VISHAL LINES PRIVATE LIMITED Vs. GENERAL MANAGER

JUDGEMENT

(1.) The petition raises a short issue. The facts necessary for the present purposes may first be noticed.

(2.) Petitioner No. 1 is a private limited company having its registered office at Thakkerbapa Nagar, National Highway, Ahmedabad. It is engaged in the business of manufacture of lime, cement paint and lime material. It is a dealer registered under the Gujarat Sales Tax Act, 1969 as well as under the Central Sales Tax Act, 1956. In exercise of its powers u/s 49(2) of the State Act, the State Government, by issuing Notification, inserted Entry 175 granting exemption from payment of tax on purchases of raw material, processing material, consumable stores or packing materials from a person who is not a registered dealer, on sales of raw materials, processing materials, consumable stores or packing materials by a registered dealer to a specified manufacturer as well as on sale of goods by a specified manufacturer of goods manufactured by him and on purchase of prohibited goods other than declared goods for use in the manufacture of textile goods on certain terms and conditions mentioned in the Notification with which we are not presently concerned. The exemption is in favour of a specified manufacturer. Under Annexure-I appended to the said entry 'specified manufacturer' was defined to mean a a person in the State of Gujarat who establishes the new industry after 1/06/1980 but not after 31.3.1991 in any of the designated areas. The latter date was extended from time to time upto 31.3.1993. One of the conditions for claiming exemption is that if a specified manufacturer has obtained an eligibility certificate from the Industries Commissioner or, as the case may be, the General Manager of the District Industries Centre concerned stating, inter alia, that the new industry has been commissioned on the date specified therein being any date during the period commencing on 1.4.1986 and ending on31.3.1991 (now 31.3.1993) in any of the designated areas and after obtaining eligibility certificate he has applied for the exemption certificate to the Commissioner of Sales Tax. Though, in the first instance, eligibility certificate was refused, during the pendency of this petition, by order dated 16.3.1999, the petitioner has been granted an eligibility certificate determining the amount of tax exemption upto which the petitioner can claim the benefit under entry 175 at Rs. 21,00,565. In computing this amount, long term borrowed capital, as distinct from working capital, has been included in computing the capital invested for the purpose of computing the maximum benefits derivable under the exemption entry. Under Annexure-V appended to the entry, quantum and period of exemption has been stated. The petitioner falls in Item B of the Table under Part III of the Annexure-V,, that is to say, he can avail exemption of tax upto 70% of the fixed capital investment or Rs. 2.5 crores whichever is less within the period of 12 years from the date of commencement of commercial production.

(3.) In short, it is not in dispute that the petitioner is a specified manufacturer having established a new unit entitled to claim exemption under the entry subject to fulfillment of the conditions and that in computation of capital investment borrowed sum is also to be included which represent the fixed capital investment. It is also not in issue that asset acquired by the petitioner is plant and machinery and cost of which is otherwise part of fixed capital investment in the new unit. The maximum monetary limit of tax exemption is directly related to the amount of fixed capital investment by a prescribed percentage of that sum, subject to a maximum of Rs. 2.5 crores.