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2006 Supreme(SC) 497
2006(4) Supreme 477
SUPREME COURT OF INDIA
(From Jammu and Kashmir High Court)
B.P. Singh, Tarun Chatterjee and Altamas Kabir, JJ.
M/s Jai Beverages Pvt. Ltd.—Appellant
versus
State of J & K & Ors.—Respondents
Civil Appeal No. 7147 of 2004
Decided on 12-5-2006
Counsel for the Parties :
For the Appellant :K.K. Venugopal, Sr. Advocate, Ravi Aggrawal, M.G. Ramachandran, K.V. Mohan and K.V. Balakrishnan, Advocates.
For the Respondents : Mukul Rohtagi, Sr. Advocate, Anis Suhrawardy Advocate.
Headnote:Central Sales Tax Act—Section 8—(J & K) General Sales Tax Act, 1962—Exemption claim—A Notification was issued by the Government of Jammu and Kashmir exempting ‘prestigious units’ from payment of sales tax—Appellant claiming to be a ‘prestigious unit’ having a capital investment of over Rs. 25 crores claimed exemption under the Industrial Policy of 1998-2003—Whether industrial unit set up by the appellant fulfilled all the necessary conditions for being declared a ‘prestigious unit’—(Yes)—Appellant is entitled to the package of benefits promised by the new Industrial Policy.
Held : The Notification contemplates a “prestigious unit” as being one which has a capital investment of Rs. 25 crores or more. Neither the aforesaid Notification, nor the Industrial Policy itself prescribes the date by which the investment of Rs. 25 crores must be made. It is not the case of the State that if the commercial production commenced by 30th September, 2000, by which date Rs. 27 crores and odd had been invested, the unit set up by the appellant would not have been entitled to be reckoned as a “prestigious unit”. The objection taken is that on the date of the unit coming into production, the investment was below Rs. 25 crores, though the investment was to the tune of over Rs. 27 crores by 30th September, 2000. It will be seen from the Memorandum of Understanding that the appellant was to start manufacture of soft beverages in the existing built up accommodation by the end of March, 2000 and complete the minimum capital investment of Rs. 25 crores or more latest by 30th September, 2000. Mr. Rohtagi, learned senior counsel appearing on behalf of the State, also could not dispute the fact that the appellant had invested a sum of Rs. 27.11 crores as on September 30, 2000. This fact is admitted in the order of the Director, Industries and Commerce dated December 12, 2000 which declared the appellant as a “prestigious unit”.(Paras 33 & 34)
All these facts, therefore, lead to the only conclusion that having considered its new Industrial Policy, and having considered the proposal made by the appellant, the Government took a conscious decision to grant the package of incentives to the industrial unit being set up by the appellant provided it went into commercial production by the end of March 2000 and made the necessary investment of Rs. 25 crores or more on or before September 30, 2000. The documents and material on record disclose that the Government took this decision after full discussion on all aspects of the matter, and in particular by reference to the date by which the appellant was required to invest Rs. 25 crores in the industrial unit being set up by it. The State cannot be permitted to ignore its own conscious decision to permit the appellant to invest a sum of Rs. 25 crores or more by September 30, 2000. The appellant acted on the basis of the decision taken by the State Government and incorporated in the Memorandum of Understanding. The fact that Rs. 25 crores was invested by September 30, 2000 was not disputed in the several counter-affidavits filed before the High Court. In view of the voluminous evidence on record the State cannot dispute the fact that over Rs. 27 crores was invested by the prescribed date i.e. by September 30, 2000. In this background, the State cannot be allowed to say that the incentives cannot be extended to the industrial unit set up by the appellant because the amount of Rs. 25 crores or more was not invested by the date the unit went into commercial production, though the amount of Rs. 27 crores was invested within the period prescribed by the Government as incorporated in the Memorandum of Understanding.(Para 35)
JUDGMENT
B.P. Singh, J.—The appellant herein claiming to be a “prestigious unit” having a capital investment of over Rs. 25 crores claimed exemption from payment of General Sales Tax and Central Sales Tax under Notification No. SOR 247 of August 20, 1998 issued by the Government of Jammu & Kashmir pursuant to its Industrial Policy of 1998-2003. Under the said Industrial Policy, a package of incentives was offered to industrial units, and in particular to “prestigious units” having a capital investment of Rs. 25 crores or more. The appellant Company set up a soft drink manufacturing unit in Jammu. The claim of the appellant was negatived by the State Government, which led to the filing of two writ petitions before the High Court of Jammu and Kashmir. A learned single Judge of the High Court dismissed the writ petitions holding that the petitioner was not entitled to the incentives claimed under the aforesaid Industrial Policy, as it did not validly acquire the status of a “prestigious unit”. Aggrieved thereby the appellant preferred a Letters Patent Appeal which was dismissed in limine by the judgment and order of the High Court dated October 4, 2004.
2. To appreciate the issues involved, it would be necessary to notice the background facts giving rise to this controversy. The facts are as under :-
Pursuant to the Cabinet decision of May 15, 1998, sanction was accorded to the new Industrial Policy 1998-2003 as per Annexures ‘A’ and ‘B’ to the package of incentives appended to GO No. 202 IND of 1998 dated May 27, 1998. A package of incentives was offered for the development of large/medium/small and tiny industries in the State of Jammu and Kashmir. Paragraph 6 of GO No. 202 of 1998 provided that the Industries and Commerce Department shall notify negative lists referred to in the new package of incentives, in consultation with Finance Department.
3. The relevant part of the package of incentives contained in Annexure ‘B’ relates to exemption from payment of General Sales Tax etc. and is as follows :-
“8. General Sales Tax
i.There will be no GST on sales of finished goods by the existing local SSI units till 31.3.2003 and for a period of 5 years from the date of production in case of new SSI units except on items brought on negative list.
ii.There will be no GST on the raw material procured by the local SSI, Medium and Large units except on items brought on the negative list.
iii.There will be no GST on the sale of finished goods manufactured by the new Medium and Large industrial units upto a ceiling on such amount of GST which would have been otherwise payable equivalent to 150% of the total capital investment made in the unit or for a period of 5 years from the date of production whichever occurs earlier, except on items brought on the negative list.
iv.There will be no GST on purchase of machinery and equipment for construction of the factory for a period of 5 years from the date of provisional registration by the SSI units.
v.The above concessions shall also be available to SICOP while acting on behalf of local registered SSI units.
9. Central Sales Tax
The local existing SSI units shall be exempt from charging and payment of CST on sale of their finished goods outside the State upto 31.3.2003 and the new SSI units for a period of 5 years from the date of production.
10. Special provision for “prestigious unit”s
(1)Not withstanding anything contained in paras 7, 8 and 9 above, prestigious units i.e. those having capital investment of Rs. 25 crores or above shall have the option to avail of full exemption from payment of GST, CST and special/additional toll tax for a period of 5 years from the date of production or until such amount of exemption reaches the level of 150% of capital investment in the project whichever occurs earlier.
(2)Not withstanding anything contained in para 7, 8 and 9 above those prestigious units which come into commercial production in the year 1998, shall have the option to avail a power tariff freeze at the rate o
