OSWAL FATS AND OILS Vs. STATE OF PUNJAB

JUDGEMENT

(1.) This is a petition for issuance of a writ in the nature of mandamus directing the respondents to implement the Industrial Policy, 1996 and the Industrial Incentive Code, 1996 and grant sales tax defernt to the petitioner on the total production. The other prayer made in the petition is to direct the respondents to withdraw the notices issued to the petitioner for non-filing of the sales tax returns and to refund the excess sales tax deposited during the quarters ending in June, 1999 and September, 1999.

(2.) The petitioner is a company incorporated under the Companies Act, 1956. It is engaged in the manufacture of soaps, fatty oils, stearic acids, glycerine etc. In the year 1998, the petitioner made expansion at its existing factory in village Jaladiwal, Tehsil Rajkot, District Ludhiana by making fixed term investment of Rs. 1200.78 lacs. After expansion, the commercial production was started on 31st March, 1999. The General Manager, District Industries Centre, Ludhiana issued eligibility certificate dated 25th June, 1999 (Annexure P-6) to the petitioner entitling it to seek deferment of sales tax to the extent of Rs. 17.12 crores for a period extending over 7 years from 31st March, 1999. After getting the eligibility certificate, the petitioner submitted application dated 29th June, 1999 (Annexure P.7) to the Assistant Excise and Taxation Commissioner, Ward-IV, Ludhiana (respondent No. 3) for grant of exemption certificate for sales tax deferment under the Industrial Incentive Code, 1996. For the next one year, a lot of correspondence was exchanged between the petitioner and the respondents on the modalities of sales tax deferment. While the petitioner was of the opinion that the benefit of sales tax deferment was available only on incremental production in terms of Rule 4(3) and (4) of the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991 (hereinafter referred to as 'the 1991 Rules') and not on the total production. Ultimately, certificate Annexure P. 18 dated 3rd May, 2000 was issued by respondent No. 4 entitling the petitioner to claim deferment benefit to the tune of Rs. 17,12,31,000/-. This was super-imposed by D.O. letter No. 5(3)/2000-ET-II(12) dated 10th May, 2000 written by the Financial Commissioner, Excise and Taxation Department. Punjab to the Secretary, Industries and Commerce Department, Punjab vide which he opined that incentive under the Industrial Policy, 1996 was meant only for incremental production, i.e. on the capacity created by expansion of the unit.

(3.) In the meanwhile, the competent authority of the Department initiated proceedings against the petitioner on account of its alleged failure to file sales tax return and to pay tax in accordance with the provisions of the Punjab General Sales Tax Act, 1948 (for short, the 1948 Act) within the stipulated time. On 31st January, 2000, the petitioner submitted representation Annexure P.14 for extension of time for filing of the return. On 14th February, 2000, the petitioner filed return for the quarter ending 31st December, 1999 and deposited Rs. 5,10,729/- which was over and above the benefit of the sales tax deferment claimed by it under the Industrial Policy, 1996. The petitioner filed another return on 15th March, 2000 showing its liability to pay sales tax amounting to Rs. 5.8 lacs after subtracting Rs. 109.66 lacs by way of deferment under the 1991 Rules.