HI TEK POWERCON PVT LTD Vs. ASST COMMISSIONER

JUDGEMENT

(1.) THE Petitioner -M/s. Hi -Tek Powercon Pvt. Ltd. has filed this Writ Petition under Articles 226 and 227 of the Constitution of India with the prayers to (a) quash the minutes of the meeting taken up by the Commissioner of Commercial Taxes, Orissa, with the officers of the National Aluminium Company Ltd. and the representatives of the Orissa Aluminium Utensils Manufacturers Association on 23.10.2002 (Annexu,re -1A); (b) direct the Opposite Parties to grant sales tax exemption to the Petitioner in view of Entry 43 -A of the Finance Department Notification dated 26.7.1996; (c) direct the Opposite Parties to grant sales tax exemption to the Petitioner as per the specific provision made in this regard under the Industrial Policy Resolution 1996; and (d) declare that the Petitioner industry being a priority industry is entitled to sales tax exemption.

(2.) THE case of the Petitioner, as projected in the Writ Petition, briefly stated, is as follows: The Petitioner -company is a beneficiary under the Industrial Policy Resolution, 1996 ('IPR 1996' hereinafter) issued by the State Hi -Tek Powercon Pvt. Ltd. v. Asst. Commissioner C.T. (TRS) Government, which provided for certain incentives to different categories of industries as indicated therein. As per the said IPR 1996, the Industries Department is the Nodai Department. In the year 1999 the Petitioner, after having satisfied the terms and conditions stipulated in the IPR 1996, established an industry in village Saura in the district of Khurda for manufacture of Aluminium Conductors with a project cost of more than Rs. 1 crore in order to become a 'Priority Industry'. The Petitioner's industry commenced its commercial production on and from 2.11.2000. The Industries Department by letter dated 27.1.1999 addressed to the Managing Director of Petitioner -company, vide Annexure -9, made a clarification on the grant of sales tax concession and on the definition of 'Technical Entrepreneur' under the provisions of the IPR 1996 the material part of which is reproduced below: It is to inform you that the industrial units for manufacturing Aluminium Conductors under the category of Priority Industries having the project cost not less than Rs. 1.00 crore under Small Scale Sector are eligible to get deferment/exemption of sales tax @ 200% of Fixed Capital Investment with additional period of 2 years as envisaged in Para 5.6 (ii) of I.P. -1996 (part -ll) read with Para of paragraph 43 (A)(ii) of Col.3 at p.12 of S.R.O. No. 475 96/F dated 26.7.96 issued by Govt. of Orissa in Financial Department which may please be referred to along with explanation notes of VI(p -23) of the said S.R.O. Besides Govt. of Orissa in Industries Department vide their Letter No. 20174/1, dated 02/08/96 have issued guidelines separately for grant of incentives of Sales tax in favour of priority industries which may please be referred to which is self -explanatory. The Industries Department by its notification No. 2184 dated 2.2.1999, Annexure -10, by way of amendment substituted sub -para 5.6 (ii)(part -ll) of the IPR 1996 published in the Industries Department notification No. 4863 -XIV.HI -1/86 dated 2.3.1996 as follows: For all 'Priority industries' entitled to incentives under this Industrial Policy, the period of exemption/deferment will be extended by 2 additional years and there will (sic) be no maximum limit on such exemption/deferment during the eligibility period. The Industries Department by letter dated 20/21.6.2000 addressed to the Managing Director of the Petitioner -company, under Annexure -3 series, clarified that 'Aluminium based Industries' having a project cost of not less than one crore had been declared as priority industries as envisaged in para -2.7 (iii) Part -ll of the IPR 1996, and entitled to avail the incentives in terms of the provisions laid down in the said IPR. It was further clarified therein that all new small, medium and large scale industrial units would be eligible for exemption/ deferment of sales tax on purchase of machineries, spare parts of machineries, raw materials, packing materials and finished products whereas new small scale industries would be eligible for exemption and new large, medium scale would have the option to defer payment of sales tax on finished products from the date of commercia! production, provided the unit should have fulfilled the criteria mentioned in the Finance Department notification No. 7352 -CTA/5/99/F dtd.17.2.2000 read with SRO No. 141/2000. The Director of Industries issued the certificate of eligibility in favour of the Petitioner unit for sales tax concession on raw materials, machinery, spare parts, packing materials and finished products under IPR 1996 for eight years from the date of commercial production, i.e., from 2.11.2000 to 1.11.2008. The Director of Industries also issued a certificate in favour of the Petitioner declaring Petitioner -industry as a priority industry eligible to avail the sales tax incentives. The aforesaid certificates have been annexed as Annexure -3 series. By the letter dated 1.10.2002, Annexure -4, the Sales Tax Officer, Bhubaneswar II Circle, Bhubaneswar, intimated the Petitioner that the Petitioner -industry was entitled to sales tax exemption under the IPR 1996 during the period, i.e., from 2.11.2000 to 1.11.2008. The Petitioner while enjoying the aforesaid tax exemption, O.P. No. 6 -National Aluminium Company Ltd. (NALCO) by letter dated 31.10./01.11.2002 issued to the Petitioner, Annexure -1, demanded deposit of 4.5% of the value of the material to be supplied as security deposit so as to cover the NALCO against any eventual liability. Thereafter the State Govt. in Finance Department by notification No. SRO 932/2002 dated 12.11.2002 issued under Section 6 of the Orissa Sales Tax Act, 1947 (Annexure -17) amended Item No. (ii) of the third proviso to Clause 3 of Entry 43 -A of its notification dated 23.4.1976, which provided that the period of exemption for all priority industries would be extended by two additional years and there would be no maximum limit on such exemption during the eligibility period. The Sales Tax Officer on 27.11.2002 passed the orders of assessment for the year 2001 -2002 under the O.S.T. Act and C.S.T. Act granting the exemption as provided in the IPR 1996 to the Petitioner industry, copies of which are Annexures -6 series. Thereafter the S.T.O. issued the letter dated 30.4.2003, vide Annexure -7, intimating the Petitioner that a certificate had been inadvertently issued vide office letter No. 30243 dated 24.12.2002 under the seal and signature of the Sales Tax Officer, Bhubaneswar II Circle, Bhubaneswar, in favour of the Petitioner relating to exemption of sales tax under the IPR 1996 and the same had been cancelled with effect from the date of issue. The Petitioner had filed a Writ Petition against the aforesaid order as well as the demand raised by the Sales Tax Department. According to Learned Counsel for the Petitioner, Petitioner's industry comes under the priority industries in terms of Entry 43 -A of the Sales Tax Exemption Notification dated 26.7.1996 and as such it is entitled to the exemption provided in the IPR 1996.

(3.) THE counter affidavit filed by the Industries Department fully supports the case of the Petitioner that the Petitioner is entitled to get the benefits as claimed by it. A similar Writ Petition being W.P. (C) No. 2976 of 2003 filed by M/s. Rishabh Electrical Pvt. Ltd. was heard finally along with the present case but on the request of the Counsel appearing for the Petitioner in that case, the said case was delinked from this case because of certain amendments brought about in that Writ Petition. No counter affidavit has been filed by the Finance Department in the present case. But the counter affidavit filed by the Finance Department in W.P. (C) No. 2976 of 2003 has been adopted in this case. In the said counter affidavit, the Finance Department has taken the stand that priority industries have never been treated by the State Govt. as separate industries or a class of industries in the sense of classification of small/ medium/large scale; and that since the minimum investment limit for priority industries is Rs. 1.00 crore and above, which is the threshold for medium and large scale industries during the framing of the IPR 1996; and as the intention of the Govt. was to give concession to priority industries falling within the category of Medium and Large scale, such industrial units would, therefore, come under the purview of Entry 43 -A. According to the Finance Department, there is no incongruity between IPR 1996 of the Industries Department and the notification of the Finance Department giving sales tax exemption/ deferment. IPR 1996 envisages certain privileges/incentives for priority industries having investment not less than Rs. 1.00 crore. Industries having that level of investment fall within the category of medium scale which is the basis for classification of industries in terms of the Industries (Development and Regulation) Act, 1951.