JINDAL POLY FILMS LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) The constitutional validity of the Maharashtra Value Added Tax (Levy, Amendment and Validation) Act, 2009 is challenged. The challenge, during the course of the hearing is to the retrospective operation of the amendment and validation which relates back to 1 April 2005 when the principal legislation came into force.

(2.) Since 1964, the Government of Maharashtra had introduced Package Schemes of Incentives to achieve a dispersal of industries outside the Bombay-Thane-Pune belt and to attract industries to underdeveloped and developing areas of the State. The Package Scheme of Incentives of 1964 was followed by amended schemes in 1969, 1973, 1976, 1979 and 1983. On 30 September 1988, the State Government notified a new package scheme of incentives for the period between 1 October 1988 and 30 September 1993 with a view to rationalize the scope, scale and mode of release of incentives and accelerate the dispersal of industries from the developed areas of the State to underdeveloped regions. The Package Scheme of Incentives of 1988 was succeeded by a scheme which was notified on 7 May 1993. Scheme of 1988

(3.) Under the Package Scheme of Incentives of 1988, areas of the State were classified into groups. Group-A comprised of developed areas where no incentives were available; Group-B comprised of areas where some development had already taken place; Group-C of areas which were less developed than those in Group-B; Group-D of the least developed areas not covered by Groups-A, B and C; and 'No Industry Districts' notified by the Government of India. Paragraph 2.5 of the Scheme provided that existing/new units in areas covered by Groups-B, C, D or No Industry Districts which created on or after 1 October 1988 additional fixed capital investment for additional production or manufacturing facilities either for the manufacture of the same product or for diversification were eligible for incentives subject to a minimum stipulated threshold of additional fixed capital investment. The additional fixed capital investment had to exceed twenty five percent of the gross fixed capital investment and in the case of an expansion, the additional fixed capital investment had to result in an increase of the existing installed capacity by at least twenty five percent. Under paragraph 2.15, the expression "sales tax liability" was defined to include sales tax/additional tax/turnover tax payable by the eligible unit on the sale of finished products. Paragraph 5 provided that the sales tax incentive under Part-I of the Scheme could be by way of exemption or by way of deferral which was admissible to a new unit/pioneer unit as also in the case of expansion or diversification of units set up in Groups B, C or D or No Industry Districts. An exemption was available inter alia in respect of sales tax payable under the Bombay Sales Tax Act, 1959 on the sale of finished products of the eligible unit. The quantum of sales tax incentives was provided for in paragraph 5.2 of the Scheme. For eligible units undertaking expansion or diversification, the quantum was linked to a proportion of fixed capital investment and was for a stipulated period.