VARUN POLYMOL ORGANICS LIMITED Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) THE 1st petitioner herein has set up a manufacturing unit at MIDC, Mahad an underdeveloped area of the State of Maharashtra in district Raigad manufacturing pesticides covered under Entry 31 of Schedule C-II appended to the Bombay Sales Tax Act, 1959. The 1st petitioner has several branches within the State as well as outside the State. The 1st petitioner holds registration certificates under Bombay Sales Tax Act, 1959 as well as Central Sales Tax Act, 1955. The 2nd petitioner is the director of the 1st petitioner company and is a citizen of India. The above referred unit of the 1st petitioner is an eligible unit duly covered under 1983 Package Scheme of incentives introduced by the Government of Maharashtra. The 1st petitioner has complied with all the conditions of eligibility prescribed by the said Scheme. By virtue of the provisions contained in the said scheme as well as Entry 136 of relevant exemption notification issued by the Government of Maharashtra under section 41 of Bombay Sales Tax Act, 1959, the petitioner No. 1 is entitled to (i) exemption from payment of purchase tax/sales tax payable under the Bombay Sales Tax, 1959 on purchase of raw-materials; (ii) sales tax payable under the said Act on sales of finished goods and (iii) Central sales tax payable under the Central Sales Tax Act, 1956 on sale of finished goods effected in course of inter-State trade and commerce upto a ceiling limit of Rs. 1,00,16,675/- during the period 27th March, 1989 to 26th March, 1996. With a view to ensuring that the eligible unit does not avail of the tax exemption in excess of the stipulated ceiling limit, the notional sales tax liability of the unit is required to be assessed every year so as to debit the unit against its total entitlement of tax exemption as aforesaid. The rights and obligations of the eligible unit in respect of tax exemption are governed by the notification issued by the Government of Maharashtra under section 41 of the Bombay Sales Tax Act, 1959. The said notification is of legislative character. The said 1983 Scheme inter alia treats branch transfer or stock of goods or transfer of goods on consignment basis, though not in pursuance of an agreement of sale or connected with transaction of sale as "deemed sales" for purpose of computation of benefit of tax exemption availed of by the eligible unit. The petitioners are very much aggrieved by the impugned provisions contained in Clause 2. 11 of 1983 Scheme.

(2.) BY this writ petition filed under Article 226 of Constitution of India, the petitioners have impugned portions of Clause 2. 11 of the "package Scheme of Incentives 1983" propounded by Government of Maharashtra offering sales tax exemption to the entrepreneurs setting up industrial units in under-developed or backward areas of the State to the extent of ceiling specified therein, in so far as the said scheme treats "branch transfers" goods manufactured by petitioner No. 1 to its own depots or branches within the State or outside the State or mere consignment of goods, without there being any transaction of sale, as "deemed sales" for purpose of computation of sales tax exemption availed of by petitioner No. 1 as more particularly set out therein.

(3.) THE petitioner No. 1 has set up an industrial unit in the backward area/underdeveloped area at a place known as Mahad in Raigad District. The above referred industrial unit of petitioner No. 1 is an eligible unit entitled inter alia to sales tax exemption for the period specified in certificate of eligibility dated 17th March, 1989 issued by the Development Corporation of Konkan Ltd. and entitlement certificate dated 27th March, 1989 issued by the Dy. Commissioner of Sales Tax, Maharashtra State, Bombay to the extent of Rs. 1,00,16,675/- subject to the conditions specified in entry 136 of the Schedule appended to Government Notification No. STA-1059 (iii)G-I dated 28th December, 1959 as amended. The said unit is duly covered under the 1983 Package Scheme propounded by Government of Maharashtra. The extent of sales tax exemption available to petitioner No. 1 in sum of Rs. 1,00,16,675/- is fixed on the basis of 100% of the Gross Value of fixed capital investment in respect of the eligible unit covered under the Scheme. No Tax liability can be created without authority of law. No tax exemption can be granted except to the extent and in the manner set out in the tax legislation. It is thus far too obvious that the extent of sales tax exemption available to petitioner No. 1 is governed by exemption notification issued by the Government of Maharashtra in exercise of its power of delegated legislation under section 41 (1) (a) of Bombay Sales Tax Act, 1959, i. e. Entry 136 of the Schedule appended to the exemption notification and not by Government circulars or Schemes as such. Nevertheless, for purpose of understanding the background of relevant provisions of law concerning the extent of tax exemption available to the eligible unit and the computation of benefits enjoyed or availed of by the unit, it is necessary to refer to at least two Clauses of 1983 Package Scheme here and now. 5. Sales Tax Incentive Under Part-I :