SHREE ANNAPURNA CONDUCT Vs. SALES TAX OFFICER

JUDGEMENT

(1.) THE Petitioner -M/s. Shree Annapurna Conductors Ltd. has filed this Writ Petition under Articles 226 and 227 of the Constitution of India with a prayer to quash Annexure -1, the letter dated 31.10.2002/ 1.11.2002 issued by O.P. No. 5 -IMational Aluminium Company Ltd. (NALCO, in short) calling upon the Petitioner to deposit 4.5% of the value of the materials to be supplied as security deposit; Annexure 2A, the notice dated 24.11.2003 issued by O.P. No. 1 -Sales Tax Officer, Balasore Circle, Balasore, indicating therein that Entry 43 -A (a) and (b) of the Tax Free Schedule does not allow any exemption to small scale priority industrial units, which have come under the provision of Entry 42 -A (a) and (b) of the Tax Free Schedule and the exemption allowed by the notification bearing No. SRO No. 932/ 2002 dated 12.11.2002 under Entry 43 -A (a) and (b) of the Tax Free Schedule is not applicable to the small scale priority industrial unit of the Petitioner and further calling upon the Petitioner to produce the books of accounts on purchase of raw materials and sale of finished products; Annexure -2B, the notice 24.11.2003 calling upon the Petitioner to produce its books of accounts for the quarter ending 6/2003; Annexure -2C, the notice dated 24.11.2003 issued Under Section 12(4) of the Orissa Sales Tax Act, 1947 ('the Act' hereinafter) for the period 30.9.2003; Annexure -2D, the notice dated 11.12.2003 calling upon the Petitioner to produce its books of accounts for the quarters ending 6/2003 and 9/2003; Annexure -2E, the notice dated 29.11.2003 issued by the Asst. Commissioner of Sales Tax, Balasore Range, Balasore, under Rule 80 of the Orissa Sales Tax Rules, 1947 and notice dated 19.11.2003 issued under Section 23 (4)(a) of the Orissa Sales Tax Act. 1947 read with Rule 80 of the O.S.T. Rules calling upon the Petitioner to show cause as to why the assessments orders would not be revised under Section 23(4)(a) of the O.S.T. Act read with Rule 80 of the O.S.T. Rules and indicating therein that the orders of assessment passed under Section 12(4) of the O.S.T.Act on 25.9.2002, 25.9.2002 and 31.5.2003 by the S.T.O., for the years 2000 -01, 2001 -02 and 2002 -03 respectively were found to be erroneous and prejudicial to the interest of the Revenue for which the Petitioner industrial unit was not entitled to the benefits under Entry 43 -A (a) and (b) of the Tax Free Schedule under the O.S.T. Rate Chart as notified in SRO No. 932/2002 dated 12.11.2002; and Annexure -2F, the show cause notice dated 19.11.2003 issued by the Asst. Commissioner of Sales Tax under Rule 22 of the C.S.T.(Orissa) Rules, 1957 read with Section 23(4)(a) of the O.S.T.Act and Rule 80 of the O.S.T.Rules on the same ground as indicated in Annexure -2E and the revisional orders passed by the Asst. Commissioner of Sales Tax for the periods 2000 -01, 2001 -02 and 2002 -03 in Annexures -2G and 2H and the consequential demands raised by the Sales Tax Officer under Annexures 21, 2J and 2K. The Petitioner has also prayed for quashing Annexure 5C,. which is the minutes of the meeting taken up by the Commissioner of Commercial Taxes, Orissa, with the officers of the NALCO and the representatives of the Orissa Alluminium Utensils Manufacturers Association on 23.10.2002.

(2.) THE Petitioner's case in brief is that it set up a small scale industry under the priority sector for manufacture of Aluminium conductors and wires at Banaparia (Kuruda) in Balasore district on being attracted by the incentives provided in the Industrial Policy Resolution 1996 (IPR 1996 in short) issued by the State Govt. in the Industries Department that the Petitioner industry would not be liable to pay tax on purchase of raw materials and finished products without any limit. According to the Petitioner, the incentives granted under the IPR 1996 are available to the priority industries, which means the industrial units in the specific categories as defined in Para 2.7, Part -ll of the IPR 1996 having a project cost of not less than Rs. 1.00 crore. The specific category included at Si.(iii) is Aluminium based industries. The sales tax incentive eligibility for priority industries is provided in Para 5.6 (ii). The Industries Department in its Notification dated 2.2.1999 provided that for all priority industries entitled to incentives under the IPR 1996, the period of exemption/ Defendent would be extended by two additional years and there would be no maximum limit on such exemption/deferment during the eligibility period. Similar notification was also issued by the Finance Department basing upon which the Petitioner industry started its commercial production on 21.4.2000 and the Director of Industries, who is the competent authority to grant eligibility certificate for priority industry, issued the eligibility certificate in the prescribed forms confirming the status of the Petitioner's unit as priority industry under small scale sector with fixed capital investment of Rs. 115.02 lakhs, i.e., more than Rs. 1.00 crore and the eligibility for exemption with no maximum limit with effect from 21.4.2000 to 20.4.2007. Accordingly, the Petitioner was getting sales tax exemption as a priority industry and while so enjoying the sales tax exemption, all on a sudden, NALCO, O.P. No. 5, demanded an indemnity bond and security deposit at 4.5% of the value of materials to be supplied. Though the Petitioner was assessed to 'nil' demand for the assessment years 2000 -01, 2001 -02 and 2002 -03 and the S.T.O. had made the assessment himself both under the O.S.T. Act and the C.S.T. Act granting the Petitioner industry a tax holiday, subsequently the same officer basing upon the minutes of the meeting dated 23.10.2002 taken up by the Commissioner of Commercial Taxes, Orissa, with the officers of the NALCO and the representatives of the Orissa Alluminium Utensils Manufacturers Association, vide Annexure -5C, disallowed the incentives/exemptions to the Petitioner unit and accordingly the impugned notices were issued and the impugned orders were passed by the Sales Tax Authorities.

(3.) THE question that emerges for consideration in the present case is whether the Petitioner industry is to be treated as a priority industry under IPR 1996 so as to be eligible to avail the incentives of exemption of sales tax in terms of Entry 43 -A of the Notification dated 26.7.1996 issued by the Finance Department, which also fell for consideration in W.P. (C) No. 5618 of 2003. In the Judgment delivered today in the said W.P.(C) No. 5616 of 2003, we have allowed the said Writ Petition by quashing the minutes of the meeting dated 23.10.2002 taken up by the Commissioner of Commercial Taxes, Orissa, with the NALCO and others and declared that the Petitioner industry is entitled to avail the sales tax exemption in accordance with the IPR 1996. Adopting the reasonings given by us in the Judgment delivered in aforesaid W.P.(C) No. 5616 of 2003, we allow the prayer of the Petitioner in this Writ Petition and quash the minutes of the meeting dated 23.10.2002 of the Commissioner of Commercial Taxes, Orissa, with the NALCO vide Annexure -5C and declare that the Petitioner industry is entitled to the sales tax exemption in accordance with IPR 1996.