LPA/834/1995 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD LETTERS PATENT APPEAL No. 834 of 1995 In SPECIAL CIVIL APPLICATION No. 8909 of 1994 For Approval and Signature: HONOURABLE MR. JUSTICE MOHIT S. SHAH HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= = 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= = STATE OF GUJARAT & 1 - Appellant(s) Versus SANAND TEXTILE INDUSTRIES LTD & 1 - Respondent(s) ========================================= Appearance : MR APURVA DAVE, ASSTT. GOVT PLEADER for Appellant(s) : 1 - 2. SERVED BY AFFIX.-(R) for Respondent(s) : 1 - 2. ========================================= = CORAM : HONOURABLE MR. JUSTICE MOHIT S. SHAH and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 16/12/2008 LPA/834/1995 2/8 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR. JUSTICE MOHIT S. SHAH) 1. This Appeal under Clause 15 of the Letters Patent is directed against the judgment and order dated 5th May 1995 of the learned Single Judge allowing the writ petition of the present respondent and, quashing and setting aside the decision dated 18th May 1994 of the Industries Commissioner, by which the Industries Commissioner had rejected the respondent Company's application for sales tax incentives under the 1980-86 Scheme for its expansion project. 2. The State Government had framed a Scheme for sales tax incentives for the benefit of industries being established in rural and backward areas to achieve a more balanced growth and to avoid further congestion of developed areas and large cities. The Scheme was initially for a period of five years i.e. upto 31st May 1985, but subsequently, it was extended and further extended upto 31st March 1988. 3. The undertaking of the respondent Company was established in the year 1982. The Commissioner of Sales Tax gave exemption from payment of sales tax to respondent undertaking upto the limit of Rs.16,27,750/- during the period from 29.6.1982 to 28.6.1989. On the basis of the said eligibility certificate, the sales tax exemption certificate was issued by the Assistant Commissioner of Sales Tax on 25th November 1982. LPA/834/1995 3/8 JUDGMENT Subsequently, by virtue of additional investments in fixed assets made by the respondent Company, the limit of eligibility certificate was increased to Rs.24,12,000/- and the sales tax exemption certificate was modified accordingly. The respondent Company availed of the entire amount of exemption by December 1986. 4. The dispute in the present proceedings is with respect to the expansion project of the unit. In the year 1985, the respondent Company undertook expansion of its unit by installing one Draw Texturising Machine of 216 spindles, and commissioned the same on or about 3rd December 1985. 5. It appears that the Industries Commissioner was approached for grant of eligibility certificate in respect of the said expansion project. The Industries Commissioner, initially, granted eligibility certificate dated 4th February 1987 for Rs.21,29,175/-, but since the expansion project was not included in it, the same was returned. Aggrieved by non-grant of the eligibility certificate, respondent filed Special Civil Application No.1246 of 1990 which came to be disposed of by learned Single Judge of this Court, with a direction that the authority shall consider the Company's representation keeping in mind provisions of the Scheme dated 27.8.1980 and also bearing in mind the original registration. The Industries Commissioner rejected the respondent Company's representation by the impugned communication dated 18th May 1994 on the ground the respondent Company did not hold valid registration for its expanded capacity when the unit went LPA/834/1995 4/8 JUDGMENT into commercial production. 6. It appears that the Industries Commissioner took the above view on the ground that the respondent Company had expanded the unit by installing the above machine – one Draw Texturising Machine of 216 spindles, without obtaining permission of the Textile Commissioner of the Central Government under the provisions of the Art Silk Textiles (Production and Distribution) Control Order, 1962 (hereinafter referred to as “the Control Order of 1962”) 7. The respondent (original petitioner) challenged the above decision of the Industries Commissioner before the learned Single Judge on the following grounds : (i) While considering the question of Company's application for sales tax incentives under the Sales Tax Incentive Scheme of the State Government, the Industries Commissioner or the Sales Tax authorities could not have taken into consideration the provisions of the Art Silk Textiles (Production and Distribution) Control Order, 1962. In support of the said contention, reliance was placed on the decision of the Apex Court in the case of State of M.P. v. G.S.Dall and Flour Mills, AIR 1991 SC 772. (ii)In the alternative, it was also submitted that subsequently the unit expansion was regularized by the Textile Commissioner and the said authority had not taken any action against the respondent Company even after noticing the alleged breach. LPA/834/1995 5/8 JUDGMENT Hence, the Industries Commissioner could not have taken any decision adverse to the respondent Company. 8. The learned Single Judge accepted the first contention urged on behalf of respondent Company, which was the petitioner before the learned Single Judge, and also accepted the alternative contention that the unit expansion had been subsequently regularized. The learned Single Judge, therefore, accepted the petition and quashed the order dated 18th May 1994 of the Industries Commissioner. The learned Single Judge further declared that respondent herein (petitioner before the learned Single Judge) was entitled to grant of sales tax incentives under the Government Resolution dated 27th August 2008 and the authorities were restrained from recovering the sales tax in respect of the amount available to the respondent Company as and by way of sales tax incentives / exemption under the Government Resolution dated 27th August 2008. 9. Mr.Apurva Dave, learned Assistant Government Pleader has vehemently submitted that the learned Single Judge has erred in accepting the first contention of the respondent Company that the Industries Commissioner could not have taken into consideration the violation of the Art Silk Textiles (Production and Distribution) Control Order, 1962. The learned Assistant Government Pleader also sought to distinguish the decision of the Apex Court in the case of State of M.P. v. G.S.Dall and Flour Mills (supra). LPA/834/1995 6/8 JUDGMENT 10.Having heard the learned Assistant Government Pleader and having gone through the record and particularly, the communication dated 10th February 1988 of the Government of India, Ministry of Textiles in the office of the Textile Commissioner, granting permission to the respondent Company to acquire and install one Draw Texturising Machine consisting of 216 spindles at the existing location of the respondent Company at Sanand, we are of the view that it is not necessary to consider the correctness or otherwise of the finding given by the learned Single Judge on the first contention of the Company. By the said communication dated 10th February 1988, the office of the Textile Commissioner did permit the Company to install one machine, which was already installed by the Company in December 1985. The said permission was granted by the office of the Textile Commissioner on 10th February 1988 in response to the Company's application dated 28th January 1988. It is not the case of the Industries Commissioner or the Sales Tax authorities that, pursuant to the said permission, the Company had installed another machine over and above the one installed in December 1985. It appears from the documents on record that the correspondence between respondent Company and the office of the Textile Commissioner was going on between November 1984 and February 1988. It appears that the Company had already applied for such permission from the office of the Textile Commissioner as far back as on 5th November 1984 and had given subsequent clarifications on 16th March 1985. At that point of time, it LPA/834/1995 7/8 JUDGMENT appears that the office of the Textile Commissioner was not inclined to grant the permission for certain reasons. However, subsequently, by the aforesaid communication dated 10th February 1988 (Annexure “G” to the petition), the office of the Textile Commissioner did grant the permission to the respondent Company. Moreover, the Textile Commissioner did not take any action against respondent Company for the alleged breach of the aforesaid Control Order of 1962 and therefore, the learned Single Judge was justified in taking the view that the Industries Commissioner ought not to have taken the view against respondent Company on the basis of alleged breach of the Control Order of 1962 of the Central Government which in any case stood regularized upon grant of permission by the Textile Commissioner on 10th January 1988. 11.In view of the above discussion, we do not think it necessary to express any view on the correctness or otherwise of the finding given by the learned Single Judge with respect to the first contention and we leave it open to the State Government to raise any such challenge on the merits of the first contention in any other appropriate proceedings in future. We, however, confirm the findings of the learned Single Judge on the second contention. 12.In the result, the Appeal deserves to be dismissed and is, accordingly, dismissed. [M.S.SHAH, J.] [HARSHA DEVANI, J.] LPA/834/1995 8/8 JUDGMENT parmar*