BIKRAM INDUSTRY Vs. STATE OF JAMMU AND KASHMIR

JUDGEMENT

(1.) BY the abovesaid petitions under article 226 of the Constitution of India read with section 103 of the Constitution of Jammu and Kashmir, the petitioners herein, who were three in number have challenged the SRO Notification No. 118 dated 31st March, 1984 in so far as the same supersedes SRO No. 671 dated 18th December, 1979 regarding withdrawal of the exemption from payment of general sales tax on the goods manufactured and sold by the petitioners. With a further prayer for issuance of a writ in the nature of prohibition restraining the respondents from recovering any sales tax on the sales of goods manufactured by the petitioners in their small-scale industrial units situated in Jammu. All the abovesaid three writ petitions involve similar questions in controversy and hence all the three petitions are heard together, which are hereby disposed of by a single judgment.

(2.) THE petitioner by this petition submits that the petitioner is a partnership concern in the State of Jammu and Kashmir. The State of Jammu and Kashmir, to encourage, allure and attract entrepreneurs from within and outside the State of Jammu and Kashmir to set up industrial units in the State, took a decision as early as in 1971 to grant various incentives including exemption from tax as leviable on the raw material and finished goods of such units. The first of such orders is No. 276 of 1972 issued on 11th April, 1972. By this order, besides other things assured to such entrepreneurs, exemption from the State sales tax and levy of additional toll tax for the initial period of five years from the date the unit goes in production was also ensured. Vide Government SRO No. 267 dated 15th May, 1978 the incentives announced for small-scale manufacturing units was further extended even to the existing and new small-scale industrial established or to be established in the State. Vide Government Order No. 391-Ind of 1972 announced the package of incentives in the nature of grant of land, financial assistance, exemption from payment of toll tax and sales tax on import of raw material and sale of finished goods for a period of five years from the date the unit goes into production issued on 21st June, 1972. The order is issued under the authority of the Government of Jammu and Kashmir, which is annexed as annexure P-1 with the petition. Subsequent to that the Industries Department of the Government published pamphlets on 6th March, 1978 and 9th September, 1978 granting exemption from sale tax and toll tax for a period of years.

(3.) THAT in the year 1979, the Government through its Finance Department came out with SRO No. 671 dated 18th December, 1979 assuring exemption from payment of sales tax on the finished goods manufactured by small-scale units in the State, which are registered with the Department of Industries and Commerce or with the Directorate of Handicraft and Handlooms. With the said SRO which is annexed as annexure P-4 with the petition, annexure P-1 is attached and the petitioners product unit existed in the column of Food Industry at S. No. 15 (Spices ). The industry was to fulfil certain formalities to avail the incentives of exemption from payment of sales tax on the finished goods manufactured by the petitioner and after applying to the assessing authority concerned an exemption licence was to be granted in favour of the petitioner for a particular financial year, which was renewable after every financial year, the petitioner submits that they fulfil the basic requirement and exemption licence was granted in favour of their unit in form No. SC-1 by the assessing authority, Sales Tax Circle 'g'. Jammu for the year 1983-84. While the petitioners were enjoying the benefits of incentives the Government issued yet another notification being SRO No. 434 of 1983 issued on 22nd August, 1983 which purported to supersede SRO No. 671 of 1979 referred to above and withdraw the exemption from payment of tax on the finished goods manufactured by the petitioner-unit. Thereafter another notification was issued as SRO No. 118 of 1984 dated 31st March, 1984 which further superseded SRO No. 671 of 1979 and withdrew the exemption of sales tax on the finished goods manufactured by the petitioners' small-scale industrial units and the said SRO included among other items "spices", the finished goods manufactured by the petitioners' industry. SRO No. 434 of 1983 is also a subject-matter of a different writ petition which according to the allegations of the petitioners are still pending. Thus by way of the abovesaid writ petitions, the petitioners have come up before this Court challenging SRO No. 118 of 1984 in so far as the same superseded SRO No. 671 and withdrew the exemption from the payment of sales tax on the finished goods manufactured by the petitioners as illegal, unconstitutional, discriminatory and opposed to the principles of promissory estoppel.