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2013 Supreme(Bom) 1836
IN THE HIGH COURT OF BOMBAY AT NAGPUR
B.P. DHARMADHIKARI & A.S. CHANDURKAR, JJ.
M/s. Vidarbha Winding Wires Ltd. & Others
Versus
State of Maharashtra, through the Secretary, Finance Department, Mantralaya & Others
Writ Petition No. 846 of 1996, 853 of 1996 & 854 of 1996
Decided on: 17-09-2013
Advocate Appeared:
For the Petitioners:M.G. Bhangde, Senior Advocate with V.V. Bhangde, Advocate.
For the Respondents: Mrs. B.H. Dangre, Additional GP.
Headnote:Bombay Sales Tax Act, 1959 - Section 41-C - Constitution of India, Articles 14 and 19 - Applicability of amendment in Section 41-C. - Held, if units of Small Scale Industries (SSI), never ceased to be SSI units during eligibility period, provisions of Section 41-C(1)(a)(i)(A) of Act not applicable to SSI. In the instant case Government was aware of certain error in Package Incentive Scheme, 1979 since 1982 and took some steps to provide cure through 5.7.1982 modification. But then consistent with commitments contained in 1979 policy, it gave option to SSI units and allowed them to continue under 1979 unmodified Scheme. Amendment in shape of Section 41-C(1)(a)(i)(A) has come in 1995 and it results in curtailment of benefit available to Small Scale Industries (SSI) and also imposes unforeseen tax liability. Till then all benefits without any ceiling or then, after 10.1.1983, incentives equal to 100% of fixed capital investments made during entire period of eligibility qualified for claiming exemptions. That has been suddenly changed and eligibility is pegged down to initial year in which eligibility certificate was issued. This drastic change results in retrospective cancellation of eligibility certificate. Need for such measure was felt in 1982 itself and it lead to issuance of 5.7.1982 modification. Why State Government could not bring in such amendment immediately after 1982 is not clear.
If measure of imposing ceiling on quantum of incentives was evolved in public interest, its advance notice to aspiring investors was possible and also must. But even in 1982 modification, petitioner Units are given exemption equal to cent percent capital investment made during period of eligibility. Mode and manner’ of calculating quantum continued without any ceiling for all these petitioners and they may have also expanded their projects by investing back exemptions granted. Even otherwise, it is obvious that no SSI unit under 1979 Scheme would have surrendered and voluntarily subjected themselves to any ceiling and hence, if Government wanted really to remedy mischief bringing proper legislation at earliest was only solution. Legislation has been brought after majority of units completed their eligibility period. Liability not in contemplation, has been fastened for past investments which were then eligible for exemption. Past investments may be expansions which catered to development of underdeveloped area and there for, advance objective of State Government. Thus such investments and appropriation of incentives are now irreversible and it is irrational to disallow same and demand taxes. It is strange to levy penalty for same. Therefore subjecting very few units to such legislation i.e. to Section 41-C(1)(a)(i)(A) is not justified.
Respondents are directed not to extend provision of Section 41-C(1)(a)(i)(A) to petitioner if their Units never ceased to be SSI units during eligibility period as per eligibility and entitlement certificates grated to them.
B.P. Dharmadhikari, J.
1. Three different industries i.e. Small Scale Units (SSI) have filed these writ petitions for quashing and setting aside the amendment made to Section 41C of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act), on the ground that it is ultra-vires the Articles 14 and 19(1)(g) of the Constitution of India. There was also a challenge to Section 41D of the said Act but during the course of hearing, it has been given up.
2. To state the challenge very briefly, the petitioners urge that Eligibility Certificates given to them under the Package Incentive Scheme of 1979 do not contain any ceiling on the quantum of benefits / incentives envisaged thereunder. By the impugned amendment effected in the year 1995, that ceiling on quantum has been added retrospectively & taxes otherwise exempt with penalty are being claimed.
3. We have heard Shri M.G. Bhangde, learned Senior Advocate with Shri V.V. Bhangde, learned counsel for the petitioners and Mrs. Dangre, learned Additional Government Pleader for the respondents, on various dates.
4. During hearing, on 26.07.2013, affidavit has been filed on record by the petitioners to demonstrate that the Eligibility Certificates issued to them in terms of 1979 Scheme have not been affected, by the alleged modification or amendment made to it vide Government Resolution dated 05.07.1982. The facts stated in this additional affidavit have not been denied by the respondents during later hearings & till date.
5. The provisions of Section 41C of the Act stipulate that Eligibility Certificates issued to units like the petitioners shall be deemed to be automatically cancelled on the date on which the cumulative quantum of benefits received by such unit, whether before or after the amendment, exceeds the monetary ceiling provided in the relevant package scheme of incentives. This provision has been further amended with effect from 01.10.1995. As per this subsequent amendment, sub-clause (I) in clause (a) in Section 41C of the Act is substituted and a concept of Approved Gross Fixed Capital Investment at the time of grant of Eligibility Certificates has been added. Thus, by virtue of this amendment, if the cumulative quantum of benefits received by the petitioners exceeds this “approved gross fixed capital investment”, their Eligibility Certificates automatically gets cancelled from the date on which it so exceeds.
6. Shri Bhangde, learned Senior Advocate, submits that in Eligibility Certificates issued to the petitioners or then, in their Entitlement Certificates, there is no such condition or rider. He invites attention to 1979 Scheme as formed on 05.01.1980 to urge that the Scheme was made more broad based so as to speed up the industrialization in developing regions of the State. According to him, as per clause 1.2 of this modified Package Scheme of Incentives (hereinafter referred to 1979 Scheme), the Scheme remains unaltered and though Government can make amends to it after giving six months notice, commitments already made cannot be affected by any such amendment. He further points out that as per 1979 Scheme, which was in operation for a period from 01.08.1979 to 31.03.1983, all the petitioners submitted their applications within the stipulated time and their applications were found complete in all respects but have been granted subsequently i.e. much after the grant of certificate of eligibility to other similar small scale industries. With the result, the period of eligibility of seven years or nine years, as stipulated in their certificates, could not expire before 1995. The amendment with effect from 01.10.1995 has thus affected the petitioners only while other units enjoyed all benefits for the during the entire eligibility period without any ceiling.
7. Edible oil companies already functioning in the State complained of hostile treatment to them because of more benefits conferred on new Oil companies under 1979 Scheme. They approached this Court an
