(Nd \QuLof 199a Writ Petition No. W5 Raymond Limited Cement Division, Mahindra Towers. ’B' wing, Panaurang Budhakar Marg, Warli, Mumbai. Petitioners: (1) Through - $hr1 $id§ique Rahatjam son of Siéaique Rahman. aged about 44 years, Deputy Manager (Accounts), Raymond Limited; Cement Division, Gopal Nagar. Tahsil Janjgir. District Bilaspur M.P. e \ \ ‘ Dipankar Sen, son of $hri s.Sen, ared about 42 years, K s ire—honors of M/s Raymond ma: resldent c£ House No.522, Vinoba Nagar, Bilaspur, District BilaSpur MgP. (2) VS: Aaditionai Comissioner of Commerci alv Tax, Sales Tax office, Raipur M.'Po~ (1) Responaents: assistant Comseioner o£ Comerci a1 Tax, Vikraye Ker Bhawan Bil awur M.P. (2) state of Madhya Pradesh, through 8ecretary¢ Department of Comerce anti Industries 60W¢ 0f M. Pe‘ , Bhopal M.P. (3) . HIGH COURT OF JUDICATURE CHHATTISGARH AT BILASPUR LaiwsxoN BENCH ) CORAM : Hon’ble Shri A.K. Patnaik, C.J. & Hon’bie Shri Suni! Kumar Sinha, J WRIT PET!T!ON NO. 1965 OF 1991 Mls Raymond Cement Works. Versus Assistant Commissioner of Sales Tax, Bilaspur & others. WRIT PETIT10N N0. 4294 OF 1992 Mls Raymond Cement Works. Versus Assistant Commissioner of Sales Tax, Bilaspur & others. WRIT PETITION NO. 1750 OF 1991 Mls Raymond Cement Works. Versus The General Manager, District Industries Centre. ‘Biiaspur & others. WRIT PEI”E~i’TION NO. 1041 OF 1998 Mls Raymond Limited Cement Division, Mumbai & another Versus Additionai Commissioner of Commerciai Tax, Raipur & others. Eresent : i\ i.$.P. Shanna, learned counsel for the petitioner. Mr. V.V.S. Murthy. learned Dy. Advocate General for the State of Chhaitisgarh/respondents along with the Ofncers Mr. LR. Rajput, Dy. Commissioner and Mr. GR. Bangre, Assistant Commissioner, Commercial Tax Department, Biiaspur. f QRQEB (Passed on 28‘“ June, 2005 ) The following order of the Court was passed by A.K. Patnaik, C.J : The petmoner a company registeyed under the Companies Act ‘ 1956 set-up a plalnt for manufacture of Cement at Gopalnagar, Bllaspur and was registered as a dealer under the Madhya Pradesh General Saies Tax Act 1958 and the Centml Sales Tax Act 1956. ln exercise of powers I under Section 51 read with Section 22-D of the Madhya Pradesh General ‘Sales Tax, 1958 and Section 13 of the Central Sales Tax Act, 1956, the Smte Government of Madhya Pradesh made the Madhya Pradesh Deferment of Payment of Tax Rules 1986 (hereinafter referred to as “the Rulas’) Rule 3 (1) (c) of the Rules proVided that an industnai unit other than a untt specified In Rule 11 of the Rules covered by any of the. categories specified in Section 22-D of the Madhya Pradesh General Sales Tax Act, 1958 and engaged in manufacture and sale of any goods undemking subsmntial ewansion shall be eligible to avail of the faCility of deferment of payment of hx Sub-rule 3 (2) (c) of the Rules prowded that such an industrial unit undertaking substantial expanSion shall be eligible to avail of the facility of deferment of payment of tax payable by it under the Madhya Pradesh General Sales Tax Act 1958 in respect of the sales of only those goods produced or manufactured-by it the production of whlch is in excess of 90%. of its originalvlicensed or registered capacity. Rule 4 (c) of the Rules provided that an indushial unit undertaking substantial expanse” shalt be eligible te deter the payment of tax payable by it for the period specified in eoloumn (3) in respect of the categories of industrial units in items 2 (ii) of the Schedule to the notincation dated 16-10-1986 depending upon the category to which the industrial unit i A: . awnmm’immmwml belongs and the category of the district in which it is situated. Rule 5 of the said Rules provided the period of deferment of payment of tax for a period 10 years commencing from the year to which the tax. payment of which is being deferred. relates. Rule 7 of the Rules provided for application for graht of eligibility certificate. Rule 8 of the Ruies provided for hling of the returns by the industrial unit availing the facility of deferment of payment of tax under the Rules. Rule 9 of the Rules provided for assessment of tax of the industrial units. Rule 12 of the Rules provided that the Rules shall mutatis mutandis apply to the tax levied and collected under the Cenh'al Sales Tax Act. 1956 subject to the modmcations mentioned therein. 2. The petitioner's case in this batch of writ petitions is that it undertook the substantial expansion of its industrial unit and was thus entitled to deferment of payment of saies tax both under the Madhya Pradesh General Sales Tax Act. 1958 and under the Central Sales Tax Act. 1956 for a period of 10 years as provided in Rule 5 of the Rules quoted above. Accordingiy. the petitioner applied on 10021 987 for grant of aiigibility certificate under Rule 7 of the Rules, but by order dated f 15.04.1991, the petitioner was informed that it was not entitied to an eligibiiity certificate on the ground that it commenced the commercial production prior to 1“ August, 1986 and under the Rules only those ndustrial unib undertaking subsmntial expansion and commenced commercial production under the expanded capacity on or prior to 1“ at 1986 were entitled to deferment of payment of'sales tax. The petitioner. has therefore tiled Writ Petition No.1750 of 1991 challenging the order dated 15.04.1991 passed by the Under Secretary of the industrial Department of Madhya Pradesh and praying for declaration that i a._-.‘y.....‘,3<y,.ww¢,.,,.,/ . the petitioner was entitted to grant of etigibitity certificate for deferment of. payment of sales tax in respect of me expanded capacity. 3. ‘ I Since the petitioner was refused deferment of payment of sates tax under Me Rules. nottces of demand were served on the petitioner for payment of satestax under the Madhya Pradesh‘Genera! Sates Tax Act, 1958 as well as under the Central Sales Tax Act. 1956. The petitioner has, therefore. tiled Writ Petitions No.1965 of 1991, 4294 of 1992 and 1041 of 1998 for quashing of assessments and demands made by the Sales Tax Authorities under the Madhya Pradesh General Sales Tax Act, 1958 and under the Central Sales Tax Act, 1956 for different periods. 4. Mr. BP. Sharma. learned counsel appearing for, the petitioner vehemently submitted that the documentary evidence annexed to the writ petition in W.P.No.1750 of 1991 and in particular Annexure P-7, P-8 and P-9 annexed to the writ petition would show that the petitioner commenced commercial production after 1" August 1986 and mat the f Managing Director M.P.A.K.V.N. has in fact recommended die case of me petitioner for elrgrbrlrty certificate under the Ruies for deferment of \ payment of sates tax‘ which is evident from Annexure R-V. He further submMed that before passing the impugned order dated 15.04.1991 the industrial Department should have given-an opportunity of hearing to the petitioner and the petitioner would have produced material to show that it commenced commercial production in the expanded capacity after 1" August. 1986. He further submiued that as per me circular issued by the Government on 10.06.1985. the commercial production is to be taken only after six months of the date of commencement of the triai production, but in the order dated 15-044991 appears to have taken the month of the trial production has been taken as the month of commercial production. , 5.’ Mr.*V.V.S. Murthy. learned Dy. Advocate GeneraL on the other hand. relying on the avermens in the rep!y med by the respondents submiued that from the figures of the raw-material & electricity and the figures of output given by the industrial unit of the petitioner, it would be clear that there was an upward trend in production in the industrial unit of the petitioner from January 1986 and. therefore, the respondents were justified in taking the month of January, 1986 as the month of starting of commercial production in the industrial unit of the petitioner. 6. We need not ‘go into aforesaid controversy between the parties as to when the petitioner actually started commercial production in its expanded capacity because under Rule 5 of the Rules quoted above the period'of deferment of payment of tax was to be for a period of 10 years commencing from the year to which the tax. payment of which is being deferred. relates and that period of 10 years even for the seventh year for which the petih'oner ciaims to be eligible for deferment is aiready over In _ other words assuming that the petitioner smrted commercral production in I EV em expanded capacrty after 1" August 1986 as claimed by die petitioner the petitioner would have been entitled to deferment of sales tax under the Madhya Pradesh Sales Tax Act. 1958 and under the Central Sales Tax Act. 1956 for the accounting years 19.86.1987” 1987-1988, 1988-1989, r 1989-1990, 1990-1991. 1991-1992'and 1992-1993 up to 10 years ‘respecu'veiy i.e. 1996-1997, 1997-1998, 1998-1999, 1999-2000, 2000-2001. 2001-2002 and 2002-2003. Hence, even if the petitioner’s case is accepted. the petitioner was to pay back the entire tax. which is deferred under the Rules by 2003-2004. This would also be clear from the certmcate of eligibility for availing facility of deferment of payment of 13,); “aid. ‘ $x In FORMC prescribed under Rule 7 of the Rules, relevant portion of which is quoted herein below: " The payment of the tax payable by the dealer for each year shall be deferred for a period of ten years. The tax payable by the dealer for each year shall be paid by him as indicated below : ‘ SNo. Accounting year Year of deposit (1) (2) (3) “ Further Rule 9 of the Rules provided that after the facility. of deferment of payment of tax availed of in accordance with the Rules and the Act. the assessing authority shall serve upon the unit the assessment order and notice/bf demand under Rule 27 of the Madhya Prades’h General Sales Tax Rules 1959 and shall indicate in the said notice the date by which the payment of tax is to be made. The said Rule 9 of the Rules is quoted herein below : ‘9. Assessment of tax. — The assessment of tax of any lndusulal unit specified in sub-rule (1) of rule 3 availingx‘of the facility of deferment of payment of tax shall, for every year for which the said facility has been availed of, be made in accordance with the provisions of the Act. The assessing authority shall thereafter serve upon the said unit the assessment order and a notice of demand under Rule 27 of the Rules and shall indicate in the said notice the date by Which payment of tax is to be made.” Thus. even if the petitioner was issued with an eligibility certihcate, since the 10 years period of deferment for the 7 years beginning from the date of commercial production is over, the petitioner would be liable to pay the 4MmHg . Act. 1956 and me rules made thereunder. s Lassessed under the Madhya Pradesh General Sales Tax Act. 1958 the Centrar Sales Tax Act, 1956. . ‘ By the interim order passed by this Court ahd modified by the Supreme Court in this bakh of writ petitions. the petitioner was asked to ‘ deposit a portion of the impugned demands and to furnish bank guarantee for a portion of the impugned demands and recovery of the balance was smyed. The petitioner. will, therefore. have to pay the balance of the I Ia~\reasonable opportunity of being heard. direct such dealer to. pay by way of penalty, a sum equal to 2% of the amount of tax due, for every month, for the period for which the payment has been delayed. But in this case. the case of the petihoner was that it was entitied to eligibility certincate for deferment of sates tax under the Madhya Pradesh General Sales Tax Act. 1958 and under me Central Sales Tax Act. 1956 and that such benelit was denied to the petitioner on me ground that the petitioner started the commercial produch'on in its expanded capacity prior to 1" August, 1986. Petitioner's further case is that despite the earlier recommendation made by the i impugned demands in accordance with the provisions of Rule 9 of'the Rules read with the provisions of the Madhya Pradesh General Sales Tax f Act'1958 and the rules made thereunder as well as the Centrai Sales Tax ‘ Managing Director, M.P.A.K.V.N.. recommending such eligibility ‘ certificate. die same was denied to the petitioner by the impugned order a i ated 15-04-1991 without atfording the opportunity of hearing to the bgtitIQner to show mat the peh'tioner actuaHy started the commercia! preducu‘on in its expanded capacity atter 1" August, 71,986 and not before 1d August. 1986. After considering the case of the petitioner, the High ‘ Court as well as the Supreme Court passed interim orders staying the impugned demands. Moreover, we would have quashed the order dated 15044 991 and remanded the mater back to the competent authority of the Industry Department to grant an opportunity of hearing to the petitioner and pass fresh orders, but we are of the view that no useful purpose would be served by quashrng the order and sending the matter back because even if the clarm of the petitioner for deferment of sales tax was allowed. me petitioner would now be liable to pay back the tax, the period V of deferment of ax being already over.‘ ln the event we would, have . quashed the order.lthe entire levy of taxi-with penalty and interest would A\ have also been quashed by this Court. We are, therefore, of,the considered opinion that no penalty or interest will be recovered from the peutloner and only tax as due and payable wrll be recovered from the pedtioner as indicated above 9. Accordingly. these writ petib'ons are disposed with a direction that the Registry of this Court shall. within one month from today. pay to the Salas Tax Ofhcer. Bilaspur the amount already deposited by the petitioner together with interest. The balance amount of the tax that will be payable by the petitioner after adjustnent of the amount received from the Registry l of this Court. will be worked out by die Sales Tax Ofhcer and notices of demand for the balance mx will be sewed on the pedtioner in accordance with the Rule 9 of the Rules read with Rule 27 of the Madhya Pradesh General Sales Tax Rules 1959 as provided in Rule 9 of the Rules and will ‘ d 5 ‘ ‘ ' acoverod from the petiu'oner The bank guarantees fumished by the pemioner pursuant to interim orders passed by this Court as modified by ph‘ffa orders of the Supreme Court wrll be reieased by this Court only auer - me pebtioner pays the entire amount of tax as demanded by the Sales ’ Tex Ofncer Bilaspur and‘the petitioner tiles an application for retease of u ' he bank guarantees atter payment of such tax i r ‘;~.._r._e~.tgteg&mm&-wk A iLwi ’i K u r Sdl‘ 7 V V r 77 r sdl_ Sunil Kumar Sinha Chief Justice Judgfir‘,