VRV FOODS LIMITED Vs. STATE OF H.P.

JUDGEMENT

(1.) BY means of this petition, the petitioner which is a company engaged in the manufacture of liquor, has prayed that the letter dated June 24, 2009 whereby the benefit of deferment of tax under H.P. General Sales Tax (Deferment of Tax) Scheme, 2005 granted to it was withdrawn be quashed and the State be directed to restore the benefit of deferment to the petitioner. Briefly stated the facts of the case are that the State of Himachal Pradesh framed a scheme where the industries which were set up or substantially expanded would be given benefit of deferment of tax. As per this scheme, eligible industrial units other than those specified in the negative list which came into Commercial production before January 7, 2003 and which had undertaken substantial expansion after the said date after prior approval of the Director of Industries or the authorities were entitled to the benefit of deferment of payment of the tax. Tax was not exempted but these units which fell under the scheme were permitted to take advantage of the deferment of this scheme. It is not disputed that the petitioner - company was registered under this Scheme for the grant of benefit of deferment. However, vide impugned letter dated June 24, 2009, benefit of such Scheme was withdrawn pending clarification from the headquarters. Relevant portion of the letter reads as follows : "Kindly refer to the order of the undersigned dated May 27, 2009 with regard to issuance of deferment certificate in form S.T. - (DP) - II. After the issuance of the certificate it has been noticed that there is inconsistency in the provisions of the HPGST (Deferment Payment of Tax) Scheme, 2005 which would not be reconciled. Because of this inconsistency, the deferment certificate cannot be issued unless this inconsistency is resolved. So the reference to resolve this inconsistency has been sent to learned Excise and Taxation Commissioner, Himachal Pradesh vide letter No. KAN/Sales Act/Deferment/2009 -10/7103 dated June 18, 2009. Therefore in view of the above/the Deferment Certificate issued in favour of M/s. VRV Foods Ltd., Sansarpur Terrace, District Kangra (H.P.) is withdrawn pending clarity from the Headquarter.

(2.) THE petitioner challenged this order and according to the petitioner, once the petitioner - company had expanded its unit and was given benefit of deferment scheme, the State was estopped from withdrawing this benefit from the petitioner. The stand of the State on the other hand is that there was a mistake in the original negative list attached to the notification. According to the State, liquor industry is not one of those industries to which such benefit has to be given. Reliance has been placed on article 47 of the Constitution of India which provides that the State should endeavour to introduce prohibition throughout the country. Further the stand of the State is that now the State has introduced liquor industry in the negative list and it has specifically been provided that this amendment shall be retrospective in operation and shall always be deemed to have been in existence.

(3.) THE State intended, inter alia, to grant incentive to include industrial units by way of waiver and/or deferment of payment of sales tax wherefor rule 28A was made. The sales tax laws enacted by the State, as noticed hereinbefore, contain a provision empowering the State to grant such exemption.