same should be confirmed. Points for consideration: Now the question arises whether the petitioner is entitled for exemption from payment of tax for the periods from 1994 to 1997 and consequently for refund of the amount already paid ? Discussion: It is admitted fact that the petitioner is a dealer of small-scale unit under the Industrial Policy Resolution, 1986 (hereinafter in short, the IPR 1986) engaged in manufacturing and processing of quality spices under the brand name, Swadist . It is also not disputed that it has got certificate from District Industries Centre (hereinafter in short, DIC ) under the IPR 1986 for obtaining exemption from the payment of sales tax for the period of five years under the IPR 1986 and also it has availed of the benefit of such IPR 1986 for a period of five years from 1989 when he commenced production of spices. It is also not disputed that a notification dated August 16, 1990 was issued by the State Government to the effect that the benefit of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after April 1, 1986 and has gone into commercial production on April 14, 1989. 3. The unit is a small-scale continuing unit of 1986 Policy as defined in the IPR-1989 and is eligible for exemption from payment of sales tax on sale of its finished products for a period of 7 (seven) years from the date of commercial production as per IPR-1989 and subject to such restrictions and conditions as laid down in Finance Department Notification No. SRO-789/90, dated August 16, 1990 as amended from time to time. 4. This certificate is issued for the year 1995-96, i.e., from April 1, 1995 to April 13, 1996 only. Manager (Credit) Project Manager. Memo No........ /Dt. Copy forwarded to the Commissioner, Commercial Taxes, Orissa, Cuttack/C. T. O., Circle II, Badambadi, Cuttack/Director of Industries, Orissa, Cuttack, for favour of information and necessary action. Manager (Credit) Project Manager. The aforesaid list of finished products vide annexure 1 not state that the petitioner is exempted to pay sales tax on the items as finished products. The aforesaid annexure 1 does not state that the finished p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the General Manager, DIC but never denies it is an instrument used for spice grinding purpose. Moreover, the unit of the petitioner is spice making unit as the end-product is the spices which are used for sales and tax imposed on the sale of finished products. Thus the reason given vide annexures 4 and 5 did not apparently convince the court to rely on it. Apart from this the notification dated August 16, 1990 vide annexure 11 is issued under IPR-1989 as it is an amendment to the Finance Department notification dated April 23, 1976 to the effect that section 30FF to the schedule of OST Act has been incorporated. That notification vide serial No. 21 takes out spice making unit from the exemption list. So the stipulation of seven years exemption is not applicable to the spice making unit from December 1, 1989. Such notification does not contain the pulverizing unit as ineligible for exemption, but the certificate of the General Manager has made it clear that it is a spice grinding unit using pulverizer as available from the order of the assessing officer. At any rate it is reiterated that the unit of the petitioner being spice grinding unit cannot avail of seven years' exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 80 of the OST Rules was issued by the Assistant Commissioner, Sales Tax because they found that the petitioner has availed of the tax exemption for the period 1994-97showing it as pulverizing unit but not as spice making unit which is not eligible under the IPR 1989 and under 30FF of the OST Act and the Sales Tax Officer has accepted the same against the interest of the Revenue. It appears from annexure 8 that after the notice was issued, the matter was heard and was disposed of by the Assistant Commissioner, Sales Tax, Cuttack II Range. Thus the proceeding under section 23(4)(a) of the Act and rule 80 of the Rules was pressed into service purportedly stating that the spice making unit is not eligible for tax exemption. Necessary extract of the order is placed hereunder for better analysis. ANNEXURE 8 8. When the assessee realised that spice making unit is not eligible for tax exemption he took the contention that his unit is not spice making unit but a pulverising unit. In order to cover up the lapse, he represented to DIC, Jagatpur and DIC, Jagatpur vide their letter No. 1967, dated April 21, 1991 intimated that the unit is not an ordinary spice making unit but a h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough the detailed order, it appears that the concerned authority has distinguished the case of the present petitioner from the case law cited by the petitioner before him and he is of the view that the five years of exemption was granted to the petitioner and it expired on April 13, 1994. Learned counsel for the petitioner submitted that the exemption period could be extended for seven years in view of the Government notification dated April 28, 1992. On going through the notification dated April 28, 1992 vide annexure 12 it appears that 38 categories of industries with its expansion have been added to the Schedule under section 6 of the OST Act showing the same as ineligible to avail of exemption under serial No. 30FF of the Schedule vide notification issued on August 16, 1990. Essentially pulverizing unit vide serial No. 51 has also been made ineligible to avail of exemption from April 28, 1992. But there is a footnote stating that industrial unit which are set up and in receipt of the incentive under that notification of Government of Orissa in Finance Department Notification No. 27662-CTA-56/90F, dated August 16, 1990 (annexure 11) will continue to receive the said incentive. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated April 29, 1992 to the case of the petitioner. Moreover, the appellant's unit is entitled to benefit of exemption under IPR-1986 and entry 30FF of the tax-free schedule for period of 5 years from April 1, 1989 to April 13, 1994. It is only from April 14, 1994 that claims to exemption from sales tax on sale of finished product for an additional period of two years, over and above five years allowed under IPR-1986 arises. Till that date the petitioner was not in receipt of any incentive under IPR-1989. Accordingly, the 'foot note' in the notification dated April 29, 1992 does not apply. Entry 30FF originally allowed sales tax incentives of sale of finished products to industrial units of IPR-1989. To allow additional benefit of 2 more years, the entry was amended in notification dated August 16, 1990 substituting the period of five years in column 3 of the entry to seven years. And the existing list of ineligible industries was also substituted as per annexure 1 of IPR-1989. The question whether the units of IPR-1986, which were availing of benefit of exemption under 30FF would cease to avail of benefit for any balance period out of five years was considered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not covered under IPR-1989. Even if the petitioner claimed that vide notification dated August 16, 1990 (annexure 11) read with notification dated April 28, 1992 (annexure 12) are taken into consideration and in view of the footnote, he will continue toavail of the said incentive, it must be held that neither the spice making unit nor the pulverizing unit being excluded from the exemption list, is liable to get any benefit. Apart from this on going through the notification vide annexure 11 it is found that the exemption for a period of seven years from the commercial production must be certified by the General Manager of concerned DIC and bereft of that certificate, in the present case, the petitioner cannot claim the benefit of such notification dated August 16, 1990 read with dated April 28, 1992. This fact has also been clearly available from the impugned order under annexure 9. On facts, the case of the petitioner has become unsuccessful. The learned counsel for the petitioner has relied on the decision of this court in Shree Ganesh Roller Mills [2001] 121 STC 583 (Orissa) and according to him, the exemption for a period of seven years should be available on sale of finis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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