THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.12120 of 2004 Dated 30th June, 2010 Between: M/s. Tirumala Engineering Company, Visakhapatnam. …Petitioner And The Commissioner of Industries, and others. …Respondents Counsel for the petitioner: Sri M. Ramachandra Rao for K.A .Narasimham Counsel for respondents: Assistant Government Pleader for Prohibition and Excise The Court made the following: ORDER: This writ petition is filed for a Mandamus to set aside the proceedings dated 05.02.2002 and the consequential notice dated 26.06.2004 issued by respondent No.3. The petitioner is a small scale industry involved in manufacture, fabrication and creation of heavy steel structures, tanks piping, heat exchange etc.,. It was found eligible for incentives declared by the State Government under a scheme called Target 2000 for receiving incentives such as investment subsidy and exemption from payment of sales tax. The petitioner was accordingly sanctioned and paid Rs.3,50,050/- towards investment subsidy. It also appears that it was given sales tax exemption to the tune of Rs.23,62,890/-. After the petitioner was allowed the said subsidy, respondent No.3 issued a show-cause notice dated 21.11.2001, wherein it was alleged that the Inter Departmental Committee constituted by the Commissioner of Industries, enquired into the veracity of incentive claim of the petitioner under Target 2000, and came to the conclusion that 75% of the machinery is not found in the unit and that the machinery was shifted to the work sites at Samalkot, BHPV and Tajpur. The petitioner was, therefore, called upon to show-cause as to why the incentives sanctioned to it on 22.09.1998 should not be cancelled. In response to the said show-cause notice, the petitioner submitted its reply on 01.12.2001, wherein it is, inter alia, mentioned that BHPV limited has placed an order of pot-shell fabrication (under category of storage vessels) for 10 numbers; that each pot-shell size was 10 MTR x 5 MTR x 1.5 MTR (Rectangular vessel) and that as the size of the pot- shell was very big, which the petitioner was unable to accommodate at its work shop premises and as BHPV limited asked the petitioner to do the fabrication work at its premises, the petitioner commenced the said work by shifting a part of the machinery and completed eight pot-shells and the work relating to the remaining two pot-shells at BHPV Visakhapatnam site was under progress. It was further stated that the work of Samalkot, Power Plant Heavy Structures of about 2000 MT also could not be accommodated at the petitioner’s work shop due to space constraints and economical reasons compelling them to execute the said work at Samalkot. A similar explanation was offered regarding execution of heavy structures for sintering plant erection at NINL Steel Plant, Jaipur. It was further explained that as the petitioner could not get sufficient orders from Visakhapatnam Steel Plant, they are forced to undertake outside works. It was also stated that the entire work shop and machinery was intact and that except shifting the work site temporarily, the unit was not shifted. It was further explained that as the works referred to above were almost in completion stage, the equipment will be brought back by the end of 31st December, 2001 and the petitioner’s activities will be continued further, which may be got verified by the competent authority. Purporting to consider the said representation, respondent No.3, vide his proceedings No.10/1/8/0534/534/FD, dated 05.02.2002, cancelled the incentives sanctioned in favour of the petitioner and directed the petitioner to remit the subsidy amount of Rs.3,50,050/-. It was further stated that if the petitioner fails to pay back the investment subsidy, proceedings under Andhra Pradesh Revenue Recovery Act, 1864 (for short ‘the Act’), will be initiated. Thereafter, the petitioner continued to correspond with respondent No.3 to convince the latter about their bona fides. However, the efforts of the petitioner did not fructify as respondent No.3 issued proceedings dated 26.06.2004 under the Act for recovery of the amount of Rs.3,50,050/- along with interest. The petitioner assailed these two proceedings in the writ petition. A counter-affidavit has been filed on behalf of respondent Nos.1 to 3, wherein it is, inter alia, stated that the petitioner has violated Clause 22.5 of Target 2000 scheme by shifting 75% of the machinery to other places. The gravaman of the allegation against the petitioner, as could be seen from the show-cause notice, is that the petitioner has shifted about 75% of the machinery to work site at Samalkot, BHPV, Tajpur. Clauses 22.0 and 22.5, which were extracted in the counter- affidavit, read as under. “22.0 Recoveries of Investment Subsidy: Investment Subsidy granted to an industrial unit shall be liable to be recovered in the following circumstances; 22.5 If the unit shifts a part or whole of the industrial unit after receiving a part or whole of the incentives without prior approval of the Commissioner of Industries.” From the above reproduced Clauses, it is evident that the investment subsidy is recoverable if the industrial unit, either in part or whole, is shifted after receiving the incentives without the prior approval of the Commissioner of Industries. There is no allegation in the show-cause notice that the petitioner has shifted the industrial unit either in part or whole. The only allegation, as noted above, made in the show-cause notice, was that 75% of the machinery was shifted. The petitioner has offered a detailed and convincing explanation for shifting the machinery. Respondent No.3, in the impugned proceedings, except stating that the petitioner’s reply was discussed by the State Level Committee and held that the petitioner unit is not entitled for incentive, has not given reasons for the State Level Committee not accepting the petitioner’s explanation. In my view, the whole approach of respondent No.3 is perfunctory. In the absence of any allegation that the petitioner has shifted the unit, the question of recovery of investment subsidy does not arise. Temporary shifting of machinery to attend to the job works cannot be equated with shifting of the unit. As clearly explained in the petitioner’s explanation, due to exigencies of work, the petitioner had to shift its machinery at three different work sites without shifting the unit. In my opinion, respondent No.3 has not acted with reasonableness and rationality in examining whether the petitioner has violated Clause 22.5. After a careful analysis of the entire material on record, I am of the opinion that the impugned proceedings dated 05.02.2002, cancelling the investment subsidy and the consequential notice, dated 22.06.2004, issued by respondent No.3 for recovery of subsidy already granted to the petitioner, cannot be sustained in law and they are accordingly quashed. Accordingly, the Writ Petition is allowed. ________________________ C.V.NAGARJUNA REDDY, J 30th June, 2010 GHN