HIMALAYA COMMUNICATION Vs. STATE OF H.P.

JUDGEMENT

(1.) Two Notifications, being Notification No. EXN -F(9)1/97 dated 20th July, 2001 and Notification No. EXN -F(9)1/97 dated 31st January, 2002 are under challenge in this petition filed by the petitioner M/s. Himalaya Communications Ltd., under Article 226 of the Constitution of India. To understand and appreciate the background under which these two impugned Notifications have been issued, it shall be worth while to take notice of some important facts leading to the filing of this petition.

(2.) The petitioner is carrying on the business of the manufacture of jelly filled telephone cables/optical fibre cables at Baddi District Solan in the State of Himachal Pradesh. Government of HP. in the year 1999 formulated and announced certain incentive in its Industrial Policy Guidelines and also accordingly framed and promulgated Rules notifying these incentives, concessions and facilities, which inter alia, also included the charging of Central Sales Tax at the confessional rate of 1% under the Central Sales Tax, 1956, on goods manufactured by both new as well as existing industrial units and this incentive of confessional rate: of Central Sales Tax of 1% was to remain in operation till 31st March, 2009. The petitioner is relying upon Para 7.1.5 of the Industrial Policy Guidelines and Rules, which we reproduce hereunder for our ready reference: - "7.1.5 Central Sales Tax at a confessional rate of 1% shall be leviable on the goods manufactured by new and existing industrial Units except produce of breweries, distilleries, non -fruit/vegetable winderies and bottling plant (both for country liquor and Indian Made Foreign Liquor) upto 31.3.2009."

(3.) Consequently, therefore, in the light of, and based upon the aforesaid Industrial Policy and in exercise of the statutory power conferred upon the State Government by clause (b) of sub -section (5) of Section 8 of the Central Sales Tax Act, 1956 (1956 Act, for short). Notification No. EXN -F(9)2/1999 dated 23rd July, 1999 was issued by the Government of H.P., which, inter alias, provided that the tax levied under sub -section (1) of Section 8 of 1956 Act would be calculated at the rate of 1% of the taxable turn over of all goods sold in the course of Inter -State trade or commerce and that this confessional rate would be operative with immediate effect and shall be available till the period ending 31st March, 2009. Para 2 of this Notification being relevant for our purposes, may be reproduced as hereunder. It reads thus: - "2. Now, therefore, in exercise of the powers conferred by clause (b) of sub -section (5) of Section 8 of the Central Sales Tax Act, 1956 (Central Act No. 74 of 1956), the Government of H.P. is pleased to direct that in respect of the sale in the course of Inter -State trade or commerce of the goods (other than those manufactured by the breweries, distilleries, non -fruit vegetable based wineries and bottling plants (both of country liquor and Indian made foreign liquor) manufactured by the dealers running any existing industrial unit or new industrial units (other than those new industrial units which are located in the tax free industrial zone in the State of H.P., and are registered as dealer with Excise and Taxation Department, H.P., the tax levied under sub -section (1) of Section 8 of the said Act shall be calculated any payable at the rate of 1% of the taxable turnover of such goods with immediate effect for the period ending 31.3.2009."