SCA/2068/2004 1/4 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 2068 of 2004 ========================================= = EMICO ELECON (INDIA) LTD. & 1 - Petitioner(s) Versus STATE OF GUJARAT & 2 - Respondent(s) ========================================= Appearance : M/S WADIA GHANDY &CO for Petitioner(s) : 1,NOTICE UNSERVED for Petitioner(s) : 2,PARTY-IN-PERSON for Petitioner(s) : 2, GOVERNMENT PLEADER for Respondent(s) : 1 - 3. ========================================= = CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 07/08/2008 ORAL ORDER (Per : HONOURABLE MS.JUSTICE H.N.DEVANI) 1. This petition has been preferred challenging the action of the respondent authorities of demanding and recovering tax on the basis of the certificates issued by the Sales Tax Department on 27.6.1996 being cancelled in the following circumstances : In 1993, respondent – State of Gujarat announced the scheme titled “Incentive Scheme for Wind Power Generation 1993” for extending sales tax incentives to industrial undertakings who would set up wind farms in SCA/2068/2004 2/4 ORDER the State of Gujarat so as to curb the gap between demand and supply of power in the State. 2. Pursuant to the said Scheme, the petitioner installed four windmills in two lots at Lambha, District Jamnagar and the eligible investment was computed at Rs.2,48,53,028/- for the first lot and Rs.1,25,22,948/- for the second lot. On 27.6.1997, the Sales Tax Department issued Exemption Certificate granting benefit of sales tax deferment to the tune of Rs.1,24,26,514/- for the first lot and Rs.62,61,474/- for the second lot. The first certificate was effective from 30.3.1994 and the second certificate was effective from 30.3.1995. The period of benefit was available for a span of six years i.e. commencing from 30.3.1994 and ending 29.3.2000 for the first lot and commencing from 30.3.1995 and ending on 29.3.2001 for the second lot. 3. On 9th June 1998, a cyclone hit the coastal regions of the State, more particularly districts of Porbandar and Jamnagar resulting in wide spread damage. The windmills installed by the petitioner company were uprooted resulting in stoppage of production of power. One of the conditions of the Scheme was Condition No.7(b) which reads as under: “(b) The Industrial unit will remain in production continuously during the eligible period.” SCA/2068/2004 3/4 ORDER Obviously, as the petitioner could not remain in production continuously during the eligible period, the respondent authority issued notices proposing to recover the amount availed of by the petitioner as sales tax benefit under the said Scheme with interest. Such notices were issued on 29.8.2000, 22.10.2003, 15.12.2003 and 17.1.2004. The petitioner tendered a detailed explanation on 7.9.2000, followed by letters dated 23.12.2003 and 3.1.2004 pointing out that the demand was unjustified in the facts and circumstances of the case. 4. It is the case of the petitioners that despite the aforesaid position, vide order dated 30.1.2004 the respondent Sales Tax authority has held that the petitioners have committed breach of the condition No.7 (b) of the Scheme of running the windmill for a continuous period of six years from the date of commissioning. In the present case, the windmills have not been recommissioned, however the petitioners have installed a new windmill on 22.9.2001. 5. Heard the learned Advocate for the petitioners and the learned Assistant Government Pleader on behalf of the respondents. 6. It is an admitted position that the controversy involved in the present petition has been decided by a judgement and order of even date made in the case of Elecon Engineering Company Ltd. and another v. State of SCA/2068/2004 4/4 ORDER Gujarat and others, rendered in Special Civil Application No.2067 of 2004. 7. The facts of the present case are therefore, required to be examined in the light of the principles laid down in the aforesaid decision. It is an admitted position as noted hereinabove, that the petitioner herein has not recommissioned its windmills. In the circumstances, as held in paragraph 9 of the said decision, the petitioner shall be liable to discharge its liability for the period prior to the date of the cyclone for which the original scheme provides for in accordance with other terms of the Scheme. In other words, the respondents shall not be entitled to effect any recovery on the ground of breach of condition of continuous operation of period of six years but such bar shall not apply to the petitioner as regards discharging its liability, which it is otherwise liable to discharge, qua the benefit availed of in accordance with the other terms of the scheme. 8. The petition is accordingly, allowed. Rule is made absolute to the aforesaid extent with no order as to costs. [D.A.MEHTA, J.] [HARSHA DEVANI, J.] parmar*