Case: M/S. Tata Iron &amp; Steel Co. Ltd Vs. State Of Jharkhand

2. The facts giving rise to this appeal, briefly stated for the limited purpose of disposal of this appeal, are as follows:The appellant company had established a manufacturing unit for production of HRP, Rounds, Structurals and other iron and steel products in Dhanbad which was then in the erstwhile State of Bihar. The State of Bihar in the year 1995 evolved a new industrial policy with a view to create an environment conducive to growth of industries in the state and to utilise to its optimum advantage all the resources available in the form of surface and ground water, fertile land, mineral wealth, disciplined and skilled manpower etc. By the said policy the Government tried to attract investors from various parts of the country to invest in identified thrust areas, as also for creation of essential infrastructure including private generation. One of the areas which the said industrial policy sought to develop was in the filed of metallurgical industries. As an incentive to attract investment in the State among others, the said policy provided forx incentives which included (exemption for new units in category B districts) 8 yearsx exemption on sale and purchase of materials from the date of commencement of production by such units located in category B districts.In pursuance of the said policy, necessary exemption notifications under section 7 of the Bihar Finance Act, were also issued4. The appellant having noticed the incentives offered by the State Government by letter dated 30.4.1997 intimated the then Chief Minister of the State that it has a plan for installing a Cold Rolling Mill in Jamshedpur in which a sum of Rs.2,000 crores was to be invested if the financial climate in the State was favourable. Therefore, before taking a final decision in this regard, it sought a confirmation from the State of Bihar as to its commitment to grant sales tax exemption as stated above. By that letter the appellant also requested the Chief Minister to authorise the Secretary of the Department of Industries and other officials of the State to have a discussion with the appellant about the plan in detail and to guide the appellant in the manner in which it could enjoy the benefits of5. Pursuant to the above request letter of the appellant, a meeting of the High Power Committee under the Chairmanship of the Chief Minister was summoned on 21.7.1997. Among the persons present at the meeting were the Minister for Commercial Taxes, Chief Secretary, Commissioner of Finance, Secretary of Industrial Department, Commissioner of Commercial Taxes and Director of Industries, Bihar, who were also the members of the said High Power Committee. In the said meeting the letter written by the appellant came to be discussed and a decision was taken that even existing industries which go in for diversification with an additional capital of Rs.500 crores shall be deemed to be treated as new units and all the benefits under the Industrial Policy of 1995 will be made available to them. It is pursuant to the said decision of the High Power Committee that a resolution was passed by the Government of Bihar amending the Industrial Policy Resolution, 1995 bringing it in conformity with the decision taken at the meeting of the High Power Committee on 21.7.19976. Subsequent to the above referred amendment, the Commissioner and Secretary, Government of Bihar Department of Industries, wrote a letter on 11.11.1997 stating that the Government has taken a decision that any investment over Rs.500 crore would be taken as an expansion/diversification or a new unit, as such the appellant company will be entitled to all the reliefs under the Bihar Industrial Policy. In the said letter the Secretary also expressed the hope that the appellant will take necessary steps to set up a unit in Bihar as soon as possible. As ap action on 10.1.1998, the Director of Technical Development, Department of Industries, State of Bihar wrote to the appellant expressing the happiness on the decision of the appellant to put up a Cold Rolling Mill of 1.2 million tons per annum capacity and requested the appellant to go ahead with the project implementation and to keep the Government informed of the progress in this regard. By a letter dated 16.4.1999 the Commissioner and Secretary, Government of Bihar,d the appellant that the Centralx both will be exempted as provided in the policy in regard to the purchase and sale of Cold Rolling Mill. The said letter also assured that if production in the new unit of the appellant started in the year 1997 such benefit of exemption would be available up to the year 2005. It also assured that even if the industrial policy expired the facilities granted to the appellant will continue till a period of 8 years from the date of production7. On 2.3.2000 exercising the power conferred undern 3(b) of section 7 of the Bihar Finance Act, 1981, an amendment was brought about in the notification which came into existence pursuant to the industrial policy of 1995. This amendment also provided the benefit to the new industries which came into existence by way of expansion/modernisation/diversification provided the investment in such expansion/modernisation/diversification was done on an additional investment of Rs.500 crore. On 20.5.2000 pursuant to a decision taken on 26.4.2000 by the Commissioner, Finance, Director of Industries, Bihar, conveyed to the appellant that the Government has granted approval for setting up of Cold Rolling Mill with production capacity of 1.20 million tons on an investment of Rs.1874.04 crores put by the appellant on this project. On 9.8.2002, the Director Technical Development, Department of Industries (Director of Technical Development) wrote to the appellant that the team of Technical Officers constituted by his Department to determine the date of commercial production of appellants Cold Rolling Mill made the site verification and examined the related papers, thereafter, they had submitted a report of inspection observing that the date of commercial production has been recommended as 1.8.2000, hence, the commercial production at CRMs is declared as from 1.8.20008. From the above, it is noticed that relying on the industrial policy of the Government of Bihar of 1995 and the assurance given by the Government pursuant to the said policy and the notification made thereunder, the appellant invested nearly Rs.2000 crores on its new unit for the manufacture of CRMs, the commercial production of which commenced from 1.8.2000 which was verified by the Technical Officers of the Department of Industries, Bihar and certified as such by them9. On 15.11.2000 under the Biharn Act, 2000, a part of Bihar which included Jamshedpur, became a new State named as Jharkhand State. On 15.12.2000 by a notification, the Governor of Jharkhand ordered that the Bihar Finance Act, 1981, Central Sales Tax (Bihar) Rules, 1956 and the notification made thereunder, among other Acts, Rules and Regulations, shall be deemed to be in force in the entire State of Jharkhand w.e.f. 15.11.200010. On 21.12.2000, the successor State, namely, the State of Jharkhand issued the exemption certificate as contemplated under Notification Nos. 478 and 479 dated 22.12.1995 by the Bihar State Finance (and Commercial Tax) Department exempting the new unit of the appellant from purchase tax as well asx on purchases and sales made in regard to the Cold Rolling Mill. This was pursuant to an order made by the Joint Commissioner of Commercial Taxes dated 16.12.2000 wherein after an elaborate inquiry and after hearing the departmental representatives, the Joint Commissioner came to the conclusion among other findings that the product manufactured by the appellant in its new unit is entirely a new product called Cold Rolled Products while the product manufactured in its old unit was a separate product called HRPs; both of which required distinctly different manufacturing processes and equipments. He also held that though thel for the manufacture of CR product is HR product, the CR product is totally different both in its metallurgical components, the, and the two products were commercially recognised as different products, hence, the Cold Rolled Products manufactured by the new unit being different from the Hot Rolled Product manufactured by the old unit, the appellants were entitled to exemption ofx as provided under the industrial policy and the notifications, therefore, he approved the issuance of certificate11. However, the Commissioner of Commercial Taxes, Jharkhand, initiated suo motu revision purporting to act under section 46(4) of the Bihar Finance Act against the said approval granted by the Joint Commissioner and after an inquiry and hearing the parties concerned, came to the conclusion that the hot rolled steel i.e. the HR product and cold rolled steel i.e the CR product have to be treated as one and the same commodity for the purpose of levy of tax, therefore, the appellants are not entitled to thex exemption. In this process, he did not disagree with the finding of fact arrived at by the Joint Commissioner as to the nature of product and how they are different but relied on an entry found in the Schedule to section 14 of the Central Sales Tax Act, which enumerated both hot and cold rolled products in the same entry. Then relying on a judgment in Telengana Steel Industries [93 STC 187 (SC)] held merely because the two products are found in the same Entry in the Schedule to the Central Sales Tax Act, both the products will have to be treated as the same. Though it was pointed out to the Commissioner that the judgment of this Court in Telenganas case (supra) was subsequently held to be contrary to an earlier Constitution Bench judgment of this Court and declared to be not good law in K.A.K. Anwar & Co. vs. State of Tamil Nadu [108 STC 258  (SC)], the Commissioner seems to have lost sight of the same and chose to rely upon Telengana Steel (supra) to come to the conclusion that the two products must be treated as the same commodity merely because they are found in the same Entry in the Act for the purpose of levy ofx and if that be so under the policy and the notification unless the products are two different commodities the benefit of exemption was not available12. Being aggrieved by the said order of the Commissioner, the appellant preferred a civil writ petition before the High Court of Jharkhand. The High Court by the impugned judgment, accepted the appellants case in all other respects including the effect of the judgment of this Court in K.A.K. Anwar & Co.s case (supra) and came to the conclusion that merely because two commodities are shown in the same Entry in the Central Sales Tax Act, it would not ipso facto make the two commodities the same commodities. It also recorded the concession made by the learned Additional Advocate General appearing for thee who had submitted that all other issues raised in the writ petition have to be answered in favour of the appellant. The Court also held that the only issue to be decided was whether on facts the HR product and CR product manufactured by the two units of the appellant are one and the same product or are two different products, and not on the basis of law as held by the Commissioner12. On the above basis, the High Court without there being a challenge to the findings of the Joint Commissioner as to the comparability of the two products on facts, and which finding being based on material produced before the said authority, still remanded the matter to the Commissioner holding that the appellant had not produced enough material whereby it could be satisfactorily held that the CRM is a product commercially different from HRM. It is because of this limited finding that the appellant is now before us.

Court's reasoning:
It follows from the above that the reference in the present form is clearly defective as it does not take care of the correct and precise nature of the dispute between the parties. On the contrary, the manner in which the reference is worded shows that it has already been decided that the respondent workmen continue to be the employees of the appellant and further that their services were simply transferred to M/s. Lafarge. This shall preclude the appellant to put forth and prove its case as it would deter the labour court to go into those issues. It also implies that by presuming so, the appropriate Government has itself decided those contentious issues and assumed the role of an adjudicator which is, otherwise, reserved for the Labour Court/ Industrial Tribunal.21. As a consequence, this appeal is allowed and the impugned judgment of the High Court is set aside. Sequitur to that would be to quash the references made in the present form. However, at the same time, direction is given to the appropriate Government to make fresh reference, incorporating real essence of the dispute as discussed in this judgment, within a period of two months from the date of receipt of the copy of this judgment.