AHMEDABAD ADVANCE MILLS LIMITED Vs. STATE OF GUJARAT

JUDGEMENT

(1.) The Ahmedabad Advance Mills Ltd. (Tata Metal and Strips Ltd. since 3-2-1989) has a Metals and Special Alloy Steel Division at Navsari, where it is engaged in manufacturing Cold Rolled Steel Strips. In 1970, it embarked upon expansion of the said unit by setting up a plant for bright annealing and grinding of the cold rolled steel strips. On 31/03/1982, it invested for that purpose Rs. 1,82,07,308.00 approximately. It also commenced production from 31/03/1982.

(2.) With a view to encourage establishment of industries in the State, and to achieve the object of development of small, medium and large scale industries in rural areas and backward areas to achieve a more balanced growth, and decongestion of industries from developed areas and cities like Ahmedabad, Baroda and Surat, the Government of Gujarat announced two Schemes by two separate Resolutions passed on 2 2/12/1977.By the first Resolution, it framed a Scheme called the State Cash Subsidy Scheme for Industries. By the second Resolution, it . framed a Scheme for sales tax exemption and grant of loan in respect of amount of sales-tax paid on sales of finished products. Under the Scheme, exemption from sales-tax was to be granted to all new small scale industrial units commissioned on or after 1-11-77. Interest free sales-tax loan benefit was to be extended to medium and large scale industrial units commissioned during the period of the Scheme and for expansion and diversification of the existing units. All the three Schemes became effective from 1/11/1977.

(3.) On 27-8-1980, the Government reviewed the package of incentives introduced by the said two Resolutions and decided to introduce a new Scheme of Sales-tax benefits in lieu of the then existing Sales Tax Exemption/Loan Scheme with effect from 1/06/1980. The cash subsidy scheme of the earlier package was retained as it was. The new Scheme was called "The New Sales-tax Incentives Scheme for Industries". It became effective from 1/06/1980 and was to remain in force for a period of five years. Under the Scheme, new industrial projects, including expansion/diversification by existing units commissioned (i. e., which had started commercial production) on or after 1/06/1980 were eligible to opt for new sales-tax benefits in lieu of old sales-tax incentive Scheme. Areas of applicability, List of Growth Centres and the list of industries excluded from the perview of the Scheme remained the same as under the Old Scheme. Under the New Scheme, all eligible industrial units were given an option to choose one of the two salestax incentives, viz., (a) Sales-tax Exemption Incentives, or (b) Sales-tax Deferment Incentives. If a new industrial unit had opted for the Scheme of Sales-tax Deferment, then in case of such unit recovery of sales-tax payable on sales of its products was to be deferred to the extent and for the period specified in that Resolution. By its Resolution dated 18/03/1982, the Government laid down conditions for availability of such benefit.