INDIAN ACRYLICS LTD Vs. STATE OF PUNJAB

JUDGEMENT

(1.) The petitioner has invoked jurisdiction of this Court under article 226 of the Constitution of India for striking down sub-rules (3) and (4) of rule 4 of the Punjab General Sales Tax (Deferment and Exemption) Rules, 1991 (for short, "the 1991 Rules") and for quashing the condition imposed by the prescribed authority in the exemption certificate, annexure P2, requiring it to maintain separate accounts of existing units and expansion units.

(2.) The petitioner is a company incorporated under the Companies Act, 1956. It is engaged in the business of manufacture and sale of acrylic fibre and is registered under the Punjab General Sales Tax Act, 1948 (for short, "the 1948 Act") and the Central Sales Tax Act, 1956 (for short, "the 1956 Act" ). In January, 1993, the petitioner was granted sales tax exemption to the tune of Rs. 333 crores spread over a period of seven years in terms of Industrial Policy, 1992, in respect of the industrial units set up at Village Harkishanpura, District Sangrur. However, it could avail the benefit of exemption only to the tune of Rs. 49 crores. In 1996, the Government of Punjab announced a new Industrial Policy (hereinafter described as "the 1996 Policy") which was published vide Notification No. 15/43/96-5/ib/2238 dated March 20, 1996 for grant of fresh incentives to the new entrepreneurs as well as existing industries. For the purpose of giving effect to the 1996 Policy, the State Government framed the rules titled as "punjab Industrial Incentive Code under the Industrial Policy, 1996" (hereinafter described as "the Incentive Code, 1996" ). With the avowed object of availing the benefit of incentives announced under the 1996 Policy, the petitioner undertook expansion of its existing unit by enhancing the installed capacity from 25,000 TPA to 38,500 TPA and made additional fixed capital investment to the tune of Rs. 3,568. 41 lacs. The General Manager, District Industries Centre, Malerkotla, issued eligibility certificate (annexure P1) under rule 6. 3 (ii) of the 1991 Rules entitling the petitioner to claim sales tax exemption amounting to Rs. 84 crores in a period of 120 months commencing from January 9, 1999. After receiving the eligibility certificate, the petitioner submitted application to the Assistant Excise and Taxation Commissioner, Sangrur (respondent No. 3) for grant of sales tax exemption certificate in accordance with the 1996 Policy and the Incentive Code, 1996. Respondent No. 3 issued certificate, annexure P2, with the following condition :

(3.) The petitioner has averred that the condition of maintaining separate books of account in respect of the existing unit and expansion unit appears to have been incorporated in the certificate on the basis of rule 4 (4) of the 1991 rules which speaks of grant of benefit of deferment/exemption on the basis of incremental production and while doing so, respondent No. 3 completely ignored the provisions contained in the 1996 Policy and rule 2. 5 read with rule 6. 3 of the Incentive Code, 1996. It has further averred that rule 4 (3) and (4) of the 1991 Rules cannot be invoked while granting exemption under the 1996 Policy and the same are liable to be declared ultra vires to the 1996 Policy and articles 265 and 300a of the Constitution of India. Respondents Nos. 1 and 3 have not controverted the petitioner's assertion that the exemption granted to its original unit had come to an end in January, 2000, but they have justified the condition enshrined in the exemption certificate for maintaining separate accounts of the existing unit and expansion unit by asserting that this was done in accordance with sub-rules (3) and (4) of rule 4 of the 1991 Rules. They have averred that the petitioner was granted exemption certificate in accordance with the 1996 policy read with the 1991 Rules and therefore, it cannot avoid the applicability of the concept of incremental production. In support of this contention, respondents Nos. 1 and 3 have relied on the decision taken in the meeting of the Officers Committee on Fiscal Management under the Chairmanship of the Chief Secretary, Punjab, held on January 27, 2000. They have also questioned the petitioner's locus standi to challenge rule 4 (3) and (4) by contending that after having availed the benefit of incentives, it cannot turn around and challenge the provisions of the 1991 Rules. In the written statement filed on behalf of respondent No. 2, it has been averred that the department has granted sales tax exemption to the petitioner to the tune of Rs. 382. 84 crores from May 14, 1993 for a period of seven years.