Important Point
Under the Bihar Industrial Incentive Policy 1993, old industrial units whose investment on plant and machinery did not exceed Rs. 15 crores on 1.4.1993 would be entitled to sales tax exemption on the purchase of raw materials for a period of seven years from 1.4.1993 and such a benefit is not limited to those industrial units which would come into production from 1.4.1993 to 31.3.1998 alone.

Headnote:Bihar Industrial Incentive Policy 1993-Clause 10.4(i)(b)-Notification dated 2.4.1994-Sales Tax exemption on purchase of raw material to industrial units whose investment on plant and machinery did not exceed 15 crores-Notification indicating that industrial unit who has availed of any facility or benefit under any earlier industrial promotion policy would not be entitled to benefit under 1993 policy -Not sustainable-Old industrial units whose investment on plant and machinery did not exceed Rs. 15 crores on 1.4.1993 would be entitled to sales tax exemption on purchase of raw materials for a period of seven years from 1.4.1993 -Impugned part of notification struck down.
       Held : It is no doubt true that Clause (a) of the Policy clearly indicates that the policy would be applicable to those industrial units which would come into production from 1.4.93 to 31.3.98. But in enumerating the benefits which would be available under the Policy, the policy makers have indicated different heads of the benefit dealing with subsidy, financial assistance, exemption in sales tax/deferment facility so on and so forth. Clause (10) deals with facility of sales tax deferment. Clause 10.4 deals with the heading ‘Sales tax exemption on the purchase of raw material’. A bare look at the aforesaid Clause makes it crystal clear that under sub-clause (a), while the industrial units coming into production between 1.4.93 to 31.3.98 whose investment on plant and machinery does not exceed Rs. 15 Crores would be entitled to the facility of exemption on the purchase of raw material for a period of seven years from the date of production, under sub-clause (b) the old industrial units whose investment on plant and machinery do not exceed Rs. 15 Crores on 1.4.93 would be entitled to the said facility of sales tax exemption on the purchase of raw material for a period of seven years from 1.4.93. In view of the clear and unambiguous language of sub-clause (b) of Clause 10.4, it is difficult to accept the contention of State that even said sub-clause (b) would be subject to the terms indicated in the beginning of the Resolution that the Policy would be applicable only to those industrial units which would come into production from 1.4.93 to 31.3.98. While considering the benefits and incentives given to the several industrial units under the Policy Resolution of 1993, it would not be appropriate to exclude those industrial units who would be otherwise entitled to the sales tax exemption on the purchase of raw material under Clause 10.4(i)(b) of the Policy. Reading the Policy as a whole, the only conclusion which can be arrived at is while generally the incentives under the 1993 Policy would be available to the industrial units coming into production between 1.4.93 and 31.3.98, but so far as sales tax exemption on the purchase of raw material is concerned which is provided under Clause 10.4, even though the old industrial units have started production prior to 1.4.93, but whose investment on plant and machinery do not exceed Rs. 15 Crores on 1.4.93 would be entitled to the facility for a period of seven years from 1.4.93. We are entirely in agreement with the conclusion arrived at by the High Court in this regard and we do not find any error committed by the High Court in granting the benefits of the said Clause 10.4(i)(b) of the Policy to the respondents’ industrial units. (Para 5 & 6)
       Coming to the second question, namely the issuance of notification by the State Government in exercise of power under Section 7 of the Bihar Finance Act, it is true that issuance of such notifications entitles the industrial units to avail of the incentives and benefits declared by the State Government in its own industrial incentive policy . But in exercise of such power it would not be permissible for the State Government to deny any benefit which is otherwise available to an industrial unit under the Incentive Policy itself. The Industrial Incentive Policy is issued by the State Government after such Policy is approved by the Cabinet itself. The issuance of the notification under Section 7 of the Bihar Finance Act is by the State Government in the Finance Department which notification is issued to carry out the objectives and the policy decisions taken in the Industrial Policy itself . In this view of the matter, any notification issued by the Government Order in exercise of power under Section 7 of the Bihar Finance Act, if is found to be repugnant to the Industrial Policy declared in a government Resolution, then the said notification must be held to be bad to that extent . In the case in hand, the notification issued by the State Government on 4th of April, 1994 has been examined by the High Court and has been found, rightly, to be contrary to the Industrial Incentive Policy, more particularly the Policy engrafted in Clause 10.4(i)(b). Consequently, the High Court was fully justified in striking down that part of the notification which is repugnant to sub-clause (b) of Clause 10.4(i) and we do not find any error committed by the High Court in striking down the said notification. (Para 7)

Judgment

G.B. Pattanaik, J.-Leave granted in the Special Leave Petitions which have been tagged on to the Civil Appeals.

2. In these appeals, the judgment of the Division Bench of Patna High Court in Civil Writ Jurisdiction Case Nos. 7063, 7068 and 7467 of 1994 and the other judgments following the same are under challenge. The short question for consideration is whether the Industrial Units which have started production prior to 1.4.93 and whose investment on plant and machinery do not exceed Rs. 15 Crores on 1.4.93 would be entitled to the facilities of sales tax exemption on the purchase of raw material for a period of seven years from 1.4.93 in accordance with Clause 10.4(i)(b) of the Industrial Incentive Policy, 1993 (hereinafter referred to as ‘the Industrial Policy’) and whether the notification issued by the Government of Bihar dated 2nd of April, 1994 in exercise of power under Section 7 of the Bihar Finance Act to the extent it indicates “who has not availed of any facility or benefit under any industrial Promotion Policy” is invalid as being contrary to the Policy of Resolution of 1993. The High Court by the impugned Judgment came to the conclusion that the old industrial units whose investment on plant and machinery did not exceed Rs. 15 Crores on 1.4.93 would be entitled to the sales tax exemption on the purchase of raw material for a period of seven years from 1.4.93 as provided under Clause 10.4(i)(b) of the Industrial Policy of 1993. Examining the notification dated 2nd of April, 1994, issued by the Government of Bihar in exercise of power conferred by Clause (b) of sub-section (3) of Section 7 of the Bihar Finance Act, 1981, the High Court further came to the conclusion that the notification so far as it imposes a condition that the facility of sales tax exemption on purchase of raw material will be available only to those industrial units who have not availed of any facility/benefit on the earlier incentive policy is bad and struck down that part of the notification.

3. It is not necessary to state the facts in detail. Suffice it to say that the State of Bihar with the object of accelerating the industrial progress in the State have been declaring the industrial policies from time to time and prior to 1993 Policy, had announced the Policy on 1.9.86. Being of the opinion that the incentives given under 1986 Policy have not achieved the desired industrial progress in all the Districts of the State and to achieve balanced industrial growth in a planned manner, the industrial incentives require new dimensions, the State Government introduced the new Industrial Policy of 1993. Clause 10.4(i)(b) of the Policy with the facility of sales tax exemption on the purchase of raw material with which provision we are concerned in the present appeals. There is no dispute that the respondents in each of these appeals are old industrial units which have come into production prior to 1.4.93 but whose investment on plant and machinery did not exceed Rs. 15 Crores on 1.4.93. The State Government after introducing the new Industrial Policy of 1993, issued the exemption notification on 4th of April, 1994 in exercise of the power under Section 7 of the Bihar Finance Act under which the old industrial units like the respondents who had started production prior to 1.4.93 but whose investment on plant and machinery did not exceed Rs. 15 Crores on 1.4.93 were denied the facility of sales tax exemption on the purchase of raw materials as those units had availed of some facilities under the prior Policy of 1986. Being aggrieved by the said notification, the respondents approached the High Court of Patna for quashing the said notification dated 4th of April, 1994 to the extent it makes the old industrial units of the respondents ineligible for the facility of sales tax exemption on purchase of raw materials and for a direction to the State of Bihar to extend the facility to such old units of sales tax exemption on raw materials in terms

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