Elf Gas India Limited, Bangalore vs State of Karnataka and Others

This matter is taken up for final bearing with the consent of the learned Counsel appearing for the petitioner and the learned Additional Government Advocate.

In these writ petitions filed under Articles 226 and 227 of the Constitution of India, the petitioner has sought for quashing of the order of Annexure-D, dated 16-10-2004 and assessment made on the basis of the said order as per Annexure-E, and the rectification order as per Annexures-K and M and the demand notices as per Annexures-L and N issued pursuant to Annexures-K and M respectively.

It is averred in the petition that the petitioner is a Public Limited Company incorporated under the provisions of the Companies Act, 1956, and is engaged in the activity of import, storage, bottling and distribution of Liquefied Petroleum Gas (for short, ''L.P.G.'') in bulk and cylinders, and has set up its own import, storage and bottling facilities at its unit in Mangalore. In view of the progressive industrial policy of the State of Karnataka intending to attract industrial investments in the State, attractive packages of incentives and concessions to Industrial Units set up in various zones situate in the State of Karnataka, were announced. In order to achieve the desired objective, the State of Karnataka resolved to adopt the industrial policy and incentives package as per the Government Order dated 15-3-1996. On the basis of the same, a notification has been issued as per Annexure-B. Thereafter, after compliance of the requisite procedure, Fixed Assets Valuation Certificate (for short, "F.A.V.C.") for the new unit set up by the petitioner was issued by the Department of Industries and Commerce, Government of Karnataka for the bottling of Liquefied Petroleum Gas (L.P.G.) in bulk and Cylinders. It is the case of the petitioner that the said Fixed Assets Valuation Certificate, which had been issued on 22-11-1999 as per Annexure-C for the bottling of Liquefied Petroleum Gas (L.P.G.) in bulk and cylinders, has been modified by order dated 16-10-2004 vide Annexure-D to the prejudice of the petitioner by restricting the incentive for the activity of filling of L.P.G. bottling only and other terms and conditions envisaged in F.A.V.C., issued on 22-11-1999 have remained unchanged and the said action on the part of the respondents is opposed to the principles of natural justice as the petitioner is not afforded opportunity before modifying F.A.V.C., and restricting the concession for the activity of filling of L.P.G. bottling only and therefore, the order at Annexure-D and the consequential assessment order as per Annexure-E and the rectification orders as per Annexures-K and M and the demand notices as per Annexures-L and N issued pursuant to Annexures-K and M, respectively are liable to be quashed.

Statement of objections has been filed by the respondent averring that though the order dated 22-11-1999 as per Annexure-C has been clarified by order dated 16-10-2004, the exemption that was granted remains the same and there is no change in the exemption to which the petitioner would be entitled to and even in the order as per Annexure-C, the order did not extend to bottling of L.P.G. in bulk and the same has been clarified by order dated 16-10-2004 at Annexure-D and wherefore, no prejudice is caused to the petitioner and therefore, the question of granting any opportunity before passing the order as per Annexure-D does not arise.

I have considered the contentions of the learned Counsel appearing for the petitioner and the learned Additional Government Advocate for the respondents and perused the material on record.

It is clear from a perusal of Annexure-C, dated 22-11-1999 that the petitioner-Unit is registered with the Ministry of Industry, Government of India, vide registration dated 19-12-1997 and Department of Industries and Commerce, Government of Karnataka vide Single Window Agency Clearance dated 26-7-1996 under Karnataka Udyog Mitra for the bottling of Liquefied Petroleum Gas (L.P.G.) in Bulk and Cylinders. However, the order dated 16-10-2004 at Annexure-D clearly states that the F.A.V.C., issued on 22-11-1999 is restricted for the activity of filling of L.P.G. bottling only and there is modification of the order passed at Annexure-C by the order passed as per Annexure-D as Annexure-C permitted exemption in respect of bottling of L.P.G., in bulk and cylinders and Annexure-D restricted incentive for the activity of filling of L.P.G. bottling only and the preamble to the order clearly shows that the unit is bottling L.P.G., both in bulk and in cylinders and in view of the decision taken, the sales tax benefit has been limited to L.P.G. bottling only and not to filling L.P.G., in bulk and tankers. It is well-settled that when an order which had already been passed is sought to be modified to the prejudice of a person, it is necessary to give opportunity to the concerned person to show cause as to why the order should not be modified and any order passed without giving opportunity to the petitioner in that behalf, is opposed to the principles of natural justice. Learned Counsel for the petitioner has relied upon the decision of the Hon''ble Supreme Court in Polycan Industries v Commissioner of Trade Tax, Uttar Pradesh, Lucknow, (2005)11 SCC 448, wherein it is held that when an exemption is granted and the same is liable to be modified, it is necessary to provide opportunity of being heard before the rejection. In the present case, having regard to the fact that Annexure-D restricts exemption that was granted for filling L.P.G., in Cylinders and bulk, to the activity of filling of L.P.G. bottling only, the same would amount to rejection of exemption in respect of the filling of L.P.G. in bulk, which had been granted by order dated 22-11-1999 as per Annexure-C. Admittedly, the petitioner was not given any opportunity before the order was passed as per Annexure-D, dated 16-10-2004, restricting the order that was passed as per Annexure-C, dated 22-11-1990 and wherefore, the said order dated 16-10-2004 cannot be sustained and the same is liable to be set aside. When once the order at Annexure-D is liable to be set aside, it is clear that the assessment order, which is based solely on the basis of Annexure-D, restricting exemption for the activity of filling of L.P.G. bottling only, is also liable to be set aside and further, the rectification orders as per Annexures-K and M and the demand notices as per Annexures-L and N are also liable to be set aside with liberty to the respondents to give opportunity to the petitioner and pass fresh orders in accordance with law. Accordingly, I pass the following order.-

The rule is made absolute. The writ petitions are allowed. The order dated 16-10-2004 passed by the 4th respondent as per Annexure-D is quashed with liberty to the 4th respondent to pass fresh order after affording opportunity to the petitioner in accordance with law. Consequently, assessment order at Annexure-E and rectification orders as per Annexures-K and M and the demand notices issued as per Annexures-L and N issued pursuant to Annexures-K and M respectively, are also quashed with liberty to the respondents to pass fresh assessment order after the order is passed by the 4th respondent in accordance with law.