Bhagwati Polytex Pvt. Ltd. vs District Level Screening Committee and Others

Jainendra Kumar Ranka , J.—This revision petition has been filed by the petitioner-assessee, u/s 86 of the Rajasthan Sales Tax Act, 1994 (in short, "the Act") against the order dated February 2, 2005 passed by the Rajasthan Tax Board, Ajmer (in short, "the Board") in Appeal No. 1306/2003. This revision petition was admitted by this court on April 3, 2007 on the following substantial questions of law:

(1) Whether, in the facts and circumstances of the case, the order passed by respondent No. 1 refusing to allow the benefit of unavailed benefit of exemption at the new premises is a correct interpretation of law and scheme?

(2) Whether in the facts and circumstances and on correct interpretation of the Scheme the applicant is entitled for the benefit for unavailed tax at the shifted premises?

(3) Whether the notification dated March 24, 2005 prescribing the procedure for claiming the unavailed benefit of tax is retrospective in nature? and

(4) Whether in the facts and circumstances of the case the learned Rajasthan Tax Board was justified in holding that as per clause 3(3) benefit cannot be given to unit at shifted premises?.

The brief facts of the case as emerging on the face of record is that the petitioner is a private limited company and established a new industry at Norangpura, Tehsil, Sambhar District, Jaipur and was granted eligibility certificate under the New Incentive Scheme, 1989 for sales tax exemption from June 24, 1996 to June 23, 2003, i.e., for a period of seven years. The petitioner was to make fixed capital investment to the tune of Rs. 90.72 lac and accordingly, the petitioner complied with the directives.

Subsequently, on account of defective supply of the main plant power connection from rural feeder, non-availability of skilled labourers and lack of infrastructure facility, the unit could not run smoothly and on the contrary, could not produce the desired material and suffered heavy losses and burden on account of interest. It also got irregular power supply and accordingly this unit was declared as sick unit by the District Industries Center, Jaipur, on March 26, 2002 with effect from April 1, 1998. Finding no alternative, the petitioner moved an application for revival of the sick unit and also moved an application simultaneously to shift the industrial unit from village Norangpura, Tehsil, Sambhar District, Jaipur to B-228 Route No. 9, VKIA Jaipur. The petitioner was directed to obtain NOC from RIICO and also from other authorities and finally the RIICO granted permission to the petitioner to shift the unit on October 29, 2002. The petitioner thereafter, moved another application to the General Manager, District Industries Center, Jaipur and State Level Screening Committee for availing of the incentive granted earlier under sales tax for the balance period and mentioned the facts reiterated before the various authorities. However, the claim of the petitioner was rejected by the District Level Screening Committee in this regard vide order dated March 6, 2003.

A review petition was also filed by the petitioner before the District Level Screening Committee, reiterating the facts and also submitted the facts that as there was no change in the name and title of the company or in the management, and all directors remained the same, no change of address of the registered company and only location of the sick unit has been changed to rehabilitate it. It was further submitted that plants and machineries have been shifted to the VKIA Jaipur itself, the unit was financed by the RIICO and RIICO also granted permission to shift it, in the facts and circumstances of the case. Not only RIICO but also other Departments, namely, the Excise Department and other authorities were pleased to accept the proposition of the petitioner, it was further submitted that there would be no loss to the Government or Sales Tax Department by shifting the industries from Sambhar to Jaipur. On the contrary, it would be better to run it at Jaipur with all infrastructure available including the skilled labourers, etc. It was also submitted that by shifting it to Jaipur, Government and Sales Tax Department and other Departments would be gainer in the long term. However, the review petition was also rejected by the committee vide order dated May 28, 2003.

The learned counsel Mr. Vivek Singhal, appearing on behalf of the petitioner after referring to these facts submitted that the petitioner-assessee was granted the benefit for establishing a new industrial unit and because of reasons stated earlier, the petitioner suffered heavy losses and was having no alternative except to shift it to Jaipur. He further submitted that since, the benefit was conferred to the new industrial unit whether established at Sambhar or at any other place, the benefit should have been allowed, it is not that incentive was granted because of the reason that the industrial unit was set up at Sambhar. He drew attention of the court on the eligibility certificate and submitted that eligibility certificate does not mention anything that incentive is being granted for the reason that it had been established at Sambhar or otherwise. It was further pleaded that extreme view has been taken by the Board as well as by the District Level Screening Committee. He further submitted that had this unit been sold to any other outsider or third party, the purchaser would have availed of Incentive Scheme but the petitioner had been denied his due right to which he was legally entitled only because of shifting of industry from one place to another and that too for reasonable causes. He further submitted that the incentive once granted to the company on account of establishment of new industrial unit, should have been allowed till the entire period and it should not have been denied only on the ground of shifting of the industry from one place to another. He further submitted that similar situation was faced by other industries and many representations were made/sent by other units, almost on identical facts and circumstances, like the case of the present petitioner and the State Government vide its order dated March 24, 2005 issued a Notification No. S.O. 394 dated March 24, 2003 whereby directed that a registered dealer manufacturing goods in the State who shifts his industry as a whole from one place in the State to another place would be entitled to avail the un-availed part of the benefits conferred on it by any notification issued under the said section. Therefore, when the State Government allowed the benefit on the same facts and circumstances of the case, therefore, this should be treated as having retrospective operation and thus pleaded to allow this petition.

It was submitted by the learned counsel for the petitioner that the petitioner fulfils all the criteria laid down in this notification which was issued in the light of the facts and circumstances of the case and is of clarificatory in nature and the benefits accruing, emanating out of the said notification ought to have been granted to the new industrial unit for the reasons stated in the said notification.

On the other hand, Mr. P.K. Kasliwal, learned counsel for the respondent, submitted that the scope of this revision petition is very limited and the petitioner cannot travel beyond the scope of revision petition. He further submitted that there was no ambiguity in the scheme and the incentive scheme was only granted because the petitioner offered to establish a industrial unit at Sambhar being a backward place and similarly situated industries were also being granted benefits as the industries were being established at rural/distant places so that those particular areas may develop and the villagers living nearby the area may get employment. He further submitted that in view of the definition of sub-clause (3) of section 3 of the Rajasthan Sales Tax Incentive Scheme, the incentive was denied and the Tax Board is quite justified in rejecting the claim of the petitioner and no infirmity is noticed in the order passed by the Tax Board.

Mr. Kasliwal, also relied upon the judgment of the honourable apex court in the case of Mangalore Chemicals and Fertilisers Ltd. Vs. Deputy Commissioner of Commercial Taxes and others, Union of India and others Vs. M/s. Wood Papers Ltd. and another, and also the case of Collector of Central Excise, Bombay-I and Another Vs. Parle Exports (P) Ltd., He also submitted that the notification dated March 24, 2005 is much later and speaks of benefits accruing subsequently and cannot be said to have retrospective operation.

I have considered the rival submissions made by the learned counsel for the parties, have gone through the various judgments passed by the various authorities and the order impugned. I am satisfied with the arguments advanced by the learned counsel for the petitioner that in the instant case, since incentive was granted to the new industrial unit, for a period of seven years, therefore, the benefits ought to have been allowed to the petitioner till the intervening period. Since, many units which were established in such remote area or district head quarter or otherwise were facing problems relating to irregular/defective supply of power, non-availability of skilled labourers and also lack of infrastructure facility which was not envisaged by the petitioner and others therefore, on account of several representations, from different corners the Government of Rajasthan issued a notification bearing No. 394 dated March 24, 2005 and the same is quoted hereinbelow:

Finance Departments

Tax Division

Notification

Jaipur, March 24, 2005

SO. 394.--In exercise of the powers conferred by section 15 and sub-section (3) of section 25 of the Rajasthan Sales Tax Act, 1994 (Rajasthan Act No. 22 of 1995) read with sub-section (5) of section 8 and section 9 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), the State Government being of the opinion that it is expedient in the public interest so to do, hereby allows a registered dealer manufacturing goods in the State who shift his industry in whole from one place in the State to another place, to avail the unavailed part of the benefits conferred on it by any notification issued under the said sections, subject to the following conditions:

that there shall not be any change in the constitution/status of such registered dealer;

that the plant and machinery of the unit as a whole has to be shifted from the city/town/village where it was originally established to another city/town/village in the State;

that the unit shall have to apply to the assessing authority having jurisdiction in respect of the shifted place, to grant for the benefits under this notification, within thirty days of such shifting under intimation to the assessing authority having jurisdiction over the place from where the unit is being shifted, and shall also furnish the details of the original benefits and the extent of its availment along with complete details of the shifting of the plant and machinery as a whole;

that the time period involved in shifting of the unit would form part of the time during which the benefits have been availed;

that on receipt of the application from the unit, the assessing authority having jurisdiction, shall after having conducting such enquiry as it may deem proper, determine the extent of the amount and the period of availment, for which the unit is eligible to avail the unavailed benefits under this notification. However, in no case the maximum benefit permissible under this notification should exceed the unavailed benefits in terms of eligible fixed capital investment and the time period;

that the shifted unit shall have to comply with all the terms and conditions of the original notification conferring benefits to the unit before being shifted;

that in case of violation of any of the terms or conditions of this notification and/or the original notification conferring benefits to the unit, the benefits conferred under both the notifications shall stand withdrawn by the assessing authority, after seeking approval from the Commissioner in this behalf.

[F. 12(20)FD/Tax/2005-186]

By order of the Governor,

(Ajitabh Sharma)

Deputy secretary to the Government.

The honourable apex court in the case of W.P.I.L. Ltd., Ghaziabad Vs. Commissioner of Central Excise, Meerut, U.P., has held that clarificatory notification would take effect retrospectively. Such a notification clarifies the position and makes explicit what was implicit. Clarificatory notifications have been issued to end the dispute between the parties.

The honourable Supreme Court in the case of Collector of Central Excise, Shillong Vs. Wood Craft Products Ltd., again came to the same conclusion and it was observed by the honourable apex court that representation was made by the various industries and on being satisfied, the Central Government issued a clarificatory Notification No. 95/94 on April 25, 1994 therefore, though the notification was new but clarifies the position and made the position explicit which was implicit.

The honourable Supreme Court in the case of Commnr. of Income Tax-I, Ahmedabad Vs. Gold Coin Health Food Pvt. Ltd., has held that the circumstances under which the amendment was brought in existence and the consequences of the amendment will have to be taken care of while deciding the issue as to whether the amendment was clarificatory or substantive in nature and, whether it will have retrospective effect or it was not so.

The honourable apex court in the case of Zile Singh Vs. State of Haryana and Others, observed as follows:

It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is deemed to be prospective only--''nova constitutio futuris formam imponere debet non praeteritis''--a new law ought to regulate what is to follow, not the past. (See Principles of Statutory Interpretation by Justice G.P. Singh, 9th Edn., 2004 at page 438). It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole.

The honourable apex court in the case of R.B. Jodha Mal Kuthiala Vs. The Commissioner of Income Tax, Punjab, Jammu and Kashmir, Himachal Pradesh and Patiala, , the Allahabad High Court in the case of Anand Gramodyog Samiti v. Commissioner of Trade Tax [2005] All. L.J. 3917 and the Kerala High Court in the case of Commissioner of Income Tax Vs. Peermade Tea Co. Ltd. also came to the conclusion. Considering the facts and circumstances of the case in the light of the above judgments, looking to the purpose, objective and intention of the Notification No. 394 dated March 24, 2005 (supra) it is held that the notification is retrospective in operation and applicable to all matters pending and it is clear that the petitioner is entitled to claim benefits of the notification. It was submitted by the learned counsel for the petitioner that the petitioner fulfils all the criteria laid down in this notification.

I have gone through the judgments relied upon by the learned counsel for the respondent and in my view, the aforesaid judgments are distinguishable to the facts and circumstances of the present case whereas the case law referred to hereinabove, are more applicable and nearer to the facts and circumstances of the present case. Since, the subsequent notification dated March 24, 2005 bearing SO No. 394 (supra), was not available before the Tax Board, therefore, the matter is being remitted back to the Tax Board, who will consider the same afresh in the light of the aforesaid notification in accordance with law. If the terms and conditions specified in the notification stand complied with by the petitioner, the claim deserves to be allowed.

Consequently, the revision petition is partly allowed and the Tax Board is directed to consider the matter afresh. Since, the matter is quite old therefore, Tax Board shall decide the matter expeditiously and within a period of four months from the date of receipt of the certified copy of this order. No order as to costs.