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TMI Blog2017 (5) TMI 377X X X X Extracts X X X X X X X X Extracts X X X X ..... as under :- 2.1 That, on account of devasting earthquake which shook the entire State of Gujarat and more particularly, the District of Kutch and consequently, the economic development of Kutch region had come to a major halt, in an attempt to give impetus to the economic development and for creating better opportunities of employment and environment of Industrial Development, the respondent-State vide its Resolution dated 9th November 2001 announced a sales-tax incentive scheme known as, "Incentive Scheme 2001 for Economic Development of Kutch District" [hereinafter referred to as, "the Scheme"] and thereby invited existing industrial undertakings and new industries to set-up industrial units in the said district by promising benefit of Sales-tax exemption or Sales-tax Deferment Eligibility Fixed Capital Investment under Section 49 [2] of the Gujarat Sales Tax Act, 1969. 2.2 That, the period of the Scheme was initially notified from 31st July 2001 to 31st October 2004 which came to be extended further by two Notifications dated 13th September 2004 and 7th January 2005 by which the applicability of the Scheme was extended upto 31st December 2005. 2.3 That, the petitioner no.1-Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner no.1-Company was fixed at Rs. 28.73 Crores, relying upon the report of the Joint Team and that the additional investment cannot be considered for the purpose of grant of incentive under the Scheme. Therefore, the petitioners approached this Court by filing Special Civil Application No. 5638 of 2011 challenging the decision of the respondent in granting the Eligibility Certificate to the tune of Rs. 28.73 Crores only and also prayed for appropriate direction to the respondents to consider its actual investment to the tune of Rs. 47.25 Crores and to grant the incentives/benefits accordingly. 2.4 That, by judgment and order dated 13th January 2012, Division Bench of this Court partly allowed the said Special Civil Application and thereby quashed and set-aside the Final Eligibility Certificate dated 22nd September 2009 by directing the respondents to consider the investment made in the fixed capital and held ineligible, other than those made under the head GEB deposit, second hand indigenous machinery and furniture, office equipments, etc., on the basis of documents made available by the petitioner and those evidences to be further made available within four weeks of the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility of the petitioner-Company for additional sum of Rs. 3.58 Crores and convey the same latest by 30th July 2016 alongwith the brief reasons why the petitioners' investment in Phase-II would not qualify for such Eligibility Certificate. That thereafter, vide communication dated 30th July 2016, the respondent no. 4 communicated to the petitioners that the Final Eligibility Certificate granted was proper and no additional amount is required to be granted. 3. Feeling aggrieved and dissatisfied with the order/ communication dated 30th July 2016, the petitioners have preferred the present Special Civil Application praying for issuance of appropriate writ, order directing the concerned respondents to grant Final Eligibility Certificate to the tune of Rs. 94,49,84,000/= and to grant the benefit to the petitioner-Company in terms of subsequent Notification dated 28th July 2016. 4. At this stage, it is required to be noted that in the meantime, the petitioner-Company became sick industrial undertaking and applied before the BIFR on 31st March 2016. 5. Heard learned advocates appearing on behalf of the respective parties at length. 6. Shri S.N Soparkar, learned Senior Advocate appeari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07. It is submitted that the petitioner-Company had incurred total expenditure of Rs. 94.49 Crores upto January 2011, and therefore, the petitioner- Company is entitled to the benefits of incentive/Sales Tax exemption on the Capital Investment made up to January 2011 ie., Rs. 94.49 Crores. It is submitted that the respondents authorities are not justified in considering only the expenses of Rs. 47.25 Crores ie., the investment made upto 31st December, 2005. For the said reasons, Shri S.N. Soparkar, learned senior advocate appearing on behalf of the petitioners has heavily relied upon Clause 3.8 of the Scheme (Gujarati version). 6.4 It is further submitted by Shri Soparkar, learned Sr. Advocate for the petitioners that the third part of Clause 3.8 is with respect to the Industrial Units investing more than Rs. 10 Crores is concerned, it is in two parts ie., (i) for the period upto 31st December, 2005 or (ii) where the assets are acquired within a period of 18 months from the date of commencement of commercial production. It is submitted that in the first category ie., in case of Small Industrial Units, the assets acquired upto the period of six months from the date of commencement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not open for the respondents to deny the incentives on the investment made in Phase II of the undertaking, particularly for production of forging steel. It is submitted that therefore, the impugned action of the respondents and the Final Eligibility Certificate issued considering investment eligible for incentive under the Scheme only upto 31st December 2005 is absolutely illegal and contrary to the Scheme, as amended from time to time and even contrary to the direction issued by this Court in Special Civil Applications No. 5638 of 2011 and 3817 of 2016. It is further submitted by Shri Soparkar, learned counsel for the petitioner that even otherwise, the respondents have erred in not considering the investment made on acquiring the assets on or before 31st December 2005 but the actual payment of which was made subsequently. It is submitted that sum of the amount on the investments made in land, building, plant & machineries are denied either on the ground that part payment is made prior to 31st December 2005, but the same was not purchased; and/or on the ground that the entire plant and machinery etc., was purchased and/or acquired prior to 31st December 2005, but part paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the petitioners has heavily relied upon the decision of the Supreme Court in the following cases : [1] R.B Jodha Mal Kuthiala v. CIT [1971] 82 ITR 57; [2] K.P Varghese v. ITO [1982] 131 ITR 597 [SC]; [3] Director of Enforcement vs. Deepak Maharaj AIR 1994 SC 1775;and [4] CWS [India] Limited v. CIT [1994] 208 ITR 649. 6.7 Making the above submissions and relying upon the aforestated decisions, it is requested to allow the present petition and grant reliefs, as prayed for. 7. The present petition is vehemently opposed by Shri Kamal B. Trivedi, learned Advocate General appearing for the State submitted that in the facts and circumstances of the case, the grant of benefit of incentives as well as Sales Tax exemption to the petitioner-Company on the Capital Investment incurred upto 27th December 2005 is absolutely just, proper and legal and in consonance with the Scheme. It is further submitted by Shri Kamal Trivedi, learned Advocate General that as such, the intention of the State by the Scheme was to grant incentives/Sales Tax exemption on the Capital Investment made and/or expenses incurred only upto 31.12.2005. It is submitted that however, in the printin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y after further deliberations that the provision of units having project cost exceeding Rs. 10 Crores have been incorporated in the said Clause-3.8. It is submitted that though, the said provision was made by adding the words exceeding Rs. 10 Crores, unfortunately, the condition whichever is earlier between the two was inadvertently omitted to be mentioned. It is submitted that if one peruses the file, the intention of the State Government was that the Capital Investment incurred and paid during the year from the date of commencement of commercial production or till the currency of the Scheme, whichever is earlier , was to be taken into account for exceeding the benefit of incentive Scheme. It is submitted that thus, the intention on behalf of the State in Clause 3.8 of the Scheme is that the Capital Investment of the units, namely, Small Industrial Units, Medium Industrial Units and the Large Industrial Units and Units having project cost exceeding Rs. 10 Crores will be considered for the respective specified period from the date of commencement of the production or completion of the Scheme whichever is earlier. 7.3 It is further submitted by Shri Kamal Trivedi, learned Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gibility certificate as well as final eligibility certificate accordingly. 7.5 It is further submitted by Shri Kamal Trivedi, learned Advocate General that even the petitioners have not pleaded the case of promissory estoppel. It is submitted that it is not the case on behalf of the petitioners and so pleaded in the petition that at the time of making investment, even upto 30th April 2007, they considered Clause 3.8 and thereby considered that they shall be entitled to incentives/sales tax exemption on the investment made beyond the the period of 31.12.2005, and therefore, they made the investment. It is submitted that therefore, in the present case, there is no question of applying the principles of promissory estoppel. 7.6 Now so far as reliance placed upon the decision of Division Bench of this Court in case of Shaifali Rolls Limited & Anr. [Supra] is concerned, it is vehemently submitted by Shri Kamal Trivedi, learned Advocate General that in the case before the Division Bench and as per the pleadings in the petition, the grievance made by the petitioner was with respect to the investment made upto 31st December 2005 only, and therefore, there was no issue/controversy at larg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghtly been denied the benefit of the Scheme on the investment/expenses incurred after 31st December 2005; though may be made within 18 months from the date of commencement of commercial production. 8. Now so far as submissions made on behalf of the petitioners that Phase-II of the Project can be said to be a pipeline project, and therefore, as per the subsequent decision, the period extended for pipeline projects ie., 31st December 2007 can be made applicable to the pipeline project, and therefore, treating Phase-II project as a Pipeline project, the investment made upto 31st December 2007, the petitioner shall be eligible to get the incentives on such investment made upto 31st December 2007 is concerned, it is submitted that the aforesaid has no substance. It is submitted that even as per the policy, once the commercial production has started, there is no question of considering the Unit/Industry as a pipeline project. There is nothing like dividing the project phase-wise. It is submitted that what can be considered the pipeline project is very much clear. It is submitted that therefore, Phase-II of the Project cannot be said to be a pipeline project more particularly once the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 2005. 11.1 On the other hand, it is the case on behalf of the State that the Incentive/Sales-tax exemption is available only on the investment/ expenses incurred upto 31st December 2005 or within 18 months from the date of commencement of commercial production; whichever is earlier. 11.2 It is the case on behalf of the petitioners that in Clause 3.8 of the Scheme, the words, "whichever is earlier between the two" are not there in case of Industrial Units having the project cost exceeding Rs. 10 Crores, which words though are there in the case of Small Scale Industrial Units, Medium and Large Scale Industrial Units. Therefore, it is the case on behalf of the petitioners that in case of Industrial Units having project cost exceeding Rs. 10 Crores, the assets acquired within a period of 18 months from the date of commencement of the commercial production or till completion of the Scheme ie., 31st December 2005, shall be considered eligible for the purpose of incentives. Therefore, it is the case on behalf of the petitioners that as the date of commencement of the commercial production in their case is 27th December 2005, all the expenses incurred by the petitioner- Company upto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in case of Industrial Units having project cost exceeding Rs. 10 Crores. The aforesaid seems to be an inadvertent mistake in publication/typing. The aforesaid aspect has been explained in detail, while narrating the sequence which led to introduction of Incentive Scheme in paras 5 to 7 of the affidavit dated 6th December 2016 filed on behalf of the respondent no. 1, which read as under :- "5. In this behalf, as is discernible from the Government file, I clearly suggests that originally, the Incentive Scheme in question was intended to be extended to all the industrial units regardless of any distinction like Small, Medium and Large Scale Units vis-avis the project cost involved therein, with a categorical condition that the project cost, i.e. capital expenditure incurred and paid during the period of operation of the Incentive Scheme, would be taken into account. This clearly shows as to what was intended by the State Government. However, thereafter, in the initial draft of the Resolution, clause No. 3.8 thereof carried only Small Scale, Medium Scale and Large Scale Units without there being any mention as regards the Units having project cost exceeding Rs. 10 Crore. It is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05. It may be appreciated that the expression 'whichever is earlier' at the end of the said clause 3.8 is inadvertently omitted to be mentioned in view of the fact that the last underlined portion in clause 3.8 referred to above, relating to Units having project cost exceeding Rs. 10 crore was added later on, as a result of the further deliberation. It is pertinent to mentioned that none of the 105 projects like that of the petitioners have ever been given the benefits under the Incentive Scheme after the expiry of 31st December, 2005 even though the specified periods viz. 6 months, 1 year and 18 months, as the case may be from the date of commencement of commercial production in those cases, had spread over beyond the last date of the operation period of the said Incentive Scheme i.e. 31st December, 2005 (except pipe-line cases). 13. Nobody can be permitted to take undue advantage/ disadvantage of the beneficial Scheme due to inadvertent mistake in publication. 13.1 Even otherwise, it is required to be noted that even considering Clause 3.8 of the Scheme, in case of Industrial Units having project cost exceeding Rs. 10 Crores, it is mentioned that the assets acquired wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cember 2005 only. None of the projects had claimed incentives on the assets acquired after 31st December 2005. At this stage, it is also required to be noted that even the petitioners also understood from the very beginning the Scheme in the manner as suggested by the State Government and they also understood that on the assets acquired within a period of 18 months from the date of commencement of commercial production or till the completion of the Scheme ie., 31st December 2005 [whichever is earlier between the two], shall be considered eligible for the purpose of grant of incentive and that is how, when the petitioners applied for Provisional Eligibility Certificate, they considered assets acquired only upto 31st December 2005 amounting Rs. 47.25 Crores/Rs. 76.68 Crores. While submitting application for grant of Provisional Eligibility Certificate, the petitioners submitted a Certificate issued by Chartered Accountant with respect to the investment made upto 31st December 2005 ie., Rs. 47.25 Crores and accordingly, Provisional Eligibility Certificate was issued, considering the investment made of Rs. 728.73 Crores only. 16. It is also required to be noted that the said Provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so not pleaded any estoppel or promissory estoppel. Under the circumstances, when the petitioners and all other Industrial Units/ Undertakings/Projects [105 in number] understood the Scheme, the manner in which the State Government had pleaded and all are treated equally and in case of all Industrial Undertakings/Projects, the assets acquired only upto 31st December 2005 are considered eligible for the purpose of incentive, the petitioners are not entitled to incentive on the assets acquired subsequently after commencement of commercial production or after 3.12.2005. 18. Now so far as reliance placed on the decisions of Division Bench of this Court in Special Civil Application No. 5638 of 2011 & 11768 of 2013 by the learned counsel for the petitioner is concerned, at the outset, it is required to be noted that in the case before the Division Bench, the controversy was with respect to investment/assets acquired upto 31st December 2005 only and even the pleadings in the first petition, being Special Civil Application No. 5638 of 2011 was also with respect to the assets acquired/investment made upto 31st December 2005 only. No such case was pleaded before the Division Bench with resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Scheme recommended was only Rs. 63.04 Crores and the same was controversy before the Division Bench. Before the Division Bench, there was no dispute with respect to the investment made after 31st December 2005 but within 18 months from the date of commencement of commercial production. Under the circumstances also, the said decision shall not be applicable to the case on hand and/or the same shall not be of any assistance to the petitioners herein. 20. In view of the above and for the reasons aforestated, the present writ petition with respect to the claim of the petitioners that the Incentives Scheme/Sales Tax Exemption on the investment made/assets acquired after 31st December 2005, but payment made on or before 11th April 2007 ie., within a period of 18 months from the date of commencement of the commercial production is hereby rejected. It is held that the petitioners are not entitled to claim the incentive on the investment/sales tax exemption on the total expenses/investment made after 31st December 2005 and/or before 11th April 2007 ie., within 18 months from the date of commencement of commercial production and it is held that the petitioners are entitled for Incentive S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purpose of Sales-tax benefits. At this stage, it will be worthwhile to reproduce entire chart reflecting the total investment made as per the certificate issued by Chartered Accountant and the investment in the capital assets held to be eligible and the investment which is treated as ineligible amount for the purpose of Sales-tax benefit, taking note of different heads envisaged in which it is treated as ineligible by the State Inspecting Team : Sr No Investme nt as per CA Certificat e Unpaid Amount Paid Amount Ineligible Amount as per Team e 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 37.78 34.73 34.78 4 Electrificatio n 3613.66 2984.8 3 1697.03 60.75 5 Plant & Machineries 3613.66 628.84 2984.8 3 1697.03 649.3 6 Pre-operate & Preliminary Expenses 77.07 0.68 76.38 77.06 TOTAL Rs. [Lacs] 4725.78 710.03 4015.7 5 2873.1 1852.68 22.1 In the earlier round of litigation, while deciding/disposing of the Special Civil Application No. 5638 of 2011 with respect to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted further that the Committee should consider all the investment made upto 31st December 2007 as eligible investment and the total investment made is of Rs. 9449.84/lacs. (B) Building : The total investment is of Rs. 298.18 lacs and advanced payment was made to the tune of Rs. 34.78 lacs. Out of this, total amount of Rs. 298.18 lacs, only sum treated as eligible is Rs. 270.33 lacs. Whereas, Rs. 27.85 lacs and the advanced payment given for the building to the tune of Rs. 34.78 lacs has been denied. Thus, the total sum under this heading which becomes ineligible is the sum of Rs. 62.63 lacs. The committee has bifurcated this head under "construction plants" "building" and "non-plant machinery". It treated the eligibility for the construction of plant building in the main factory building. It can be noticed that a sum of Rs. 27.85 lacs out of the total investment in the building of Rs. 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 Rs. 19.84 lacs and Rs. 8.08 lacs, per government resolution, are considered ineligible. No reasons are given as to why Rs. 8.08 lacs is treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 non-production of the document when eligibility is denied that requires the direction of reconsideration." 22.2 Despite the above specific observations, again the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in sub-clause [c] of Clause [iv] of the Resolution remains unaltered. In the circumstances the word "paid" has to be understood in the sense the acquirer has incurred a legal obligation to make payment for such acquisition whether he discharges such obligation immediately or undertakes to discharge the same as a debt on later date. To deny the benefit of incentive to the person enjoying one form of credit against a person enjoying another form of credit would render the scheme vulnerable to charge of being discriminatory. Law is well-settled. Such interpretation which renders any provision of law violative of any provision of the constitution is to be avoided unless the other view is not possible to take. In the context in which the term capital investment has been used, we are of the opinion that the definition which takes its colour from the definition used in the resolution dated 6th May 1986 referred to above and the meaning of word "actual price paid" or "acquired and paid" means that the capital investment relates to the acquisition of assets for consideration for which liability has been incurred to be discharged in present or in future but it does not extent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive Scheme in question, we are of the opinion that there is no justification in denying the benefits of Incentive Scheme/Sales Tax Exemption on the investment made in acquiring the land, building, plant and machineries acquired/installed prior to 31st December 2005, but payment of which was made subsequently ie., after 31st December 2005. To the aforestated extent, the petitioner-Company is justified in making the grievance in not considering the investment made in acquiring the land, building, plant and machineries prior to 31st December 2005, but payment might have been made subsequently ie., after 31st December 2005. To the aforesaid extent, the petition is required to be partly allowed and the respondents are required to consider such expenses incurred/investment made on acquiring the land, building, plant and machineries acquired prior to 31st December 2005, but the actual payment made subsequently ie., after 31st December 2005. 24. Now, so far as the claim of the petitioners for advance payments made prior to 31.12.2005 with respect to the plant and machineries acquired and installed after 31.12.2005 is concerned, considering the language used in the Scheme, more particularl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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