JAGDISH BHAI PATEL Vs. STATE OF M.P.

JUDGEMENT

(1.) THE factual backdrop and the questions of law being similar in both the writ petitions they were heard analogously and are disposed of by this common order. For the sake of convenience and clarity the facts in W.P. No. 1497/1998 are adumbrated herein. The facts as have been unfolded are that the government of M.P. with a view to give incentive to the industrialisation in the State in exercise of powers vested in it under section 12 of the M.P. General Sales Tax Act, 1958 (hereinafter referred to as 'the Act') issued notification No. A -3 -41 -81 (35) ST -V dated 23rd October, 1981 exempting dealers to set up industrial units for manufacture of goods for varying periods according to the location of industry in the various categories of backward districts. The said notification has been brought on record as Annexure -1. Being persuaded by the promise of exemption from payment of tax the petitioner set up a small scale industry for manufacture of wooden frames, shutters etc. which was registered with the General Manager, District Industries Centre, Chhindwara. He applied to the Sales Tax Officer for grant of registration under the repealed Act and after due enquiry and verification registration certificate No. 015/CHW/SASR/3258/7 dated 18 -3 -1994 was granted to him. In the Registration Certificate he was shown as a manufacturer of wooden windows, doors, frames and shutters etc. Amongst others, timber, logs and sawn timber was specified as raw materials. Having satisfied the necessary conditions for grant of eligibility certificate under the abovesaid notification he applied for grant of eligibility certificate for exemption from tax and eligibility certificate No. DIC -CWA/FA/87/1710 dated 10 -2 -1995 was issued by the General Manager, District Industries Centre, Chhindwara. The said document was signed by the Divisional Dy. Commissioner of Sales Tax, Chhindwara and the General Manager, District Industries Centre, Chhindwara. The exemption was for a period of five years from 29 -12 -1993 to 28 -12 -1998. Subsequently, certificate No. DIC -CWA/FA/87/3503 dated 25 -4 -1996 was granted for a period of 7 years from 29 -12 -1993 to 28 -12 -2000. At this juncture the M.P. General Sales Tax Act, 1958 was repealed w.e.f. 1 -4 -1995 and a new statute namely M.P. Vanijyik Kar Adhiniyam, 1995 (Act No. 5 of 1994) was brought into existence.

(2.) IT is averred in the writ petition that the State Government had issued a notification No. A -3 -41 -81(25) -ST -V dated 1st May, 1982, exempting selling dealer from payment of Sales Tax on the purchase from eligible dealer issuing the declaration appended thereto. The petitioner had purchased timber logs in various auctions held by, amongst others, from Divisional Forest Officer (hereinafter referred to as DFO), South Seoni Production Forest Division, Seoni and offered declarations appended to the above notification dated 1 -5 -1982 and Commercial Tax was not being charged by him. Earlier the D.F.O. used to charge tax at full rate of 20% against which the petitioner had filed a Writ Petition No. 3040/1995. Eventually in the writ petition a submission was made that industries to whom exemptions had been granted from payment of tax would continue to avail the said exemption on purchases. On the basis of the said assurance the writ petition was withdrawn. While the matters stood thus the petitioner received a memo No. Rajaswa/98/2054 dated 20 -3 -1998 from D.F.O. South Seoni Production Forest Division intimating that the Commissioner of Commercial Tax, Indore vide memo No. 6/95/24 -B/I/1258 dated 19 -2 -1998 has directed that according to Commercial Tax Act, 1994, timber is included in Schedule III, and hence it is not exempted from tax and that it can be sold only on payment of full rate of tax from 1 -4 -1995. He also demanded the tax at full rate and surcharge right from 1 -4 -1995 till date to be paid within a month or else the amount will be recovered by coercive method as arrears of land revenue. Both the orders have been brought on record as Annexure.P -5 and Annex.P -6.

(3.) SIMILAR instructions for charging tax at full rate were issued by the Commissioner of Commercial Tax to Oil Companies for charging tax at the full rate of 20% on sale of diesel oil to industries holding eligibility certificates. It is set forth in the writ petition that the Grasim Industries Ltd., Tata Iron and Steel Company Ltd., and Larsen and Tubro represented the matter to the government of Madhya Pradesh, Commercial Tax Department which vide memo No. A -3 -77/97 -5 dt. 7 -2 -1998 rejected their representations. According to the directions of the Commissioner of Commercial Taxes, Diesel Oil was not specified in the eligibility certificate granted to M/s. Jindal Strips Ltd., Raigarh by the State Level Committee against which the party filed an appeal before the State Appellate Tribunal. The State Appellate Forum directed inclusion of diesel oil in their eligibility certificate. It is put forth that by such recognition it is apparent that industries holding eligibility certificate under the notification issued under the Repealed Act are entitled to exemption in respect of goods mentioned in Schedule HI of the Act. It has been highlighted in the writ petition that the direction of the Commissioner of Commercial Tax dated 19 -3 -1998 contained in Annexure P.6 that industries holding eligibility certificate are not entitled to exemption on timber is arbitrary, and illegal. It is also put forth that demand of tax by the D.F.O. is also unsound and illegal. It is further put forth that the vested rights have been saved under the new Act. With the aforementioned averments, prayer has been made to declare that the petitioner is entitled to purchase timber logs without payment of tax under the earlier notification and the demand made by the Commissioner on 19 -3 -1998 vide Annexure P -6 is illegal and arbitrary and deserves to be quashed and further to direct the Divisional Forest Officer to accept the declaration granted under the eligibility certificate and not to demand tax.