M/S. Jai Beverages Pvt. Ltd vs State Of Jammu & Kashmir And Others

The appellant herein claiming to be a "prestigious unit" having a capital investment of over Rs.25 crores claimed exemption from payment of General Sales Tax and Central Sales Tax under Notification No. SOR 247 of August 20, 1998 issued by the Government of Jammu & Kashmir pursuant to its Industrial Policy of 1998-2003. Under the said Industrial Policy, a package of incentives was offered to industrial units, and in particular to ""prestigious units"

9. Central Sales Tax The local existing SSI units shall be exempt from charging and payment of CST on sale of their finished goods outside the State upto 31.3.2003 and the new SSI units for a period of 5 years from the date of production.

(2) Not withstanding anything contained in para 7, 8 and 9 above those prestigious units which come into commercial production in the year 1998, shall have the option to avail a power tariff freeze at the rate of Rs.1.50 per unit for a period of five years from the date of commercial production.

On the same date, Notification No. SRO 249 was issued regarding exemption of General Sales Tax on sale of finished goods manufactured by medium and large scale industries. It is worth noticing that this Notification refers to the exemption from the payment of General Sales Tax granted to medium and large scale industrial units. It makes no reference to small and tiny units as also to "prestigious units". Moreover, a separate Notification was issued on the same day relating to grant of such exemption to "prestigious units". It is the case of the appellant that this Notification related only to medium and large scale industries and did not in any manner curtail exemptions granted to "prestigious units" by Notification SRO 247 issued on the same date. The proviso to Clause 6 of the Notification provided that the incentives granted shall not apply to goods specified in the Schedule. There is no dispute that "soft drinks" has been shown as item No.VIII in the Schedule to Notification SRO 249 dated August 20, 1998.

The MOU signed on February 1, 2000 recites the fact that the appellant Company had applied to the State Government to give permission to set up a Soft Beverages bottling plant and that the State Government had agreed to grant permission to it and authorize its nodal agency respondent No.7 SIDCO to enter into a Memorandum of Understanding. It is also noticed that the unit proposed to be set up by the appellant involved capital investment of around Rs.27.50 crores. The other relevant parts of the MOU read as under:-

Both the writ petitions were heard together and disposed of by a common judgment and order dated July 30, 2004 dismissing the writ petitions.

In view of our findings that the negative list concept does not apply to prestigious industrial units and that the industrial unit set up by the appellant fulfilled all the conditions laid down in the Government's new Industrial Policy and the notifications issued in connection therewith, it must be held that the appellant is entitled to the package of benefits promised by the new Industrial Policy of the State of Jammu & Kashmir read with various notifications issued pursuant thereto.

The question as to whether the certificates issued by the SIDCO or by the Department of Industries and Commerce are valid, or whether the declaration made by the Industries and Commerce Directorate by its order dated December 12, 2000 declaring the appellant a "prestigious unit" is binding on the State Government, has no significance. The appellant having fulfilled all the conditions which it was required to fulfil is entitled to the benefits promised to "prestigious units" under the State's new Industrial Policy (1998- 2003).

We, therefore, set aside the judgment and order of the High Court of Jammu & Kashmir in L.P.A. No. 73 of 2004 and allow the writ petition filed by the appellant. It is declared that the appellant is entitled to all the incentives and subsidies applicable to "prestigious units" under the New Industrial Policy published vide Government Order No. 202-IND of 1998 dated May 27, 1998 and the notifications issued pursuant thereto from the date the aforesaid unit went into commercial production. This appeal is accordingly allowed without any order as to costs.