JUDGMENT

S. Muralidhar, C.J. - The Petitioner challenges the decision dated 18th January 2008 of the Director of Industries, Orissa (DoI) (Opposite Party No.2), holding that the Petitioner is not a new unit under the Industrial Policy Resolution 1996 (IPR 1996); not entitled to priority industry status and is also not entitled to claim sales tax incentives under Clause 5.6 (Part-II) of IPR 1996, thereby upholding the cancellation of the Sales Tax Eligibility Certificate issued in favour of the Petitioner on 15th October, 2005.

2. The background facts are that the Petitioner was initially a Small Scale Industry (SSI) having been registered as such on 21st December 1996, with the District Industries Center, Bhubaneswar (DIC) (Opposite Party No.4). The Petitioner's unit was initially set up for manufacturing air coolers. It started commercial production with effect from 10th April, 1994. The Petitioner had earlier availed of the benefit under IPR-1989. The said benefit stood withdrawn with effect from 1 st July, 1999.

3. The Petitioner states that in order to expand its business, it undertook a diversification programme under IPR 1996 for manufacturing emergency lights, moulded furniture, TV sets (both black and white and colour) apart from the existing products being manufactured by it. It accordingly invested Rs.4,08,35,710/- and communicated this fact of diversification/modernization to the DIC, Bhubaneswar stating that it had in the process qualified as a Medium Scale Industry (MSI). The DIC, Bhubaneswar by its letter dated 29th December 2001, recommended to the DoI i.e. Opposite Party No.2 that the Petitioner's unit should be issued a Priority Industries Certificate (PIC) indicating the project cost in the aforementioned sum, after due verification.

4. At this stage, it requires to be noticed that Clause 2.7 of IPR 1996 defines "priority industry" to mean an industrial unit in certain specified categories having a project cost of not less than Rupees 1 crore.

5. By communication dated 8th January, 2002 the DoI issued a production certificate in favour of the Petitioner stating inter alia that after the expansion and modernization drive the unit had come under the purview of "Large and Medium sector" and its date of commercial production is determined as 12th November, 2001. By another communication dated 24th January 2002, the DoI certified the Petitioner's unit to be a priority industry as defined in Para-2.7 (i) and (xii) Part-II of the IPR 1996. In the said certificate it was noted that the unit was "eligible to avail sales tax exemption/deferment as applicable under IPR 1996 subject to fulfillment of all other conditions as laid down, if any."

6. On 7th March, 2002, the DoI further issued in favour of the Petitioner, under Form II-A, a certificate of eligibility for sales tax concession "on sale of finished products." Para 5 of the said certificate noted the annual installed capacity of production in respect of various products as under:

"Sl. No.	Particulars of the finished products	Installed capacity of production before E/M/D (quantity)	Installed capacity of production after E/M/D (quantity)
1.	Emergency light UPS	-	15000 pcs. P.A.
2.	T. V. Sets (B/w)	-	18000 pcs. P.A.
3.	T. V. Sets (Colour)	-	6000 pcs. P.A.
4.	Moulded furniture, household particular and air coolers cabinet of assorted sizes	-	2400 pcs. P.A.
5.	Air Cooler	8000 pcs.	(This is qty of existing unit)"

7. The aforementioned certificate was valid from 12th November, 2001 to 11th November, 2006.

8. The Petitioner contended that on the basis of the Eligibility Certificate issued to it in terms of Clause 5.6 (ii) and Clause 5.7 of IPR 1996, it was to be given the benefit of sales tax concession not only for five years but for two additional years. However, the Joint Director of Industrie