JAI BEVERAGES PVT LTD Vs. STATE OF J&K

JUDGEMENT

(1.) THE main issue involved in both the writ petitions (OWP No.613/2002 and OWP No.1166/2002) pertains to the interpre - tation of SRO -247 dated 20 -08 -1998 (hereinafter SRO -247) issued by the Finance Department, Government of Jammu and Kashmir (hereinafter Jammu and Kashmir Government) regarding Sales Tax exemption allowed to a category of Industrial Units in the State called 'prestigious units. According to the averments in the petitions, the State of Jammu and Kashmir, with a view to promote industries in the State and for generation of employment and its over all economic development, formulated a new Industrial Policy 1998 -2003, vide Government Order No.202 -Ind of 1998 dated 27 -05 -1998. By the aforesaid new Industrial Policy, the State proposed to grant number of incentives to attract the entrepreneurs from within and outside the State to establish their industries. This Policy was followed by various statutory notifications including Notification SRO -247, whereby exemption from payment of GST and CST was granted under Sections 5 and 8 of the Jammu and Kashmir Sales Tax Act, 1962 and Central Sales Tax Act, 1956 respectively, in respect to 'prestigious units, i.e., Units having capital investment of Rs.25 crores or above. That apart, various other incentives and benefits were offered to all entrepreneurs to set up their industries in all categories.

(2.) IT was during the pendency of Writ Petition No.613/2002 and the operation of interim direction passed by the Court on 19 -07 -2002 directing the parties to maintain status quo with the consent of the learned counsel for the parties, as exists on today till next date before the Bench, the respondents -State issued Order No.GR -20 (IND) of 2002 dated 25 -10 -2002, whereby the Order issued by the Directorate of Industries and Commerce in declaring the petitioner - unit as 'prestigious unit as defined in terms of new Industrial Policy dated 27 -05 -1998 qualifying for incentives in SRO -247 dated 20 -08 -1998, along with some other units, had been kept in abeyance. This led the petitioner to prefer another Writ Petition No.1166/2002, seeking to quash the Order dated 25 -10 -2002, by the issuance of a writ of certiorari, on the same grounds and raising a similar issue with regard to the interpretation of SRO -247 issued by the Government of Jammu and Kashmir in Finance Department in respect of Sales Tax exemptions allowed to a category of Industrial Units called as 'prestigious units in invoking the writ jurisdiction of this Court under Article 226 of the Constitution of India, read with Section 103 of the Constitution of Jammu and Kashmir.

(3.) THE stand of the respondents in their demurrer filed to writ petition No.613/2002 is that in order to avail the benefits of exemption from payment of General Sales Tax and Central Sales Tax as prestigious unit under SRO -247, the requirement of investment of Rs.25 Crores or above under SRO -247 is related to the initial investment and a unit, which achieves this level of investment of Rs.25 Crores or more at subsequent stages of its development, is not entitled to exemption. The petitioner has admitted itself to have commenced its production on 24 -04 -2000 and by this date, the unit had not invested Rs.25 Crores or more, so as to entitled it the benefits of a 'prestigious unit under the provisions of SRO -247. Further plea put across by the respondents is that basically all the prestigious units are primarily large and medium scale industrial units and SRO -249 deals with large and medium scale industrial units, which clearly has placed all the industrial units manufacturing Soft Drinks on the Negative List. According to the respondents, if large and medium scale industrial units manufacturing Soft Drinks are in the Negative List, even though their investment is not more than couple of crores, and the prestigious units, even if their investment is Rs.25 Crores or more, are also in the Negative List; it will amount to clear discrimination if the prestigious unit is left out and tax is imposed only on large scale and medium scale industrial units. Any decision of the Industries Department in declaring the petitioner -unit as 'prestigious unit cannot supersede SRO -249 of 1998 and does not bind the Sales Tax Department, as the Sales Tax Department is obliged in accordance with the provisions of General Sales Tax Act and Rules framed thereunder. Fulfilment of the conditions and obligations is a sine -qua -non for the eligibility in the SROs 247 and 249 issued by the Finance Department for the grant of exemption from Sales Tax (General Sales Tax and Central Sales Tax).