The State Of Madhya Pradesh vs Lafarge Dealers Association

6. Before we deal with the rival contentions, it would be appropriate to notice and take on record the undisputed position. State of 1 (2004) 6 SCC 689 Civil Appeal arising out of SLP (C) No. 23592 of 2014 & Ors. Page 4 of 38 Madhya Pradesh in exercise of powers conferred under Section 12 of the Madhya Pradesh General Sales Tax Act, 1958 and Section 8(5) of the Central Sales Tax Act, 1956 (for convenience we would refer to the two enactments as the “Sales Tax Act” for short), with a view to attract investors and increase industrial output in the State, had vide notification dated 19 th February, 1991 formulated a policy for grant of sales tax exemption to industrial units having fixed assets above Rs. 100 crores. Quantum of exemption from tax was to be equal to the capital investment in the fixed assets and the duration or period was 11 years from the date of commencement of commercial production or the date on which quantum of exempted tax reached the limit equivalent to the value of capital investment in the fixed assets. It is an undisputed position that private parties/assessee to the present appeals being entitled to the benefit/exemption were issued a certificate of eligibility for exemption from tax by the Directorate of Industries in the unified State of Madhya Pradesh.

7. The industrial units belonging to the private parties/assessee situated in the unified State of Madhya Pradesh after the bifurcation in terms of the Reorganisation Act would necessarily fall in the area/boundary forming a part either of the reorganised State of Madhya Pradesh or the new State of Chhattisgarh. As Civil Appeal arising out of SLP (C) No. 23592 of 2014 & Ors. Page 5 of 38 noticed above, the precise issue before us is whether these industrial units, which were granted exemption and were after the bifurcation located in the reorganised State of Madhya Pradesh or the new State of Chhattisgarh, would continue to enjoy the benefit of exemption/deferment of tax in the other state while conducting inter-state transaction(s) from the state they are located to the new State of Chhattisgarh or the reorganised State of Madhya Pradesh, as the case may be.

(k) “transferred territory” means the territory which on the appointed day is transferred from the existing State of Madhya Pradesh to the State of Chhattisgarh; Sections 3, 4 and 5 of the Reorganisation Act Part II REORGANISATION OF THE STATE OF MADHYA PRADESH

4. State of Madhya Pradesh and territorial divisions thereof.— On and from the appointed day, the State of Madhya Pradesh shall comprise the territories of the existing State of Madhya Pradesh other than those specified in section 3.

(a) in the paragraph relating to the territories of the State of Madhya Pradesh, after the words, brackets and figures, “the Rajasthan and Madhya Pradesh Civil Appeal arising out of SLP (C) No. 23592 of 2014 & Ors. Page 7 of 38 (Transfer of Territories) Act, 1959 (47 of 1959)”, the following shall be added, namely: — “but excluding the territories specified in section 3 of the Madhya Pradesh Reorganisation Act, 2000.”;

State trade or commerce; or

19. Section 86 of the Reorganisation Act states that in case any difficulty arises in giving effect to the provisions of the said Act, the President may, by an order, do anything as may be necessary and Civil Appeal arising out of SLP (C) No. 23592 of 2014 & Ors.Page 27 of 38 expedient for removing the difficulties. However, such order cannot be inconsistent with the provisions of the Reorganisation Act. Proviso states that no order shall be made after the expiry of three years from the appointed date.

25. In the end, we must take note of one of the submissions made by the private parties/assessee that under the exemption clauses even the inter-state transactions were entitled to some benefits. This contention was not raised in the writ petition or even in the Civil Appeal arising out of SLP (C) No. 23592 of 2014 & Ors.Page 36 of 38 pleadings before us and has been urged and argued for the first time. We would not like to comment and decide this contention in vacuum and leave it open to the private parties/assessee to raise this plea before the authorities in appropriate proceedings under the statute. In other words, the authorities would examine whether the inter-state transactions were entitled to any benefit and if so, whether the private parties/assessee herein fulfil and meet the requirements to claim such benefit. We have not expressed any opinion either way on this contention. It was pointed out that in several cases adjudication orders may have been passed and the private parties/assessee may not have preferred appeals in view of the writ petitions filed by them and the present proceedings. As recorded above, some of the private parties/assessee had succeeded before the High Court. We would observe that it will be open to the private parties/assessee to challenge the adjudication orders in accordance with law and if required, by filing application under Section 14 of the Limitation Act, 1963, or other applicable provisions of the state enactments for exclusion of time during which the proceedings have remained pending before the High Court and this Court. In such cases, it would be appropriate for the authorities to exclude such time period as we are overruling the Civil Appeal arising out of SLP (C) No. 23592 of 2014 & Ors.Page 37 of 38 ratio laid down in paragraphs 29 and 30 in Swarn Rekha Cokes and Coals Pvt. Ltd. (supra).

26. Accordingly, the appeals arising from Special Leave Petition (Civil) Nos. 10520 of 2013, 1334, 10165, 23297 of 2014, 6729 and 16550 of 2016 preferred by the State of Madhya Pradesh and the State of Chhattisgarh are allowed and the Civil Appeal Nos. 460, 461, 7073 of 2005 and 2343 of 2007 preferred by the private parties/assessee are dismissed in terms of the aforesaid observations, findings and directions.

JULY 09, 2019.

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