9911796707
TMI Blog1995 (1) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... st April, 1993, with investments on plant and machinery not exceeding ₹ 15.00 Crores, and had also come into production before that date, are entitled to the benefit of sales tax exemption on the purchase of raw material for a period of seven years from 1.4.1993. The case of the petitioners is that under paragraph 10.4(i)(b) the old industrial units referred to are those which answer the description in that sub-paragraph, but regardless of the date on which they went into production. The industrial policy does not lay down any other condition regarding their having taken benefit of any earlier scheme. On the other hand, the learned Advocate General appearing for the State submits that on a proper appreciation of the said policy it would be apparent that no benefit whatsoever was sought to be extended to such units which had gone into production before 1st April, 1993, and had taken advantage of the earlier industrial policy. It was for this reason that Notification No. S.O. 95 dated 4.4.1994 and published in the official gazette on the same date was issued by the Commercial Taxes Department laying down a condition that the exemption from payment of tax on purchase of raw m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in this background that the State Government announced its Industrial Incentive Policy in 1993 for the rapid growth of industry in the State of Bihar. The Resolution incorporating the policy mentions in the opening paragraph that with the objective of accelerating industrial progress in the State the Industrial Incentive Policy was announced by the State Government on 1st September, 1986, the period of which was extended upto 31.3.1993 under different Resolutions issued from time to time. It had been experienced that desired industrial progress had not been achieved in all the districts of the State. It was also felt that in the context of New Industrial Policy, 1991 of the Centre, and with the withdrawal of Freight Equalisation Policy, these industrial incentives require new dimensions to achieve balanced industrial growth in a planned manner so that the natural and human resources of the State were fully utilised and developed and the opportunities for employment were progressively increased. In the very second paragraph of the Resolution under subparagraph (a) it is provided that this industrial policy shall be applicable to those industrial units which would come into product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be claimed. Paragraph 10.3 provides for the manner in which the amount involved in sales tax deferment will be repayable. 5. Then comes paragraph 10.4, which is the crucial paragraph so far as the dispute in these writ petitions is concerned. For the sake of convenience the same is reproduced below: 10.4. Sales Tax exemption on the purchase of Raw Material.--(i) This facility will be admissible to the industrial units mentioned in Annexure-V in the following manner: (a) Industrial Units coming into production between 1.4.93 to 31.3.98 whose investment on plant machinery does not exceed ₹ 15.00 Crores shall be entitled to this facility for a period of seven years from the date of production. (b) Such old industrial units whose investment on plant machinery do not exceed ₹ 15.00 Crores on 1.4.93 shall be entitled to this facility for a period of seven years from 1.4.93. (ii) All other industrial units shall continue to enjoy the existing facility of purchase of raw material on concessional rate of tax as announced and made applicable by the Sales Tax Department as before. 6. Paragraph 10.5 provides as follows: 10.5. A separate order/notification f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment had prescribed the form for application, grant of certificates, account of raw material purchased, goods manufactured etc. with a view to ensure that the incentive was not misutilised or was not extended to undeserving units. By issuance of the notification dated 4.4.1994, the benefit itself has been withdrawn contrary to the Industrial Incentive Policy. The notification issued by the Commercial Taxes Department Is, therefore, in conflict with the Industrial Incentive Policy of 1993. The petitioners had made purchases of raw materials within the State of Bihar relying upon the representation made in the Industrial Incentive Policy. 8. A counter-affidavit has been filed on behalf of Commissioner, Commercial Taxes and Deputy Commissioner, Commercial Taxes (respondent Nos. 5 and 6) asserting that the Notification dated 4.4.1994 was issued by the Commissioner, Commercial Taxes, in exercise of power conferred under Section 7(3) of the Bihar Finance Act by which exemption from payment of tax on purchase of raw materials to the old Industries has been disallowed, if the industry had taken any benefit under another Industrial Incentive Policy. Reliance is placed upon the Preamb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... avit stating that in view of the Industrial Policy of 1993 the petitioner has altered its position by purchasing raw materials within the State of Bihar on the assumption that the exemption shall be made available to the petitioner on purchase of raw materials. In other neighbouring States exemption is being provided to the manufacturer of the raw materials of the petitioner's industry when the petitioner purchases raw materials in the State of Bihar it has to pay taxes twice, if this exemption is not granted, firstly to the seller of the raw material which buys goods from other States and are paying taxes there, and again taxes are being charged from the petitioner by the seller of the goods. In view of the policy decision of the State, in the hope that the benefit of exemption shall be available, the petitioner purchased more and more materials in the State of Bihar. The petitioner has also made further investments in land, building, plant and machinery after 1.4.1993 on the basis of the promise made in the industrial policy. 10. A counter-affidavit has also been filed on behalf of the State of Bihar. The stand of the State of Bihar is substantially the same as the stand o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which went into production or even came into existence after 1.4.1993. But, this does not mean that it was not open to the State Government to confer some small benefits on older units as well, while considering the grant of larger incentives and benefits to new units. I have, therefore, no hesitation in coming to the conclusion that the Industrial Incentive Policy of 1993 must be read as a whole with a view to understand its scope and import. If on a reading of the Policy as a whole it appears that some benefit was sought to be conferred on older units as well, such benefits cannot be denied to older units only on the ground that in the opening paragraphs of the Policy it is stated that the Policy shall be applicable to those industrial units which would come into production from 1.4.1993 to 31.3.1998. 12. Then comes the question as to whether paragraph 10.4(i)(b) extends to old industrial units the facility of sales tax exemption on the purchase of raw material. Sub-paragraph (b) must not be read in isolation. It must be understood in the light of sub-paragraph (a) and other provisions of the Policy. Sub-paragraph (a) of paragraph 10.4(i) provides that industrial units comi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units which were established before 1.4.1993, but had not gone into production before that date. He, therefore, submitted that the old industrial units, to which sub-paragraph (b) refers, are such old industrial units which, though established before 1.4.93 went into production later. It is not disputed that those industries which went into production between 1.4.1993 and 31.3.1998 are entitled to all the facilities and incentives under the Policy of 1993. It is also not disputed that the industrial units which came into production before 1.4.1993 are entitled to claim all benefits under the earlier scheme. So far as the third category of industrial units is concerned, namely, industrial units which were established before 1st February 1993, and which came into production on or after 1.4.1993, the industrial policy is quite clear and such units are covered by paragraph (b) of what has been described by the learned Advocate General as the Preamble . It has been clearly laid down that such units may either claim the benefits announced by the previous incentive policy or may claim benefits announced by the Industrial Incentive Policy of 1993. They have to opt between the complete pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on the purchase of raw material was extended to old industrial units also fulfilling the condition laid down in the policy, the Notification of 4th April, 1994 imposing the condition that such old industrial units must not have taken advantage or benefit under any other industrial policy, appears to deprive the old industrial units of the benefits under the Industrial Incentive Policy of 1993. As has been urged on behalf of the petitioners, industrial units which had come into production earlier did take advantage of the benefits and facilities extended under the earlier policy of the Government. The Government was also aware of this fact and yet provided a limited facility by way of incentive to such old units also. It is not as if the Government was not competent to extend this limited facility to older industrial units, and if it was competent to do so, it has done so in clear words without imposing any condition. The petitioners are, therefore, right in contending that the notification of 4th April, 1994 in so far as it imposes a condition that the old industrial units should not have taken benefit under any earlier industrial incentive policy of the Government is inconsis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of payment of sales tax consistent with the Industrial Incentive Policy decision of 1993, which bound the State. 17. The learned Advocate General did not urge that the principle of estoppel does not apply in the instant case, and in my view, rightly. The impugned notification has been issued with a view to give effect to the policy announced. It does not proceed on the basis that old industrial units which came into production before 1.4.1993 are not entitled to any benefit under the scheme. On the contrary, it concedes that such old industrial units are entitled to the facility of exemption of sales tax on purchase of raw material, provided they have not taken benefit under any earlier incentive policy. The challenge is on the ground that if the notification is intended to give effect to the policy decision announced by the State, it is not permissible to the Commissioner of Sales Tax to make a further classification by imposing a condition not warranted by the policy. If the policy intended to give a benefit or facility, to a class of industries, he could not impose a further condition so as to create another class of industries out of the industries to whom the benefit or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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