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Judgment
Vivek Rusia, J, Rajendra Kumar Vani, J
As all the aforesaid petitioner arise out of the same controversy, they are being decided by this common order.
The petitioner has filed the present petition (W.P. No.7622/2014) challenging the order dated 31.07.2014 passed by respondent No. 2, whereby the benefit of notification No. A-3-68-2004-V(21), dated 04.04.2005 regarding the Entry Tax Exemption Scheme, 2004 has been denied for the entire period of five years.
W.P. Nos. 4471/2015, 4294/2015, 1994/2015 and 748/2016 have also been filed by the petitioner challenging the assessment orders for the periods 2010-2011, 2011-2012, 2012-2013 and 2013-2014 respectively on the ground of absence of exemption certificate.
For the sake of convenience, the facts are being taken from W.P. No.7622/2014, which, in short, are as under:-
(i) The petitioner is a Company registered under the provisions of the Companies Act, 1956 (Now 2013). The petitioner is a registered Dealer under the provisions of the M.P. VAT Act, 2002 and also under the provisions of the Central Sales Tax Act having Tin No.23905202405. The petitioner company is engaged in the sale and manufacture of electric bulbs, tube lights, CFL, pipes high mast poles etc. For the manufacturing of aforesaid lights and poles, the petitioner established a factory in an industrial area, Malanpur Tahsil Gohad, District Bhind (hereinafter referred to as “CFL Division”).
(ii) In exercise of the powers conferred under Section 10 Madhya Pradesh Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam 1976 (hereinafter referred to as “Entry Tax Act”), the State Government issued notification No. A-3-68-2004-1-V (21) dt.4.4.2005 granting exemption in whole from payment of entry tax to a class of registered dealers who established a new industrial unit in any of the districts in the State of Madhya Pradesh. The Exemption was granted for a period of five years from the date of effecting the first purchase of raw material on or after 1st April 2004. Clause (4) of the notification made it clear that a dealer holding a registration certificate under the VAT Act, who opts to avail exemption under this notification in respect of an industrial unit shall, notwithstanding such registration, obtain a separate registration certificate as a manufacturer for such industrial unit.
(iii) In the year 2006, the petitioner established a separate industrial unit for the manufacture of PCB at an industrial area, Maharajpura, District Gwalior (hereinafter referred to as “PCB Unit”). The petitioner thereafter obtained separate registration under the VAT Act vide Tin No.23335207132 to avail of the benefits of the above exemption. The petitioner commenced production of PCB with effect from 01.09.2009.
(iv) The State Government amended Section 2 (u) of the M.P. VAT Act by inserting new Clause (d) in the Explanation, with effect from 01.04.2010 to the effect that transfer of goods from one unit to another unit if such units are having separate registration certificate, is deemed as a sale to charge VAT. The petitioner considered the effect of the aforesaid amendment and found that if the PCB Assembly at the PCB Unit transfers goods to the CFL Unit then it would attract VAT @ 12.5%. In such a situation, the petitioner applied for cancellation of separate registration of its PCB Unit, i.e., Tin No. 23335207132. Vide order dated 14.05.2010, registration of petitioner was cancelled by the respondent w.e.f. 05.04.2010. The respondent Commercial Tax Officer issued a fresh registration certificate for CFL and PCB Assembly manufacturing as a finished product. In view of the changed circumstances, the General Manager, District Trade and Industries Centre, Gwalior issued an entry tax exemption certificate dated 27.11.2010 from 30.08.2009 to 04.04.2010 in respect of PCB Unit. The petitioner submitted an application to seek review of the decision before the State-Level Investment Promotion Empowered Committee. The committee in its meeting dated 17.7.2014 considered the representation of the petitioner and rejected the same. Hence, this petition before this Court.
Shri Pawan Dwivedi learned counsel for the petitioner submitted that on one hand, the State Government has inserted explanation (d) to Clause (u) of Section 2 of the VAT Act by way of amendment in the years 2009 and 2010 thereby making every transfer of good between two units of a dealer liable for tax @ 12.5 % if both the units are having separate registration, and on the other hand the State has declined to grant exemption to the petitioner in the absence of separate registration certificate of its PCB Assembly Manufacturing Unit. The respondent has given a wrong interpretation to condition No.4. If the petitioner is required to obtain separate registration to get the benefit of exemption notification under the Entry Tax Exemption Scheme 2004, then the petitioner will have to pay the entry tax @ 12.5% for transfer of PCB from one unit to another unit.
Learned counsel further submitted that the DLIPEC has misread the condition No.4 of the notification No.21. It does not provide that if a manufacturing unit has a registration number then it has to get a separate registration for the new unit of the same dealer to be eligible for exemption under the said notification. The purport of the same is that if as already holding a registration certificate for any other business activity i.e. other than the manufacture then it is required to obtain a separate registration as a manufacturer, but in the present case, the petitioner holds registration as a manufacturer and after establishing the PCB Unit it has got its registration amended so as to include the PCB Unit at Plot No.49, 50 & in Industrial Area, Maharajpura, Gwalior as a manufacturer. As such, no separate registration is required in the case of the petitioner, hence, the impugned order is illegal in the eyes of the law.
Learned counsel further argued that reliance by the Committee on the decision of this Hon'ble Court in the case of Ashok Steel Rolling Mills Vs. State Level Committee - (1997) 30 VKN 141 is misplaced. In the said case, vires of Rule 13 was challenged which required separate registration. In the said case the language of Rule 13 was completely different vis-a-vis the language of condition No.4 of the exemption notification (Annexure P/3).
Learned counsel has placed reliance on the judgment of the Apex Court in the case of Union of India and Others vs. Wood Papers Ltd. and another reported in (1990) 4 SCC 256 and Commissioner of Sales Tax Vs. Industrial Coal Enterprises reported in (1999) 2 SCC 607, in which the Apex Court held that any taxing statute providing a concessional rate of tax should be liberally construed because the object of granting exemption from payment of sales tax has always been to encourage capital investment and establishment of an industrial unit in the State.
Per contra shri Ankur Mody, learned Additional Advocate General appearing for the State refuted that the State Government introduced the Entry Tax Exemption Scheme, 2004 in order to encourage the establishment of new industrial units in any of the districts by registered dealers. Under this scheme, a registered dealer is entitled to get exemption in whole from payment of entry tax for a period of five years on various restrictions and conditions mentioned in the schedule as well as paragraphs 2 to 12 of the scheme. As per Para 4, a dealer who opts to avail of exemption under this notification having a registration certificate under the VAT Act, for any other business activity shall obtain a separate registration certificate as a manufacturer for such industrial unit. The petitioner established the unit in the year 2006 and got a registration certificate on 16.11.2006. The State Government inserted Explanation (d) in the definition of 'Sale' under Section 2 (u) w.e.f. 01.08.2009 vide VAT (Amendment) Act, 2010 that when the goods specified in Schedule II are transferred from a unit of a dealer to another unit of the same dealer for sale or consumption or use in/for the manufacture of goods specified in Schedule II in such unit and the dealer holds separate registration certificate for each of such units, shall be treated as two independent sales or purchase. Since under this provision, the petitioner was liable to pay 12.5% VAT, therefore, the petitioner surrendered the registration certificate of the PCB unit. Hence, he became entitled to get the benefit of the Entry Tax Exemption Scheme 2004. The petitioner has been granted an exemption from 30.08.2009 to 04.04.2010 as per the validity of the second registration certificate. Hence, the petition is misconceived and liable to be dismissed.
We have heard the learned counsel for the parties at length and perused the record of the case.
The petitioner was already engaged in the business of the sale and manufacture of electric bulbs, tube lights, CFL, pipes high mast poles etc. The State Government issued a notification No. A-3-68-2004-1-V (21) dt.4.4.2005 to grant the benefit of exemption of payment of entry tax to the registered dealer who establishes a new industrial unit in any of the districts of the State of Madhya Pradesh. This exemption was granted by the State Government under the Entry Tax Act. The petitioner established a separate industrial unit at the industrial area, Maharajpura, District Gwalior for the manufacture of PCB and obtained a separate registration certificate as required in para 4 of the notification. Before 2010, Explanation (d) of Section 2 (u) was causing the burden of extra tax to the registered dealers upon transfer of goods from one unit to another unit of the same dealer by treating it as two independent sales or purchases but the State Government considered and amended explanation (d) by treating two independent sales or purchase from one unit to another unit of the same dealer in respect of goods specified in Schedule II if both the units held separate registration certificates. Therefore, in view of this amendment, the petitioner surrendered the certificate and merged the certificate of the PCB Unit into the CFL Division to save himself from the liability of paying VAT @ 12.5%.
That the Petitioner has not challenged para 4 of the Entry Tax Exemption Scheme 2004, which mandates that the dealer who holds a registration certificate under VAT and opts to avail exemption under this Scheme shall obtain a separate registration certificate as a manufacturer of such industrial unit. Therefore, amendment in explanation (d) of Section 2(u) will not automatically nullify the requirement of para 4 of notification No. A-3-68-2004-1-V (21) dt.4.4.2005. The petitioner has two separate industrial units; one is for manufacturing electric bulbs, tube lights, CFL, pipes high mast poles etc. and a second unit is for manufacturing PCB. The list of raw materials for manufacturing CFL and PCB are altogether different. The list of plants, machines, packaging, and industrial goods are separate in the details of items. The raw materials for CFL Assembly and PCB Assembly are altogether different. The PCB Assembly is not in the list of raw materials to be used for CFL Assembly. Therefore, the business activities of both units are different, therefore, the petitioner obtained a separate registration certificate under Clause 4 but because of the amendment in explanation (d) of Section 2 (u), but got it cancelled. This amendment in explanation (d) has been brought to consider the problems of all types of dealers who have two units and goods are transferred from one unit to another unit treating it to be a sale. In order to treat the said transfer as a sale, a separate registration certificate for both units has been made compulsory. Therefore, the dealer might be the same but if two units are engaged in the production of two different goods, then separate registration is required for both the manufacturing units.
After the establishment of the PCB unit the petitioner obtained a separate registration to get an exemption in tax. Had the definition of sale in the VAT Act was not amended the petitioner would not have got cancelled its new registration. The petitioner is now estopped from contending that separate registration is not required for the PCB unit.
In view of the above, we do not find any error in the decision taken by the committee granting exemption from payment of entry tax from 30.08.2009 to 04.04.2010 not for five years. The Writ Petition (W.P. No.7622/2014) being devoid of merit is hereby dismissed.
Consequently, W.P. Nos. 4471/2015, 4294/2015, 1994/2015 and 748/2016 filed by the petitioner challenging the assessment orders for the periods 2010-2011, 2011-2012, 2012-2013 and 2013-2014 respectively, on the ground of absence of exemption certificate, also stand dismissed.
No order as to cost.
A copy of this order be retained in each of the connected petitions.