MAHESH UDYOG Vs. STATE OF H.P.

JUDGEMENT

(1.) The first petitioner is a Small Scale Industrial Unit (for short "S. S. I. Unit") managed by a Private Limited Company of which the second petitioner is the General Manager. The S. S. I. Unit is engaged in the manufacture of Katha and Cutch produced out of a particular type of timber available for purchase from the Forest Department of the Government of Himachal Pradesh, The S. S. I. Unit came into existence on 8 -2 -1973 and it started production of Katha and Kutch from that date onwards. Annexure P -2, dated 21 -2 -1973 is the certificate of registration of the first petitioner, S. S I. Unit, issued by the District Industries Officer, Una Annexure -B dated 17 -12 -1979 is a certificate issued by the Director of Industries, Himachal Pradesh to show that the S. S. I. Unit has started production from 8 -2 -1973. It further shows that it has remained in production for the period 1 -12 -1976 to 7 -2 -1978 and being a new Unit is entitled to incentives given to Small Industries for the aforesaid period. Annexure -E is a similar certificate dated 13 -2 -1982 issued by the Director of Industries to show that the unit continued production till 31 -3 -1982 and as per the Government notification is entitled to incentives referred to therein. Annexure -F is a certificate relating to the period 1 -4 -1982 to 31 -3 -1983 for the same purpose. These documents clearly show that the S. S. I. Unit had come into existence on 8 -2 -1973 and had been enjoying concessions by way of incentives accorded by notifications issued by the Government of Himachal Pradesh.

(2.) The Industries Department of the Government of Himachal Pradesh issued notification No. 2 -193/69 -SI for the grant of incentives to new and already established industries in the State. The incentives included exemption from sales tax for a period of five years in respect of industries established after the notification With a view to give effect to the above incentives, the Himachal Pradesh General Sales Tax Act was amended we f. 12 -4 -1971 by Act (2) of 1974 The words "or Small Scale Industries" were inserted in section 42 () of the Act to empower the Government to issue the requisite notification under the said section to extend the incentives to Small Scale Industries. The expression Small Scale Industries is defined in section 2 (p) to mean "all industrial units with a capital investment of not more than rupees 7.5 lakhs irrespective of the number of persons employed". There is no dispute that the S. S. I. Unit involved in the present case falls under the definition in section 2 (p) of the Act The Government of Himachal Pradesh thereafter issued Annexure P -l notification on 27 -5 -1974 under section 42 (1) of the H. P. General Sales Tax Act, 1968, with retrospective effect from 12th April, 1971, incorporating the same incentives as were provided for in the notification dated 12 -4 -1971 issued by the Industries Department of the Government of Himachal Pradesh. The relevant part of the notification is extracted below: "In exercise of the powers conferred by sub -section (I) of section 42 of the Himachal Pradesh General Sales Tax Act, 1968, the Governor, Himachal Pradesh with a view to providing incentive to the Small Scale Industry, is pleased to grant exemption from payment of sale/purchase tax to the eligible Small Scale Industries with effect from 12th April, 1971 subject to the following conditions: - (1) * * * * * (2) that the exemption from payment of sale/purchase tax in the case of Small Scale Industries which came into being and are registered with the Industries Department as such after 12 -4 -1971 would be applicable for a period of 5 years commencing from the date of their coming into existence ; (3) to (7) * * * ¢ ¢ ¢ As per this notification, the petitioner Unit was accorded total concession from sales tax for the period upto 7 -2 -1978 (for five years from 8 -2 -1973 the date on which the S. S. I. Unit came into existence). The Industries Department of the Government of Himachal Pradesh on 4 -10 -1976 issued a notification containing Rules regarding grant of revised incentives to industries in Himachal Pradesh. As per Rule 3 (11) total exemption from sales/ purchase tax was accorded to Small Scale Industries set -up after 12 -4 -1971 and registered with the Industries Department of the Government of Himachal Pradesh for a period of five years from the date on which the Industry starts production. Concession by way of tax at reduced rates was accorded by Annexure P -4, notification issued by the Government of Himachal Pradesh under section 6 of the H. P. General Sales Tax Act, on 5 -7 -1978. This notification purports to be issued in exercise of the powers conferred under section 6 of the Act and provides for a Concessional rate of tax at 5% for S S. I. Units which had availed of the tax concession under the earlier notification for a further period of five years. Annexure P -4 notification reads: - H. P. Gazette Notification (Rajpatra) (Pages 859 -860). Excise and Taxation Department. Notification. Simla -2 the 5th July, 1978. No. 1 -3/7I -E & T (Sectt). -In supersession of this department notification of even number, dated the 27th May, 1974 and 5th April, 1976 and in exercise of the powers conferred under section 6 of the Himachal Pradesh General Sales Tax Act, 1968, with a view to provide incentive to the Small Scale Industries in Himachal Pradesh, the Governor of Himachal Pradesh is pleased to levy the sales tax on the terms and conditions hereunder prescribed, with immediate effect : (i) That the general sales tax shall be levied on the products manufactured by new small scale industrial units at the rate of 2% for the first five years and at the rate of 4% for the next five years in respect of goods leviable to general sales tax at the rate of 7%. In case goods leviable to general sales tax at the rate of more than 7% sale tax will be payable at the rate of 3% for the first five years and 5% for the next five years. (ii) That small scale industrial units which have availed holiday from sale/purchase tax under the notification referred to above shall be eligible to Concessional rate of tax at 4% on goods leviable at the general rate of 7% and 5% on goods leviable at the rate of more than 7% for a further period of five years. In case, or small scale industrial unit, enjoying tax holiday under the original scheme, such units will pay sales tax at the rate of 2% in case of goods leviable at the rate of 7% and 3% in case of goods leviable at the rate of more than 7% for the remaining period of tax holiday. (iii) that the above concession shall be admissible only to those small scale industries which are registered under the Himachal Pradesh General Sales Tax Act, 1968 and comply with its provisions ; (iv) that small scale industry must continue to function for a period for which the concession has been availed, failing which it shall pay tax for the remaining period, equal to the amount which would have been paid during the said exempted period but for such exemption ; (v) that the concession shall be available when the articles manufactured are sold exclusively by manufacturers themselves ; (vi) that the concession shall not be open for finished goods imported by the small scale industrial units for re -sale in the Pradesh ; and (vii) that the concession detailed above will be subject to the filing of certificate of genuineness with the Assessing Authority concerned by the 30th April, every year ; granted by the Director of Industries, Himachal Pradesh under his signatures."

(3.) There is no dispute that the petitioner Unit satisfies the requirements of Clauses (iii), (iv), (v) and (vii) of the notification.