JUDGMENT
J.P. Devadhar, J.
1.The short issue raised in this petition is
whether a manufacturer can be given eligibility
certificate under the dispersal of industries package
scheme of incentive, 1993 from a date other than the
date of commercial production even though the scheme
prevailing at the relevant time provided for issuance
of eligibility certificate from the date of
commercial production.
2.The Petitioner No.1 Company is a Company
registered under the Companies Act and is having its
factory at village Kudavali, Tal. Murbad in the
District of Thane in Maharashtra.
3. With an aim to achieve dispersal of industries
outside Bombay and Thane area and to encourage
establishing of industries in the underdeveloped and
developing areas of the State, the Government of
Maharashtra, Industry, Energy and Labour Department
has announced schemes since 1964 with the concurrence
of all the departments of the State for grant of
incentive to such industries established in the
backward area of the State of Maharashtra. The said
schemes were amended from time to time and in this
petition, we are concerned with Dispersal of
industries Packaging Scheme of incentive, 1993 dated
7th May, 1993 (1993 scheme for short).
The Statutory provisions of 1993 Scheme
4. Before dealing with the facts relevant for the
adjudication of the issues raised in this petition,
it would be appropriate to refer to some of the
relevant clauses of the 1993 scheme:
a) The 1993 scheme was to be in operation
for a period of 5 years from 1st
October, 1993 to 31st September, 1998.
b) Clause 3.1 defined “date of effect of
eligibility” as follows:
“Date of Effect of Eligibility
(1) The Eligibility Certificate
under the 1993 Scheme will be
issued by the Implementing
Agency after commencement of
commercial production as may
be determined by it, based on
the totality of the
documentary evidence led by
the Eligible Unit in this
behalf, as also such other
information, details, e.g.
date of power connection,
electricity consumption bills
over a period, first sale
bill, excise licence, extract
of excise register/production
register,etc. required/called
for in connection therewith.
(2) The decision of the
Implementing Agency, subject
to such directions as
Government may issue from time
to time in this regard, will
be final and binding on the
Eligible Unit.
(3) The Commissioner of Sales Tax
will endorse the EC issued by
the Implementing Agency and
shall specify the date of
effect of eligibility for the
Sales Tax Incentives.
c) Clause 4 deals with general provisions
and clause 4(1) dealt with Application
for Eligibility, as follows:-
“Cll .41() Application for Eligibility
(1) An application for eligibility
under the 1993 Scheme shall be filed
by an Eligible Unit only after it has
taken all the Initial Effective Steps
but not later than 30th September,
1998. It shall be supported by
documentary evidence in regard to
conmpletion of the Effective Steps.
(2) For claiming eligibility under the
1993 Scheme, an Eligible Unit shall
also complete all the Final Effective
Steps on or before 30th September,
1999.
(3) An application filed with the
implementing Agency on or before 30th
September, 1993 after completion of
the Initial Effective Steps for
incentives under the 1988 Scheme, but
where the applicant fails to complete
all the Final Effective Steps latest
by 30th September, 1994, shall be
automatically considered under and be
subject to the 1993 Scheme but the
incentives to such an Eligible Unit
shall be applicable at the scales
which are lower of the scales of the
1988 Scheme or the 1993 Scheme.
(4) An application for eligibility
shall be submitted to the Implementing
Agency at least three months prior to
the expected date of commencement of
commercial production. An Eligible
Unit shall comply with the
requirements preceding the issue of
the EC by the Implementing Agency to
ensure obtaining the EC within the
period of six months from the date of
commencement of commercial production
as laid down in the Procedural Rules.”
5. By a Resolution dated 23rd March, 2000, the
Government of Maharashtra, Industries, Energy and
Labour Department amended 1993 Scheme inter alia
substituting clause 3.1(1) as follows :-
“Notwithstanding the provisions of para
4.1(2), the Eligibility Certificate under the
1993 Scheme will be issued by the Implementing
Agency after commencement of commercial
production as may be determined by it, based
on the totality of the documentary evidence
led by the Eligible Unit in this behalf, as
also such other information, details, e.g.
electricity consumption bills over a period,
first sale bill, excise licence, extract of
excise register/production register, etc.,
required/called for in connection therewith.
The effective date of eligibility certificate
shall be from the date of commercial
production.”
THE FACTS
6. With this background, let us now look at the
facts pertaining to the case of the Petitioners.
7. The Petitioner No.1 Co. with a view to avail
the benefit under the 1993 Scheme decided to
establish a factory in a backward area. With that
view in mind, the Petitioners. purchased a plot of
land in M.I.D.C. at Kudavali, Murbad Taluka,
District Thane in the year 1996. After conclusion of
the formalities and constructing a factory and after
the commencement of commercial production, the
Petitioner Company made an application to the
Respondent No.2 namely State Industries and
Investment Corporation of Maharashtra Limited (SICOM)
seeking eligibility for their Unit under the 1993
Scheme. After perusal of the relevant documents and
on being satisfied that the Petitioner Company
complied with all the initial requirements and
formalities, an agreement was executed by and in
between the Petitioner No.1 Company and SICOMs
representing State of Maharashtra on 21.9.1999
wherein it was agreed that the Petitioners are en
titled to the benefits under the 1993 Scheme.
Thereafter, by a letter dated 16.12.1999, SICOM as
per the 1993 Scheme forwarded the case of the
Petitioners to the Respondent No.2 seeking approval
of the Commissioner of Income-tax so that requisite
Eligibility Certificate could be granted in favour of
the Petitioners. Along with the said letter, a copy
of the Eligibility Certificate under the 1993 Scheme
granting deferral of the sales Tax liability proposal
was also forwarded to the Sales Tax Authorities.
Instead of issuing Eligibility Certificate, the
Respondent No.4 namely the Deputy Commissioner of
Sales Tax, Incentive and Enforcement, called upon the
Petitioners to pay the sales tax up to 30th November,
1999 and only on such payment being made the
requisite eligibility certificate will be granted to
the petitioners. The Petitioners made several
representations stating therein that under the 1993
scheme, the date of the Eligibility Certificate ought
to be the date of commercial production and if the
certificate is issued in the light of the 1993
Scheme, the question of paying the sales tax for the
period from the date of commercial production does
not arise at all. The Sales Tax Authorities declined
to consider the case of the Petitioners. However
decided to wait for the decision of the Maharashtra
Sales Tax Tribunal, as similar issues were pending
before the Tribunal. It appears that even after the
decision of the Tribunal holding that the date of
effect of entitlements of eligibility should be from
the date of commercial production, the Respondents
failed to issue the requisite certificate to the
Petitioners.
8. In the light of the amendment to the 1993
Scheme, by the Resolution dated 23rd March, 2000, the
Petitioners once again sought the Eligibility
Certificate with entitlement from the date of
commencement of commercial production as per the
amended Scheme. By an order dated 19th June, 2000,
the Respondents held that the amendment to 1993
Scheme was applicable only to pipeline cases and the
case of the Petitioners cannot be treated as a
pipeline project and accordingly, the amendment to
the 1993 Scheme was held not applicable to the case
of the Petitioners. By their letter dated 26th July,
2000 (Exhibit-P) sales tax authorities once again
insisted upon the payment of sales tax failing which
sought to take suitable action against the
Petitioners. In these circumstances, the Petitioners
have filed the aforesaid petition on 11th July, 2001
inter alia seeking to quash and set aside the order
dated 26.7.2000 and an order directing Respondents to
grant the eligibility entitlement from the date of
the commercial production. During the pendency of
this petition, the Respondent No.2 by a letter dated
27.8.2001 forwarded Eligibility Certificate dated
16.12.1999. In the Eligibility Certificate, it was
stated that although the date of commencement of
commercial production was on 5.7.1998, the date of
effect of Eligibility Certificate will be from
1.1.2000.
The Arguments
9. Mr. Joshi, learned Counsel appearing on
behalf of the Petitioners submitted that when the
application of the Petitioner was complete in all
respects and when the Respondents have not disputed
that the date of commercial production was 5th July,
1998, there was no reason whatsoever on the part of
the Respondents to grant the Eligibility Certificate
on 16.12.1999 effective from 1.1.2000. It was
submitted that under the 1993 Scheme, it was
obligatory on the part of the Respondents to issue
the Eligibility Certificate from the date of the
commercial production. It was submitted that even
assuming that there was any ambiguity, then, the case
of the Petitioners being pending on 23rd March, 2000
when the amendment to the 1993 Scheme was brought in,
it was not open for the Respondents to deny the
benefit of the amended scheme and ought to have
granted Eligibility Certificate effective from the
date of the commercial production. Mr. Joshi
pointed out several decisions of the Sales Tax
Tribunal, wherein it was held that the
entitlements/Eligibility Certificate under the
unamended 1993 Scheme is to be effective from the
commencement of commercial production. It was also
submitted that in view of the fact that the
implementing agency namely SICOM had no objection to
the Eligibility Certificate being granted with effect
from the date of commercial production, the action of
the Sales Tax authorities in issuing the impugned
Eligibility Certificate is wholly arbitrary, illegal
and contrary to the 1993 Scheme itself.
10. Mr. Deshpande, learned Counsel appearing on
behalf of the Respondents Nos. 1 and 3 to 6
submitted that amendment to the 1993 Scheme by
Resolution dated 23rd May, 2000 was not applicable to
the case of the Petitioners as SICOM had processed
the case of the Petitioners and forwarded their case
to the Sales Tax Commissioner with approval, prior to
the amendment and hence the case of the Petitioners
cannot be treated as a pipeline project. It was
submitted that under the 1993 Scheme the implementing
agency namely the SICOM grants the Eligibility
Certificate after the commencement of commercial
production and under Clause 3.1(3) of the Scheme, the
power to issue entitlement vests with the
Commissioner of Sales Tax. It was submitted that
clause 3.14 of the 1993 Scheme read with Rule 2.12 of
the Procedural Rules as laid down in the Government
Resolution dated 11.8.1980 clearly provide that the
Certificate of Entitlement shall be made effective
from the prospective date and, therefore, there is no
impropriety or illegality in the eligibility
certificate issued to the Petitioners.
CONSIDERATION & FINDINGS
11. We have heard both the parties and perused the
material placed on record. It is not in dispute that
the Petitioners on the date of their application had
complied with all the formalities and had taken
requisite effective steps to avail the benefit of the
1993 Scheme. Under the 1993 Scheme, there was no bar
for making an application after the commercial
production had started. It is not even the case of
the Respondents that any of the final effective steps
were complied with by the Petitioners after the
filing of application. The provisions contained in
clause 4.1(4) of the 1993 Scheme to the effect that
an application for eligibility shall be submitted to
the implementing Agency at least three months prior
to the expected date of commencement of commercial
production and that the Eligible Unit shall comply
with the requirements preceding the issue of the
Eligibility Certificate by the Implementing Agency to
ensure obtaining the Eligibility Certificate within
the period of six months from the date of commercial
production, cannot be construed to mean that even
though the applicant has complied with all the
requisitions, the Respondents can withhold the grant
of Eligibility Certificate for a period of nine
months. Those provisions are meant for the applicant
to comply with the requisitions within the stipulated
time and are not meant for the Respondents to
leisurely process the application up to a period of
nine months. In our opinion, if the contention of
the Respondents is accepted, it would mean promoting
lethargy instead of promoting industrial growth in
backward area. Even the Implementing Agency has not
subscribed to the view canvassed on behalf of the
Sales Tax authorities.
12. In the instant case, there is no dispute that
the commercial production had started on 5th July,
1998. The case of the Petitioners were forwarded by
SICOM to the Respondent No.4 on 16th December, 1999
and the Sales Tax Authorities were sitting tight on
that application without any justification and it is
an admitted position that till August, 2001, the said
papers were lying in the office of the Commissioner
of Sales Tax and the same were returned to SICOM only
in the last week of August, 2001 and thereupon, by a
letter dated 27th August, 20001, SICOM has issued the
eligibility certificate to the Petitioners with
retrospective effect from 16.12.1999. There is no
justification whatsoever put forth on the part of the
Sales Tax Authorities as to why they had withheld the
application of the Petitioners for such a long
period. In spite of our repeated opportunities
granted, no satisfactory explanation has been given
as to why the Sales Tax Authorities were keeping the
application of the Petitioners pending for so long
and as to why the Petitioners are not entitled to the
eligibility certificate from the date of commencing
of commercial production. There is no dispute that
in similar cases, the Sales Tax Tribunal has held
that under the 1993 Scheme the entitlement of the
Eligibility Certificate is from the date of
commercial production. The Respondents have not
implemented the said decisions of the Tribunal and it
is not the case of the Respondents that these
decisions of the Tribunal have been stayed by any
authority or Court.
13. The aforesaid contention of the Petitioners
also gets support from the amendment to the 1993
Scheme by Government Resolution dated 23.3.2000. In
our opinion, the Respondents are wrong in contending
that the case of the Petitioners cannot be treated as
pipeline case. If after processing of the
application of the Petitioners by the Respondent
No.2, nothing was required to be done in the matter,
then the Sales Tax authorities could not have
withheld the application of the Petitioners for such
a long period. In any event, the fact remains that
on the date when the 1993 Scheme was amended by
Government Resolution dated 23.3.2000, the
application of the Petitioners was pending before the
Sales Tax authorities and hence the case of the
Petitioners is liable to be held as pipeline case and
covered under the amended 1993 Scheme. Thus, in
either view of the matter i.e. either under the 1993
Scheme itself or under the amended 1993 Scheme, the
Petitioners are entitled to seek the relief as
claimed in the petition. For all the reasons stated
above, we are of the opinion that the Respondents are
not justified in issuing the Entitlement certificate
dated 16.12.1999 effective from 1.1.2000.
14. Having said so, the question which needs
consideration is to what relief the Petitioners are
entitled in the peculiar facts of the present case.
We have noticed that the application for approval
under the 1993 Scheme was made by the Petitioners on
3rd September, 1998 and the commercial production had
commenced prior to that date namely 5th July, 1998.
Therefore, the question arises is as to whether the
Petitioners are en titled to the Entitlement under
the Eligibility Certificate even for the period prior
to their making application under the 1993 Scheme ?
Mr. Joshi, however, did not press for the date of
entitlement under the Eligibility Certificate for the
period prior to the date of application made on 3rd
September, 1998. In view of this, the Petitioners
shall be entitled to the date of entitlement from the
date of application. In this view of the matter, the
Respondents are directed to issue the Eligibility
Certificate effective from 3rd September, 1998. It
is expressly made clear that the issue of granting
eligibility certificate prior to the date of
application under 1993 Scheme is kept open.
15. In the circumstances set out hereinabove, the
petition succeeds. The Rule is made absolute in the
above terms and the Respondents are directed to issue
the Eligibility Certificate to the Petitioners with
entitlement effective from 3rd September, 1998 and
grant all of consequential reliefs and entitlements
under the 1993 Scheme. In the facts and
circumstances of the case, there will no order as to
costs.