{"id":123750,"date":"2011-06-08T00:00:00","date_gmt":"2011-06-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-prasad-power-control-pvt-vs-commissioner-of-sales-tax-on-8-june-2011"},"modified":"2018-09-26T04:33:53","modified_gmt":"2018-09-25T23:03:53","slug":"ms-prasad-power-control-pvt-vs-commissioner-of-sales-tax-on-8-june-2011","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-prasad-power-control-pvt-vs-commissioner-of-sales-tax-on-8-june-2011","title":{"rendered":"M\/S.Prasad Power Control Pvt. … vs Commissioner Of Sales Tax on 8 June, 2011"},"content":{"rendered":"
Bombay High Court<\/div>\n
M\/S.Prasad Power Control Pvt. … vs Commissioner Of Sales Tax on 8 June, 2011<\/div>\n
Bench: J.P. Devadhar, R. S. Dalvi<\/div>\n
                                           1                             wp842-00\n\n            IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n\n\n\n                                                                        \n                       CIVIL APPELLATE JURISDICTION\n\n\n\n\n                                                \n                      WRIT PETITION NO.842 OF 2000\n\n\n\n\n                                               \n    1.   M\/s.Prasad Power Control Pvt. Limited,\n         a Private Limited Company having\n         its registered office at A-5,\n\n\n\n\n                                        \n         Parvana Apartments, Sai Baba Nagar,\n\n\n    2.\n                       \n         Borivli (East), Mumbai - 400 092.\n         Shri B.P. Yadav, of Mumbai,\n                      \n         Indian Inhabitant and a Director of\n         Petitioner No.1 having his office at\n         A-5, Parvana Apartments, Sai Baba\n      \n\n\n         Nagar, Borivli (East), Mumbai - 92           ......Petitioners\n   \n\n\n\n                      Versus\n    1.   Commissioner of Sales Tax,\n         having his office at 8th Floor,\n\n\n\n\n\n         Vikrikar Bhavan, Mazgaon,\n         Nesbit Road, Mumbai - 400 010.\n    2.   Deputy Commissioner of Salex Tax,\n\n\n\n\n\n         (Incentive & Enforcement)\n         having his office at 6th Floor,\n         Vikrikar Bhavan, Mazgaon,\n         Nesbit Road, Mumbai - 400 010.\n    3.   Deputy Commissioner of Sales Tax,\n         Thane Division, Thane.\n    4.   Sales Tax Officer (E 205)\n         Enforcement Branch, having his\n\n\n                                                ::: Downloaded on - 09\/06\/2013 17:19:29 :::\n                                                2                                    wp842-00\n\n           office at 5th Floor, Vikrikar Bhavan,\n           Mazgaon, Nesbit Road, Mumbai 10\n\n\n\n\n                                                                                   \n    5.     Development Corporation of \n\n\n\n\n                                                           \n           Konkan Limited, having its office\n           at Warden House, 5th floor, Sir P.M.\n           Road, Fort, Mumbai - 400 001.\n\n\n\n\n                                                          \n    6.     State of Maharashtra,\n           having its office at Mantralaya,\n           Mumbai - 400 032                                      ......Respondents.\n\n\n\n\n                                            \n                           \n    Mr.P.C. Joshi i\/by Mr.N.B. Shah for the petitioners.\n\n    Mr.Vinay Sonpal, AGP for the respondents.\n                          \n\n                                  CORAM : J.P. Devadhar & Smt. R.S. Dalvi, JJ.\n<\/pre>\n
                                  Judgment reserved On     : 1st April 2011.\n   \n\n\n\n                                  Judgment delivered On    : 8th June, 2011\n\n\n\n\n\n    ORAL JUDGMENT (Per J.P. Devadhar, J.)\n\n\n<\/pre>\n
    1.             The challenge in this Writ Petition is to the Constitutional <\/p>\n
    validity of Section 41B of the Bombay Sales Tax Act, 1959 (“BST Act”\n<\/p>\n
    for   short)   as   also   the   constitutional   validity   of   Rule   31AA   of   the <\/p>\n
    Bombay Sales Tax Rules, 1959 (“BST Rules” for short) to the extent that <\/p>\n
    the said provisions are made applicable retrospectively from 1st January <\/p>\n
    1980.     The   petitioners   have   also   challenged   the   validity   of   the <\/p>\n
    assessment orders passed on 2nd August 1999, 3rd August 1999 and 6th <\/p>\n
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\n                                              3                                   wp842-00<\/p>\n
    August   1999   for   the   period   1994-1995,   1995-1996   and   1996-1997 <\/p>\n
    respectively.  However, Mr.Joshi, learned counsel appearing on behalf of <\/p>\n
    the  petitioners  has  not  pressed the  challenge  to  the  said  assessment <\/p>\n
    orders as the petitioners have filed appeals against the said assessment <\/p>\n
    orders before the Appellate  Authority constituted under the BST Act <\/p>\n
    and that the said appeals are pending.\n<\/p>\n
    2.            The basic dispute raised in this Writ Petition is, when a unit <\/p>\n
    is established as per the Government Resolution dated 30 th September <\/p>\n
    1988 (‘1988 GR’ for short) which provides for a mechanism to calculate <\/p>\n
    the notional sales tax liability of a unit covered under the 1988 Package <\/p>\n
    Scheme of Incentives (“1988 Scheme” for short), whether a different <\/p>\n
    mechanism   for   calculating   the   notional   sales   tax   liability   can   be <\/p>\n
    introduced with retrospective effect from 1st January 1980 by inserting <\/p>\n
    Section 41B to the BST Act and inserting Rule 31AA to the BST Rules, <\/p>\n
    so as to defeat the rights vested in the units established under the 1988 <\/p>\n
    Scheme prior to the insertion of Rule 31AA ?\n<\/p>\n
    3.            Section 41B of the BST Act inserted with effect from 1st <\/p>\n
    May 1994 empowers the Commissioner of Sales Tax to determine the <\/p>\n
    Cumulative   Quantum   of   Benefits   (“CQB”   for   short)   received   by   any <\/p>\n
    dealer to whom a Certificate of Entitlement under the Package Scheme <\/p>\n
    of Incentives has been granted under Entry 136\/E-3 of the Schedule to <\/p>\n
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\n                                               4                                    wp842-00<\/p>\n
    the Notification issued under Section 41 of the BST Act at any time <\/p>\n
    after 1st January 1980 in the manner prescribed by the Rules and if the <\/p>\n
    CQB so calculated exceeds the relevant monetary ceiling, then recover <\/p>\n
    the same  with interest and penalty.   Rule 31AA inserted to the  BST <\/p>\n
    Rules   with   effect   from   24th  March   1995   inter   alia   provides   that   in <\/p>\n
    calculating the CQB in respect of any period commencing on or after 1st <\/p>\n
    January 1980, no regard shall be had to the full or partial exemption <\/p>\n
    from   payment   of   tax   on   any   account   of   any   sale   made   against   any <\/p>\n
    declaration   or   certificate   prescribed   under   the   Act   \/   Rules   \/ <\/p>\n
    Notification.   In other words, by Rule 31AA, it is provided that the CQB <\/p>\n
    availed   by   the   units   covered   under   any   of   the   package   scheme   of <\/p>\n
    incentives on or after 1st January 1980 shall be calculated by ignoring <\/p>\n
    the full or partial exemption granted under the BST Act \/ BST Rules \/ <\/p>\n
    Notifications issued under the BST Act.\n<\/p>\n
    4.             According to the petitioners, Section 41B and Rule 31AA to <\/p>\n
    the extent they are inconsistent with para 2.11 of the 1988 GR are bad <\/p>\n
    in law.  According to the Commissioner, the method of determining the <\/p>\n
    CQB under Section 41B read with Rule 31AA is in consonance with the <\/p>\n
    method prescribed under para 2.11 of the 1988 GR and, therefore, no <\/p>\n
    fault can be found with either Section 41B or Rule 31AA.\n<\/p>\n
    5.             The   relevant   facts   are   that,   since   1964   the   State <\/p>\n
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\n                                              5                                   wp842-00<\/p>\n
    Government with a view to achieve dispersal of Industries outside the <\/p>\n
    Bombay-Thane   belt  and  to  attract  them   to  the   under-developed  and <\/p>\n
    developing areas of the State had resolved to give a Package Scheme of <\/p>\n
    Incentives to new units \/ expansion set up in the developing region of <\/p>\n
    the   State,   under   a   Scheme   popularly   known   as   Package   Scheme   of <\/p>\n
    Incentives.   The first Package Scheme of Incentives introduced in the <\/p>\n
    year 1964 was amended from time-to-time.  The amended Schemes are <\/p>\n
    commonly known as the 1969 Scheme, 1976 Scheme, 1979 Scheme, <\/p>\n
    1983 Scheme and 1988 Scheme.  In the present case, we are concerned <\/p>\n
    with the 1988 Scheme.\n<\/p>\n
    6.            The 1988 Package Scheme of Incentives announced by the <\/p>\n
    State Government as per 1988 GR was to remain in operation for a <\/p>\n
    period of five years from 1st October 1988 to 30th September 1993.  The <\/p>\n
    units   established   under   the   1988   Scheme   could   either   opt   for <\/p>\n
    exemption  from payment of  tax for the  period specified therein and <\/p>\n
    upto the specified financial limit or opt for deferred payment of tax.\n<\/p>\n
    7.            The petitioners, with a view to avail the exemption method <\/p>\n
    prescribed   under   the   1988   Scheme,   decided   to   set   up   a   unit   to <\/p>\n
    manufacture electrical goods at Village Mahim, Taluka Palghar, District <\/p>\n
    Thane.   Accordingly, the petitioner No.1 applied for and obtained an <\/p>\n
    eligibility   certificate   dated   3rd  January   1992   from   the   implementing <\/p>\n
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\n                                                6                                    wp842-00<\/p>\n
    agency, namely, the Development Corporation of Konkan Limited valid <\/p>\n
    for   seven   years   from   3rd  January   1992   to   2nd  January   1999,   with   a <\/p>\n
    financial   ceiling   of   Rs.22,64,971\/-   which   was   increased   to   Rs.\n<\/p>\n
    26,87,800\/- by a corrigendum dated 5th  November 1999.   As per the <\/p>\n
    said  eligibility  certificate,   the   petitioners   were  required  to  set  up  an <\/p>\n
    industrial   unit   at   Village   Mahim,   Taluka   Palghar,   District   Thane   to <\/p>\n
    manufacture tower and tower accessories, marshaling boxes, L.T. & H.T.\n<\/p>\n
    Fuses, switches and switch gear panels etc. and during the period from <\/p>\n
    3rd  January 1992 to 2nd  January 1999 the petitioners were entitled to <\/p>\n
    purchase   raw   materials   and   sell   the   manufactured   goods   without <\/p>\n
    payment   of   purchase   tax   \/   sales   tax   subject   to   the   above   financial <\/p>\n
    ceiling.\n<\/p>\n
    8.             After issuance of the Eligibility Certificate on 3rd  January <\/p>\n
    1992,   the   State   Government   entered   into   an   agreement   with   the <\/p>\n
    petitioners on 7th  January 1992 wherein the terms and conditions for <\/p>\n
    grant of exemption from payment of sales tax \/ purchase tax on sales of <\/p>\n
    finished   goods   and   on   purchase   of   raw   materials   required   in   the <\/p>\n
    manufacture of the electrical goods at the petitioners unit at Mahim, <\/p>\n
    Taluka Palghar, District Thane, were recorded.\n<\/p>\n
    9.             Thereafter, the Deputy Commissioner of Sales Tax, Thane <\/p>\n
    Division,   Thane   issued   a   certificate   of   entitlement   dated   17th  March <\/p>\n
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\n                                                   7                                     wp842-00<\/p>\n
    1992,   wherein   it   is   specifically   recorded   that   the   petitioner   No.1   is <\/p>\n
    entitled to claim exemption to the extent specified therein, in respect of <\/p>\n
    sales   and   purchases   made   by   the   industrial   unit   at   Mahim,   Palghar <\/p>\n
    during the period specified in the Entitlement Certificate in respect of <\/p>\n
    goods falling under Entry 136 of the Notification issued under Section <\/p>\n
    41 of the BST Act.\n<\/p>\n
    10.             At the relevant time, the sales tax \/ purchase tax on the <\/p>\n
    electrical   goods   of   all   kinds   was   levied   at   10%   under   Entry   44   of <\/p>\n
    Schedule   C,   Part   II   of   the   BST   Act.     By   inserting   Entry   47   into   the <\/p>\n
    statutory notification issued under Section 41 of the BST Act, it was <\/p>\n
    provided that with effect from 1st July 1981 sales by a registered dealer <\/p>\n
    to the undertakings engaged in the generation or distribution of energy <\/p>\n
    would be exempt from purchase tax \/ sales tax in excess of 4% subject <\/p>\n
    to the conditions set out therein. During the period from 26 th  March <\/p>\n
    1987  to   30th  September   1995,   such   exemption   was  restricted   to   the <\/p>\n
    amount of sales tax exceeding 6%.  With effect from 1st October 1995, <\/p>\n
    such   exemption   was   restored   to   the   amount   of   tax   exceeding   4%.\n<\/p>\n
    Thus, on sale of electrical goods sales tax was payable at 10% as per <\/p>\n
    the   schedule   to   the   BST   Act,   but   when   sales   were   effected   to   the <\/p>\n
    undertakings   engaged   in   the   generation   of   electricity,   sales   tax   \/ <\/p>\n
    purchase tax was payable at 4% or at 6% as per the notification issued <\/p>\n
    under Section 41 of the BST Act.\n<\/p>\n
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                                                 8                                    wp842-00<\/p>\n
    11.            However, in respect of the units established in a backward <\/p>\n
    area,   as   per   the   package   scheme   of   incentives   framed   by   the   State <\/p>\n
    Government   total   exemption  was  granted  up  to   the   specified  period <\/p>\n
    and upto a specified amount of tax.   In the case of a unit established <\/p>\n
    under   the   1988   Scheme   to   manufacture   electrical   goods,   total <\/p>\n
    exemption   was   granted   as   per   Notification   entry   136(2)(a)   and   (b) <\/p>\n
    under   Section   41   of   the   BST   Act.     The   said   entry   136(2)(a)   of   the <\/p>\n
    Notification   provides   that   sale   by   a   registered   dealer,   being   an <\/p>\n
    Industrial   Unit   set   up   in   the   developing   regions   of   the   State   of <\/p>\n
    Maharashtra   and   certificated   by   the   relevant   Regional   Development <\/p>\n
    Corporation as an eligible unit under the 1988 Scheme falling under <\/p>\n
    the   Package   Scheme   of   Incentives   and   to   whom   a   Certificate   of <\/p>\n
    Entitlement has been granted would be exempt from the whole of the <\/p>\n
    sales tax.   Similarly, Entry 136(2)(b) of the Notification issued under <\/p>\n
    Section 41 of the BST Act provides that sales of any goods being raw <\/p>\n
    materials by a registered dealer to a registered dealer referred to in <\/p>\n
    Entry 136(2)(a) shall be exempt from whole of purchase tax.\n<\/p>\n
    12.            Thus,   the   levy   of   sales   tax   \/   purchase   tax   on   electrical <\/p>\n
    goods  of  all  types  was  at  10%  as  per   the  Schedule  to the  BST  Act.\n<\/p>\n
    However, by Entry 47 of the Notification issued under Section 41 of the <\/p>\n
    BST Act, partial exemption was granted from payment of purchase tax <\/p>\n
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\n                                                  9                                    wp842-00<\/p>\n
    on purchase of raw materials and sales tax on sale of electrical goods <\/p>\n
    when made to undertakings engaged in the generation or distribution <\/p>\n
    of electrical energy.   The exemption from payment of purchase tax \/ <\/p>\n
    sales tax was in excess of 4% (from 1st July 1981 to 25th March 1987), <\/p>\n
    in excess of 6% (from 26th March 1987 to 30th September 1995) and in <\/p>\n
    excess of 4% from 1st October 1995 onwards.  In other words, when a <\/p>\n
    registered dealer purchased raw materials and on manufacture sold the <\/p>\n
    electrical   goods   to   undertakings   engaged   in   the   generation   or <\/p>\n
    distribution   of   electrical   energy,   as   per   Notification   issued   under <\/p>\n
    Section   41   of   the   BST   Act,   the   maximum   sales   tax   \/   purchase   tax <\/p>\n
    payable by that dealer was 4% or 6% as the case may be, and, when <\/p>\n
    sold to others the tax payable was at 10% as per Schedule entry in the <\/p>\n
    BST Act.  A unit covered under the 1988 Scheme was, however, totally <\/p>\n
    exempted from payment of purchase tax on purchase of raw materials <\/p>\n
    and sales tax on sale of finished electrical goods as per Entry 136(2)(a) <\/p>\n
    and 136(2)(b) of the Notification issued under Section 41 of the BST <\/p>\n
    Act.\n<\/p>\n
    13.             In the present case, it is not in dispute that the petitioner’s <\/p>\n
    unit is covered under the 1988 Scheme.   It is not in dispute that the <\/p>\n
    petitioners   have   fulfilled   all   the   conditions   set   out   in   the   Eligibility <\/p>\n
    Certificate   \/   Entitlement   Certificate   and   accordingly   the   sales   and <\/p>\n
    purchases of raw materials effected by the petitioners during the period <\/p>\n
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\n                                                 10                                    wp842-00<\/p>\n
    specified in the Certificate (from 3rd January 1992 to 2nd January 1999) <\/p>\n
    and upto the financial ceiling of Rs.26,87,800\/- are totally exempt from <\/p>\n
    payment of sales tax \/ purchase tax as per Entry 136(2)(a) and 136(2)<\/p>\n
    (b) of the Notification issued under Section 41 of the BST Act.\n<\/p>\n
    14.            The   only   dispute   is   in   relation   to   the   calculation   of   the <\/p>\n
    cumulative quantum of benefits (CQB) received by the petitioners on <\/p>\n
    the respective sales \/ purchases effected during the validity period of <\/p>\n
    the   Certificates   issued   under   the   1988   Scheme   till   reaching   the <\/p>\n
    financial ceiling provided under the Entitlement Certificate.\n<\/p>\n
    15.            Calculation of CQB, according to the petitioners was liable <\/p>\n
    to   be   made   as   per   para   2.11   of   the   1988   GR   by   considering   the <\/p>\n
    maximum tax that would have been payable under the BST Act \/ BST <\/p>\n
    Rules   including   the   exemption   provisions   contained   therein,   if   the <\/p>\n
    petitioner’s unit was not covered under the 1988 Scheme.  According to <\/p>\n
    the Commissioner, the calculation of CQB was liable to be made as per <\/p>\n
    para 2.11 of the 1988 GR read with Section 41B and Rule 31AA by <\/p>\n
    considering maximum rate of tax levied under the Schedule to the BST <\/p>\n
    Act by ignoring the exemption provisions contained therein.\n<\/p>\n
    16.            Para   2.11   of   the   Government   Resolution   dated   30th <\/p>\n
    September 1988 reads thus :-\n<\/p>\n
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                                              11                                   wp842-00<\/p>\n
          “2.11 Notional Sales Tax Liability :-\n<\/p>\n
                  (a) Sales   Tax   \/   purchase   tax   \/   additional   tax <\/p>\n
           that would have been payable by the Eligible Unit on the
\n           purchases of raw materials and sales tax \/ turnover tax \/
\n           additional   tax   that   would   have   been   payable   by   the
\n           Eligible   Unit   on   the   sales   of   finished   products   \/   by-
\n           products   \/   scrap   goods   of   the   Eligible   Unit   under   the <\/p>\n
           Local   Sales   Tax   Law   but   for   an   exemption   under   the
\n           1988 Scheme and computed at the maximum rates  of
\n           tax specified under the Local Sales Tax Law as applicable
\n           from time to time.\n<\/p>\n
                       For the  purpose  of  the  above  clause, sales <\/p>\n
           made   on   consignment   basis   within   the   State   of
\n           Maharashtra   or   branch   transfers   within   the   State   of
\n           Maharashtra   shall   also   be   deemed   to   be   sales   made <\/p>\n
           within the State exigible to tax”.\n<\/p>\n
    17.          Section 41B inserted to the BST Act by Maharashtra Act 29 <\/p>\n
    of 1994 with effect from 1st May 1994 reads thus :-\n<\/p>\n
           “41B. Calculation of cumulative quantum of benefits
\n           under Package Scheme of Incentives.<\/p>\n
                   (1) In   order   to   determine   whether   the
\n           cumulative quantum of benefits received by any dealer
\n           to whom a Certificate of Entitlement has been granted
\n           by the Commissioner under entry 136 of the Schedule to <\/p>\n
           the notification issued under Section 41, has at any time
\n           after   the   1st  January   1980   exceeded   the   relevant
\n           monetary   ceiling   under   any   Package   Scheme   of
\n           Incentives   for   any   period   whether   before   or   after   the
\n           date   of   commencement   of   the   Maharashtra   Tax   Laws
\n           (Levy  and  Amendment)  Act,  1994  (hereinafter,  in   this
\n           section, referred to as “the  commencement date”), the
\n           Commissioner shall calculate the cumulative quantum of
\n           benefits in the manner prescribed in respect of all the
\n           relevant periods and the Package Scheme of Incentives.<\/p><\/blockquote>\n
\n\n                  (2)     If it is found that the cumulative quantum of \n\n                                                         ::: Downloaded on - 09\/06\/2013 17:19:29 :::<\/span>\n                                               12                                    wp842-00\n\n<\/pre>\n
            benefits so calculated in respect of any Eligible unit has
\n            exceeded   the   relevant   monetary   ceiling   where   such <\/p>\n
            ceiling is provided in the Package Scheme of Incentives,
\n            then the Commissioner shall, require the dealer by order <\/p>\n
            in writing to pay the tax, interest or penalty in respect of
\n            each   relevant   period   and   shall   for   the   purpose   of
\n            recovery  of   such   tax,   interest   or   penalty,  serve   on   the
\n            dealer a notice.\n<\/p><\/blockquote>\n
                  Provided that, no order under this section shall be
\n            passed   without   giving   the   dealer   a   reasonable
\n            opportunity of being heard.\n<\/p><\/blockquote>\n
                    (3) The notice so issued, shall be deemed to be
\n            a notice issued under sub-section (4) of section 38 and <\/p>\n
            the   relevant   provisions   of   this   Act   shall   apply   to   such
\n            notice as they apply to a notice issued under sub-section
\n            (4) of section 38.”\n<\/p><\/blockquote>\n
    18.           Rule   31AA   inserted   to   the   BST   Rules   by   Government <\/p>\n
    Notification dated 24th  March 1995 with effect from 24th  March 1995 <\/p>\n
    (to the extent relevant) reads thus :-\n<\/p>\n
          “31AA.          Calculation of the cumulative quantum of  <\/p>\n
          benefits.-\n<\/p><\/blockquote>\n
                 (1) The cumulative quantum of benefits received
\n          by a dealer (hereinafter referred to as “the said dealer”) to
\n          whom a Certificate of Entitlement has been granted by the <\/p>\n
          Commissioner   under   entry   136   of   the   Schedule   to   the
\n          notification issued under section 41 shall be calculated by
\n          the Commissioner in  respect of any period commencing
\n          on or after the 1st January 1980 in the manner prescribed
\n          herein.<\/p><\/blockquote>\n
                 (2) The cumulative quantum of benefits received
\n          by the said dealer to whom the said certificate has been
\n          granted   under   the   1979   Package   Scheme   of   Incentives
\n          including   the   amended   1979   Package   Scheme   of
\n          Incentives   and   the   1983   Package   Scheme   of   Incentives
\n          shall  be  the  aggregate of the  following  sums, that is  to <\/p>\n
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\n                                           13                                     wp842-00<\/p>\n
     say,-\n<\/p>\n
                    (a) a sum equal to the amount of purchase
\n             tax   which   would   have   been   payable   on   the <\/p>\n
             purchases of raw materials to the Government by
\n             the said dealer under any of the provisions of the
\n             Act and the amount of additional tax in relation to
\n             such purchase tax which would have been payable
\n             to the Government if the exemption granted under <\/p>\n
             the said entry was not available;\n<\/p><\/blockquote>\n
                     (b) a sum equal to the amount of sales tax
\n             which would have been payable by a selling dealer <\/p>\n
             not holding a Certificate of Entitlement on the sale
\n             of   raw   materials   to   the   said   dealer   if   the   set   off <\/p>\n
             under rule 42AC is not admissible to the said dealer
\n             in respect of such purchases;\n<\/p><\/blockquote>\n
                    Provided   that   during   the   period   from   15th
\n             April, 1994 to 30th November, 1994, the calculation
\n             shall be made at the rate of tax applicable to such
\n             goods as reduced by 4% from the applicable rate of <\/p>\n
             tax;\n<\/p><\/blockquote>\n
                   (c) a sum equal to the amount granted as
\n             drawback,   set-off   or,   as   the   case   may   be,   refund
\n             under rule 42AC to the said dealer;\n<\/p><\/blockquote>\n
                    (d) a   sum   equal   to   4   per   cent   of   the
\n             turnover   of   inter-State   sales   of   finished   products
\n             manufactured by the said dealer in the eligible unit
\n             and specified in the eligibility certificate granted to
\n             him by the implementing agency and if the inter-\n<\/p><\/blockquote>\n
             State sales of such products are generally liable for
\n             Central sales tax at a rate less than 4 per cent then
\n             a   sum   calculated   at   such   lower   rate   on   the   said
\n             turnover;\n<\/p><\/blockquote>\n
                    (e) a   sum   equal   to   the   amount   of   tax
\n             (including   sales   tax,   additional   tax   and   turnover
\n             tax)   which   would   have   been   payable   to
\n             Government on any sales of products manufactured
\n             by the said dealer in the eligible unit and specified
\n             in  the  eligibility  certificate   granted  to  him  by  the
\n             implementing   agency   if   the   said   dealer   was   not <\/p>\n
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\n                                              14                                   wp842-00<\/p>\n
                 holding the said Certificate of Entitlement and no
\n                 regard   was   had   or   any   deduction   from   the   said <\/p>\n
                 turnover or full or partial exemption from payment
\n                 of tax on any account of any sale made against any <\/p>\n
                 declaration or certificate prescribed under the Act,
\n                 Rules   or   any   notification   issued   under   the   Act   or
\n                 Rules;\n<\/p><\/blockquote>\n
                         Provided that ………..\n<\/p><\/blockquote>\n
                         Provided further that ………..\n<\/p><\/blockquote>\n
                         Provided also that …………….\n<\/p><\/blockquote>\n<\/blockquote>\n
                  (3) For   the   purpose   of   calculation   of   the <\/p>\n
          cumulative quantum of benefits under the 1988 Package
\n          Scheme of Incentives, the provisions contained in sub-rule
\n          (2)   shall   apply  mutatis   mutandis  with   the   qualification <\/p>\n
          that the expression “finished products” shall be deemed to
\n          include by-products and scrap products generated during
\n          the process of manufacture in the eligible unit of products
\n          specified in the eligibility certificate granted to the said <\/p>\n
          dealer.\n<\/p><\/blockquote>\n
                 (4)     ……………\n<\/p><\/blockquote>\n
                  (5) In   this   Rule   the   expression   “raw   materials”
\n          shall   have   the   same   meaning   as   assigned   to   it   in   the <\/p>\n
          Explanation II appended to the said entry 136.”.\n<\/p><\/blockquote>\n
    19.          Mr.Joshi, learned counsel for the petitioners submitted that <\/p>\n
    the petitioners had set up a unit in the backward area based on the <\/p>\n
    terms   and   conditions   in   the   agreement   including   the   method   of <\/p>\n
    calculating the CQB set out under the 1988 Scheme contained in the <\/p>\n
    1988 GR.  Since Section 41B read with Rule 31AA seeks to introduce a <\/p>\n
    different method of calculating the CQB, it amounts to taking away the <\/p>\n
    rights vested in the petitioners under the 1988 GR and, therefore, the <\/p>\n
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\n                                             15                                   wp842-00<\/p>\n
    provisions of Section 41B read with Rule 31AA must be held to be bad <\/p>\n
    in law to the extent they are in conflict with para 2.11 of the 1988 GR.\n<\/p>\n
    20.           Mr.Joshi submitted that in the case of petitioners, the CQB <\/p>\n
    as per para 2.11 of the 1988 GR was liable to be calculated on the basis <\/p>\n
    of the maximum sales tax \/ purchase tax that would have been payable <\/p>\n
    if the petitioner’s unit was not covered under the 1988 Scheme.  If the <\/p>\n
    petitioner’s   unit   was   not   covered   under   the   1988   Scheme,   then   on <\/p>\n
    purchase of raw materials and sale of electrical goods to undertakings <\/p>\n
    engaged   in   the   generation   \/   distribution   of   electrical   energy,   the <\/p>\n
    petitioners would have been liable to pay purchase tax \/ sales tax at 6% <\/p>\n
    or 4% as the case may be as per the Notification issued under Section <\/p>\n
    41 of the BST Act and was liable to pay purchase tax \/ sales tax at 10% <\/p>\n
    when sales were made to others.   The submission is that as per para <\/p>\n
    2.11 of the 1988 GR, the “notional sales tax liability” computed cannot <\/p>\n
    exceed the actual sales tax liability that would have been incurred by <\/p>\n
    the unit if not covered under the 1988 Scheme.     In support of the <\/p>\n
    above contention, Mr.Joshi relied upon the decisions of this Court in <\/p>\n
    the   case   of  Varun   Polymol   Organics   Limited   V\/s.   State   of  <\/p>\n
    Maharashtra  reported in  97 STC 55 (Bom.), decision in the case of <\/p>\n
    Multifilms Plastics Private Limited V\/s. SICOM reported in 105 STC <\/p>\n
    458 (Bom.), decision of the Gujarat High Court in the case of ARDEEC  <\/p>\n
    Engg (Saurashtra) Private Limited V\/s. State of Gujarat reported in  <\/p>\n
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\n                                                16                                    wp842-00<\/p>\n
    117 STC 178 (Guj.) and a decision of the Orissa High Court in the case <\/p>\n
    of  Luis Packaging Private Limited  V\/s.  State  of Orissa  reported  in <\/p>\n
    (2010) 32 VST 481 (Ori.).\n<\/p>\n
    21.            Relying   on   a   decision   of   the   Apex   Court   in   the   case   of <\/p>\n
    State of Bihar V\/s. Suprabhat Steel Limited reported in 112 STC 258  <\/p>\n
    (S.C.),   Mr.Joshi  submitted   that   since  Rule  31AA   inserted   with  effect <\/p>\n
    from   24th  March   1995   prescribes   a   method   for   calculating   CQB <\/p>\n
    retrospectively   from   1st  January   1980   contrary   to   the   method <\/p>\n
    prescribed in the Industrial Policy declared by the State Government on <\/p>\n
    30th  September   1988,   the   Rule   31AA   to   the   extent   it   prescribes   a <\/p>\n
    different method for calculating CQB must be held to be bad in law.  He <\/p>\n
    submitted that the right to avail the CQB as per para 2.11 of the 1988 <\/p>\n
    GR   was   a   vested   right   of   the   petitioners   and   the   State   Government <\/p>\n
    could not divest that right by inserting Rule 31AA retrospectively from <\/p>\n
    1st  January 1980.   In support of the above contention, Mr.Joshi relied <\/p>\n
    upon the decisions of this Court in the case of Tapti Oil Industries V\/s.\n<\/p>\n
    State of Maharashtra  reported in  56 STC 193 (Bom.)  and  Olympic  <\/p>\n
    Oil   Industries   V\/s.   State   of   Maharashtra  reported   in  65   STC   191 <\/p>\n
    (Bom.).\n<\/p>\n
    22.            Mr.Joshi   further   submitted   that   when   the   State <\/p>\n
    Government has specifically introduced Rule 31AA with effect from 24th <\/p>\n
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\n                                                17                                   wp842-00<\/p>\n
    March   1995,   the   said   Rule   cannot   be   applied   retrospectively.     He <\/p>\n
    submitted that the principles of promissory estoppel are applicable in <\/p>\n
    the   present   case,   as   the   petitioner’s   have   set   up   the   unit   in   the <\/p>\n
    backward area relying on the promise contained in the 1988 GR which <\/p>\n
    is sought to be taken away arbitrarily by introducing Rule 31AA with <\/p>\n
    retrospective effect from 1st  January 1980.   He submitted that a unit <\/p>\n
    which   is   not   covered   under   the   package   scheme   of   incentives   when <\/p>\n
    purchases raw materials \/ sells electrical goods, then the purchase tax \/ <\/p>\n
    sales tax payable would be at 4% or 6% when sold to undertakings <\/p>\n
    engaged in the generation \/ distribution of the electrical energy and at <\/p>\n
    10% when sold to others.  The expression ‘maximum rate of tax’ in para <\/p>\n
    2.11 of the 1988 GR refers to the maximum rates of tax that would <\/p>\n
    have been payable by the Unit if not covered under the 1988 Scheme as <\/p>\n
    per  the  exemption  Notification  issued  under  the  BST  Act and is not <\/p>\n
    referable   to   the   tax   levied   under   the   Schedule   to   the   BST   Act.\n<\/p>\n
    Accordingly, Mr.Joshi  submitted that petition  be  allowed by granting <\/p>\n
    the reliefs claimed in the petition.\n<\/p>\n
    23.            Mr.Sonpal,   learned   counsel   appearing   on   behalf   of   the <\/p>\n
    Commissioner, on the other hand, submitted that the Writ Petition filed <\/p>\n
    to   challenge  the   validity   of   Rule   31AA   suffers   from   gross   delay  and <\/p>\n
    laches as Rule 31AA came into force with effect from 24th March 1995, <\/p>\n
    whereas   the   Writ   Petition   is   filed   belatedly   in   the   year   2000.     He <\/p>\n
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\n                                                 18                                    wp842-00<\/p>\n
    submitted that Rule 31AA is in consonance with para 2.11 of the 1988 <\/p>\n
    GR, as is evident from the fact that even before the insertion of Rule <\/p>\n
    31AA, para 2.11 was interpreted in consonance with Rule 31AA and <\/p>\n
    assessment orders were passed for the period 1991-92, 1992-93 and <\/p>\n
    1993-94 on 6th January 1995 and the said assessment orders have been <\/p>\n
    accepted by the petitioners.  Therefore, it is not open to the petitioners <\/p>\n
    to contend that Rule 31AA is inconsistent with para 2.11 of the 1988 <\/p>\n
    GR.\n<\/p>\n
    24.            Plain reading of para 2.11 in the 1988 GR, according to <\/p>\n
    Mr.Sonpal   is   that   the   maximum   rate   of   tax   that   would   have   been <\/p>\n
    leviable should be considered for the calculation of CQB and any sale <\/p>\n
    on   any   declaration   except   ‘C’   form   are   liable   to   be   ignored.     He <\/p>\n
    submitted   that   Rule   31AA   is   clarificatory   in   nature.     Mr.Sonpal <\/p>\n
    submitted   that   it   is   not   the   case   of   the   petitioners   that   the   State <\/p>\n
    legislature lacked the legislative competence to introduce Rule 31AA to <\/p>\n
    the BST Rules.  The only ground on which Rule 31AA is assailed is that <\/p>\n
    it   is   arbitrary   and   violative   of   Article   14   of   the   Constitution.     He <\/p>\n
    submitted that Rule 31AA  inserted to the  BST  Rules, as  per  Section <\/p>\n
    74(5) of the BST Act has been placed before both the houses of the <\/p>\n
    legislature and, therefore, Rule 31AA has the force of law as statute.\n<\/p>\n
    He   submitted   that   there   is   no   estoppel   against   the   statute   and   the <\/p>\n
    legislature is empowered to levy different taxes for different classes.\n<\/p>\n
                                                             ::: Downloaded on – 09\/06\/2013 17:19:29 :::<\/span><\/p>\n
                                               19                                    wp842-00<\/p>\n
    25.            Mr.Sonpal   further   submitted   that   the   words   “maximum <\/p>\n
    rates of tax specified under the local sales tax law as applicable from <\/p>\n
    time-to-time” in para 2.11 of the 1988 GR clearly refers to the rates of <\/p>\n
    tax set out in the Schedule to the BST Act.  The exemption notifications <\/p>\n
    do not redefine the maximum rate of tax.  Therefore, para 2.11 of the <\/p>\n
    1988 GR as also the provisions contained in the earlier Package Scheme <\/p>\n
    of Incentives referred to the maximum rates of tax provided under the <\/p>\n
    Schedule   to   the   BST   Act   and   that   position   has   been   clarified   by <\/p>\n
    inserting Rule 31AA with effect from 1st January 1980.   Accordingly, he <\/p>\n
    submitted that when the 1988 Scheme provides for calculating CQB at <\/p>\n
    the maximum rate, to accept the contention of the petitioners that the <\/p>\n
    CQB has to be calculated at the concessional rate would be contrary to <\/p>\n
    the Scheme itself.\n<\/p>\n
    26.            Relying on the decision of the Apex Court in the case of the <\/p>\n
    Indian Express Newspapers (Bombay) P. Limited V\/s. Union of India  <\/p>\n
    reported   in  (1985)   3   SCC   641,   counsel   for   the   Commissioner <\/p>\n
    contended that a subordinate legislation can be challenged only if it is <\/p>\n
    manifestly   arbitrary.     In   the   present   case,   para   2.11   of   the   Scheme <\/p>\n
    clearly provides for the notional sales tax liability to be calculated at <\/p>\n
    the maximum rates specified under the sales tax law and, therefore, <\/p>\n
    Rule 31AA which incorporates the provisions contained in para 2.11 <\/p>\n
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\n                                            20                                  wp842-00<\/p>\n
    cannot   be   said   to   be   manifestly   arbitrary   and   consequently,   the <\/p>\n
    challenge to Rule 31AA cannot be sustained.\n<\/p>\n
    27.           It is further contended on behalf of the Commissioner that <\/p>\n
    by a Circular No.9 of 1990 dated 12th April 1990, the Commissioner of <\/p>\n
    Sales Tax in the light of the clarification dated 26th March 1990 issued <\/p>\n
    by the Industries, Energy and Labour Department had clearly brought <\/p>\n
    to the  notice  of the  persons in  the  trade, that the  rate  of  tax to be <\/p>\n
    applied for calculating the notional sales tax liability would be the rate <\/p>\n
    shown in the Schedule appended to the BST Act and not the rate as <\/p>\n
    reduced by any notification issued under Section 41 of the BST Act.\n<\/p>\n
    Therefore, it is not open to the petitioners belatedly in the year 2000 to <\/p>\n
    contend that the CQB has to be calculated at the rate specified in the <\/p>\n
    exemption notification.\n<\/p>\n
    28.           We have carefully considered the rival submissions.   The <\/p>\n
    question to be considered in the present case is, whether under para <\/p>\n
    2.11 of the 1988 GR, the CQB was liable to be calculated by ignoring <\/p>\n
    the exemption provisions contained in the BST Act \/ BST Rules ?\n<\/p>\n
    29.           Plain reading of para 2.11 of the 1988 GR clearly shows <\/p>\n
    that the quantum of benefits availed by a unit covered under the 1988 <\/p>\n
    scheme has to be calculated with reference to the tax that would have <\/p>\n
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\n                                                 21                                    wp842-00<\/p>\n
    been   payable   by   a   unit   if   not   covered   under   the   1988   Scheme   on <\/p>\n
    assessment at the maximum rates of tax specified under the local sales <\/p>\n
    tax law as applicable from time-to-time.\n<\/p>\n
    30.              Sales tax \/ purchase tax are levied on sale \/ purchase of <\/p>\n
    certain   goods   at   the   rates   specified   in   the   schedule   to   the   BST   Act.\n<\/p>\n
    Where   the   sales   \/   purchases   are   covered   under   the   partial   \/   total <\/p>\n
    exemptions   granted  under  the  BST  Act  \/  BST  Rules, then,  the  sales <\/p>\n
    tax   \/   purchase   tax   in   respect   of   those   sales   \/   purchases   becomes <\/p>\n
    payable   at   the   rates   prescribed   under   the   exemption   provisions.     In <\/p>\n
    respect of sales \/ purchases covered under the exemption provisions, <\/p>\n
    the rate of tax applicable is the rate of tax set out in the exemption <\/p>\n
    provisions and not the rate of tax set out in the schedule to the BST <\/p>\n
    Act.  Thus, computation of tax at the maximum rate arises only when <\/p>\n
    the   sales   \/   purchases   are   covered   under   the   exemption   provisions.\n<\/p>\n
    Where   the   sales   \/   purchases   are   not   covered   under   the   exemption <\/p>\n
    provisions, the tax is payable at the rate prescribed under the schedule <\/p>\n
    to the BST Act and there is no question of paying taxes at the maximum <\/p>\n
    rates of tax.\n<\/p>\n
    31.              Para  2.11 of  the  1988 GR  neither  directly nor indirectly <\/p>\n
    provides that in calculating the CQB availed by a unit covered under <\/p>\n
    the 1988 Scheme, the exemption provisions contained in the BST Act \/ <\/p>\n
                                                             ::: Downloaded on – 09\/06\/2013 17:19:29 :::<\/span>
\n                                                 22                                    wp842-00<\/p>\n
    BST Rules should be ignored.  Para 2.11 of the 1988 GR provides that <\/p>\n
    the   notional   tax   liability   of   a   unit   covered   under   the   1988   Scheme <\/p>\n
    would   be   the   tax   payable   by   a   unit   not   covered   under   the   1988 <\/p>\n
    Scheme. Computation of tax payable by a unit not covered under the <\/p>\n
    1988 Scheme, would be the tax determined as payable after taking into <\/p>\n
    consideration the exemptions granted under the BST Act \/ BST Rules.\n<\/p>\n
    Therefore, the CQB availed by a unit covered under the 1988 Scheme, <\/p>\n
    as per para 2.11 of the 1988 GR had to be computed on the basis of the <\/p>\n
    tax payable by a unit not covered under the 1988 Scheme as per the <\/p>\n
    provisions including the exemption provisions contained in the BST Act <\/p>\n
    \/ BST Rules.\n<\/p>\n
    32.            The   expression   “computed   at   the   maximum   rates   of   tax <\/p>\n
    under the local sales tax law” clearly denotes that the computation is <\/p>\n
    not referable to the rate of tax specified in the schedule to the BST Act, <\/p>\n
    but   is   referable   to   the  maximum   rate   of   tax   payable   in   view   of   the <\/p>\n
    exemption provisions contained under local sales tax law.  By using the <\/p>\n
    wider expression “local sales tax law”, it is amply made clear in para <\/p>\n
    2.11 that it is the tax which is actually payable by a unit not covered <\/p>\n
    under the 1988 Scheme should be the basis for calculating the CQB <\/p>\n
    availed by a unit covered under the 1988 Scheme.   Para 2.11 of the <\/p>\n
    1988 GR cannot be construed to mean that the computation of tax has <\/p>\n
    to be made by ignoring the exemption provisions contained in the BST <\/p>\n
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\n                                                  23                                     wp842-00<\/p>\n
    Act \/ BST Rules.   When a notification issued under Section 41 of the <\/p>\n
    BST Act grants partial exemption, then the tax payable pursuant to the <\/p>\n
    notification is the maximum rate of tax payable on sale \/ purchase of <\/p>\n
    goods referred to in the notification.  There is nothing in para 2.11 to <\/p>\n
    suggest that the tax payable by a unit in the light of notification issued <\/p>\n
    under Section 41 of the BST Act should not be treated as the maximum <\/p>\n
    rate   of   tax   payable   under   local   sales   tax   law.     As   noted   earlier,   the <\/p>\n
    schedule to the BST Act does not prescribe maximum \/ minimum rate <\/p>\n
    of tax.  It is only when partial exemption is granted under the sales tax <\/p>\n
    law,   the question of paying tax at the maximum rate arises. In these <\/p>\n
    circumstances,   it   is   not   possible   to   accept   the   contention   of   the <\/p>\n
    Commissioner that the expression “computed at the maximum rates of <\/p>\n
    tax” in para 2.11 of 1988 GR refers to the rate of tax specified in the <\/p>\n
    schedule to the BST Act and not to the rate of tax payable under the <\/p>\n
    sales tax law including the exemption provisions contained in the sales <\/p>\n
    tax law.\n<\/p>\n
    33.             As noted earlier, para 2.11 of the 1988 GR refers to the tax <\/p>\n
    payable by a unit not covered under the 1988 Scheme at the maximum <\/p>\n
    rate of tax specified under the local sales tax law.  If a unit not covered <\/p>\n
    under   the   1988   Scheme   sells   the   electrical   goods   exclusively   to   a <\/p>\n
    undertaking   engaged   in   the   generation   and   distribution   of   electrical <\/p>\n
    energy, then the maximum rate of tax payable by that unit would be at <\/p>\n
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\n                                              24                                    wp842-00<\/p>\n
    6% or 4% depending upon the period of sales \/ purchases, in spite of <\/p>\n
    the fact that the rate of tax prescribed under the schedule to the BST <\/p>\n
    Act is 10%.   Similarly, if the unit which is not covered under the 1988 <\/p>\n
    Scheme   makes   sales   \/   purchases   to   the   undertakings   which   are   not <\/p>\n
    engaged in the generation and distribution of electrical energy, then the <\/p>\n
    exemption provisions would not be applicable and the tax payable by <\/p>\n
    that unit would be at 10% as per the Schedule to the BST Act.   Para <\/p>\n
    2.11 of the 1988 GR neither stipulates that in determining the notional <\/p>\n
    tax liability, the exemption provisions under the BST Act \/ BST Rules <\/p>\n
    have   to   be   ignored   nor   does   it   stipulate   that   the   sales   to   the <\/p>\n
    undertakings engaged in the generation and distribution of electrical <\/p>\n
    energy   should   be   treated   as   sales   to   undertakings   which   are   not <\/p>\n
    engaged   in   the   generation   and   distribution   of   electrical   energy.\n<\/p>\n
    Therefore, in our opinion, the expression “computed at the maximum <\/p>\n
    rates of tax” in para 2.11 of 1988 GR simply refers to the tax actually <\/p>\n
    payable by a unit not covered under the 1988 Scheme as per the local <\/p>\n
    sales tax law including the exemption provisions contained in the BST <\/p>\n
    Act \/ BST Rules.\n<\/p>\n
    34.           Once it is held that para 2.11 of the 1988 GR provides for <\/p>\n
    computation  of notional tax liability on the basis of the tax actually <\/p>\n
    payable   by   a   unit   not   covered   under   the   1988   Scheme   under   the <\/p>\n
    provisions of the sales tax law which includes the exemption provisions <\/p>\n
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\n                                              25                                   wp842-00<\/p>\n
    contained under the BST Act \/ BST Rules, then it would have to be held <\/p>\n
    that Rule 31AA inserted with effect from 24th March 1995 to the extent <\/p>\n
    it   directs   the   Commissioner   to   compute   the   CQB   by   ignoring   the <\/p>\n
    exemption   provisions   is   bad   in   law.     The   reason   being   that   the <\/p>\n
    petitioners   had   established   a   unit   in   the   backward   area   on   the <\/p>\n
    assurance contained in the 1988 GR to the effect that the CQB would <\/p>\n
    be computed at the maximum rates specified under the local sales tax <\/p>\n
    law and not at the rate specified in the schedule to the BST Act. The <\/p>\n
    said  terms   and  conditions   which  forms   the   basis   for   entering   into  a <\/p>\n
    contract between the State Government and the petitioners could not <\/p>\n
    be altered retrospectively by introducing Rule 31AA with effect from <\/p>\n
    24th March 1995.\n<\/p>\n
    35.           In  the case of  Suprabhat Steel Limited  (supra), the  Apex <\/p>\n
    Court was called upon to consider the validity of a notification issued <\/p>\n
    by the State Government which was repugnant to the industrial policy <\/p>\n
    approved by the State Government.  The Apex Court on consideration <\/p>\n
    of the rival contentions held (see para 7) thus :-\n<\/p>\n
                    “7. Coming to the second question, namely, the
\n             issuance   of   notification   by   the   State   Government   in
\n             exercise of power under section 7 of the Bihar Finance
\n             Act, it is true that issuance of such notifications entitles
\n             the industrial units to avail of the incentives and benefits
\n             declared by the State Government in its own industrial
\n             incentive policy.  But in exercise of such power it would
\n             not be permissible for the State Government to deny any <\/p>\n
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\n                                                26                                    wp842-00<\/p>\n
             benefit which is otherwise available to an industrial unit
\n             under   the   incentive   policy   itself.     The   Industrial <\/p>\n
             Incentive Policy is issued by the State Government after
\n             such   policy   is   approved   by   the   Cabinet   itself.     The <\/p>\n
             issuance of the notification under section 7 of the Bihar
\n             Finance Act is by the State Government in the Finance
\n             Department which notification is issued to carry out the
\n             objectives   and   the   policy   decisions   taken   in   the
\n             industrial policy itself.   In this view of the matter, any <\/p>\n
             notification issued by the Government order in exercise
\n             of power under Section 7 of the Bihar Finance Act, if is
\n             found to be repugnant to the Industrial Policy declared
\n             in  a  Government  resolution, then  the  said  notification <\/p>\n
             must be held to be bad to that extent. ………”\n<\/p><\/blockquote>\n
                   In the present case also, Rule 31AA is framed by the State <\/p>\n
    Government in exercise of powers conferred by Section 74 of the BST <\/p>\n
    Act and since Rule 31AA is repugnant to the industrial policy contained <\/p>\n
    in the 1988 GR, it must be held to be bad in law to the extent it seeks <\/p>\n
    to take away the rights conferred upon the petitioners under the 1988 <\/p>\n
    GR.\n<\/p><\/blockquote>\n
    36.            It may be noted that Section 41B inserted to the BST Act <\/p>\n
    with effect from 1st  May 1994 merely provides that the Commissioner <\/p>\n
    shall calculate the CQB from 1st January 1980 in the manner prescribed <\/p>\n
    for   that   period.   Section   41B   does   not   provide   that   the   manner   of <\/p>\n
    calculating CQB should be different from the manner prescribed under <\/p>\n
    the package scheme of incentives.  Thus, in our opinion, it is Rule 31AA <\/p>\n
    and not Section 41B which is repugnant to the industrial policy and, <\/p>\n
    therefore,   Rule   31AA   to   the   extent   it   is   repugnant   to   the   industrial <\/p>\n
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\n                                               27                                   wp842-00<\/p>\n
    policy must be held to be bad in law.\n<\/p>\n
    37.            The   argument   advanced   on   behalf   of   the   Commissioner <\/p>\n
    that the petition suffers from delay and laches is without any merit, <\/p>\n
    because,   Rule   31AA   has   been   invoked   in   the   case   of   petitioners   by <\/p>\n
    passing assessment orders in August 1999 for the period 1994-95 to <\/p>\n
    1996-97 and the writ petition has been filed in January 2000.  In such <\/p>\n
    a case, the argument that the petition suffers from delay and laches <\/p>\n
    cannot be entertained.\n<\/p>\n
    38.            It is true that the Assessing Officer in his assessment orders <\/p>\n
    for the period from 1991-92 to 1993-94 as also the Commissioner in <\/p>\n
    Circular   No.9   of   1990   dated   12th  April   1990   on   the   basis   of   the <\/p>\n
    clarification issued by the Industries, Energy and Labour Department <\/p>\n
    have   held   that   under   para   2.11   of   1988   GR,   the   CQB   has   to   be <\/p>\n
    calculated by ignoring the exemption granted under the BST Act \/ BST <\/p>\n
    Rules.  In our opinion, the aforesaid interpretations are contrary to the <\/p>\n
    plain   language   of   para   2.11   in   the   1988   GR   and   hence   the   said <\/p>\n
    interpretation given in the assessment orders and the circular must be <\/p>\n
    held to be contrary to the 1988 GR.  If the assessments for 1991-92 to <\/p>\n
    1993-94 have attained finality then the consequences for those years <\/p>\n
    would be as per the assessments, but the same would not affect the <\/p>\n
    assessments which are pending before the adjudicating authority or the <\/p>\n
                                                          ::: Downloaded on – 09\/06\/2013 17:19:29 :::<\/span>
\n                                            28                                   wp842-00<\/p>\n
    appellate authority.\n<\/p>\n
    39.           The   argument   advanced   on   behalf   of   the   Commissioner <\/p>\n
    that Rule 31AA is in consonance with para 2.11 of 1988 GR is also not <\/p>\n
    acceptable, because, in our opinion, Rule 31AA introduced with effect <\/p>\n
    from 24th March 1995 for the first time provides for calculation of CQB <\/p>\n
    by ignoring the exemption provisions contained in the the BST Act \/ <\/p>\n
    BST Rules, which is contrary to para 2.11 of the 1988 GR.  Such a Rule <\/p>\n
    which  purports  to  take  away  retrospectively the  vested  rights  of  the <\/p>\n
    traders who have established their units in the backward areas based <\/p>\n
    on para 2.11 of the 1988 GR must be held to be bad in law to the <\/p>\n
    extent it is made applicable retrospectively.\n<\/p>\n
    40.           It was contended on behalf of the Commissioner that the <\/p>\n
    State Legislature has power to make laws with retrospective effect and <\/p>\n
    accordingly Section 41B of the BST Act inserted by the State legislature <\/p>\n
    and Rule 31AA of the BST Rules which is laid before both the houses of <\/p>\n
    the State legislature  would have  the  force of law.   There  can be  no <\/p>\n
    dispute   that   the   State   legislature   has   power   to   make   laws   with <\/p>\n
    retrospective effect, but if that law arbitrarily impairs or seeks to take <\/p>\n
    away the rights vested in the citizens, then such a law must be held to <\/p>\n
    be bad in law to the extent it is made applicable retrospectively.  In the <\/p>\n
    present case, the petitioners had a vested right in computing CQB as <\/p>\n
                                                       ::: Downloaded on – 09\/06\/2013 17:19:29 :::<\/span>
\n                                                29                                   wp842-00<\/p>\n
    per para 2.11 of the 1988 GR and since that vested right is sought to be <\/p>\n
    divested by introducing Rule 31AA retrospectively, it must be held that <\/p>\n
    Rule 31AA to the extent it seeks to apply to the units established under <\/p>\n
    the 1988 Scheme prior to the insertion of Rule 31AA is bad in law.\n<\/p>\n
    41.            This Court in the case of Multifilms Plastics Private Limited <\/p>\n
    (supra) has on interpretation of para 2.11 of the 1988 GR held that for <\/p>\n
    the purposes of CQB the tax payable at the maximum rate would be the <\/p>\n
    rate   of   tax   which   is   effectively   payable   by   a   registered   dealer   not <\/p>\n
    covered under the 1988 Scheme.  We respectfully agree with the view <\/p>\n
    expressed in the above decision.\n<\/p>\n
    42.            Reliance was placed by the Counsel for the Commissioner <\/p>\n
    on various decisions of the Apex Court in support of the contention that <\/p>\n
    the legislature enjoys a greater latitude in relation to laws in the field of <\/p>\n
    taxation than the laws touching the civil rights and the same extends to <\/p>\n
    the enactment of legislation with prospective and retrospective effect.\n<\/p>\n
    There is no quarrel with the above proposition of law laid down by the <\/p>\n
    Apex Court.   However, as noticed above, the Apex Court has also laid <\/p>\n
    down the proposition of law that any Rule which is repugnant to the <\/p>\n
    industrial policy of the State Government and which seeks to deny any <\/p>\n
    benefit   which   is   otherwise   available   to   an   industrial   unit   under   the <\/p>\n
    incentive policy itself must be declared to be bad in law.  In the present <\/p>\n
                                                           ::: Downloaded on – 09\/06\/2013 17:19:29 :::<\/span>
\n                                             30                                   wp842-00<\/p>\n
    case, giving retrospective effect to Rule 31AA prejudicially affects the <\/p>\n
    interests   of   the   units   established   under   the   1988   Scheme   and, <\/p>\n
    therefore, Rule 31AA to the extent it seeks to apply retrospectively so as <\/p>\n
    to divest the vested rights of the units covered under the 1988 Scheme <\/p>\n
    must be held to be bad in law.  We do not consider it necessary to deal <\/p>\n
    with   various   other   decisions   relied   upon   by   the   Counsel   for   the <\/p>\n
    Commissioner as all those decisions are distinguishable on facts \/ have <\/p>\n
    no relevance to the facts of the present case.\n<\/p>\n
    43.           Before concluding, we may note that the package scheme <\/p>\n
    of incentives were issued by the State Government from time-to-time <\/p>\n
    with total exemption for the period specified therein, so as to attract <\/p>\n
    establishment of units in the backward areas of the State.   When the <\/p>\n
    package   scheme   of   incentives   itself   was   to   operate   based   on   the <\/p>\n
    exemption granted under the sales tax law, it is difficult to envisage <\/p>\n
    that   in   calculating   the   CQB,   the   scheme   intended   to   ignore   the <\/p>\n
    exemptions available under the sales tax law.   In any event, as noted <\/p>\n
    above the language used in para 2.11 of the 1988 GR does not either <\/p>\n
    directly or indirectly indicate that in calculating the CQB the exemption <\/p>\n
    provisions contained under the sales tax law have to be ignored.\n<\/p>\n
    44.           For all the aforesaid reasons, we hold that calculation of <\/p>\n
    CQB availed by a unit covered under the 1988 Scheme as per para 2.11 <\/p>\n
                                                        ::: Downloaded on – 09\/06\/2013 17:19:29 :::<\/span>
\n                                               31                                    wp842-00<\/p>\n
    of the 1988 GR had to be made with reference to the tax payable by a <\/p>\n
    unit not covered under the 1988 Scheme at the maximum rates of tax <\/p>\n
    specified   under   the   local   sales   tax,   which   includes   the   exemption <\/p>\n
    provisions contained in the BST Act \/ BST Rules and, therefore, Rule <\/p>\n
    31AA inserted to the BST Rules with effect from 24th March 1995 to the <\/p>\n
    extent it provides that the calculation of CQB under the 1988 Scheme <\/p>\n
    has to be made by ignoring the exemption provisions contained under <\/p>\n
    the sales tax law is illegal and contrary to law.\n<\/p>\n
    45.           In   the   result,   Rule   is   made   absolute   in   the   above   terms <\/p>\n
    with no order as to costs.\n<\/p>\n
                  (Smt.R.S. Dalvi, J.)                           (J.P. Devadhar, J.)\n\n\n\n\n\n\n                                                           ::: Downloaded on - 09\/06\/2013 17:19:29 :::<\/span>\n <\/pre>\n","protected":false},"excerpt":{"rendered":"
Bombay High Court M\/S.Prasad Power Control Pvt. … vs Commissioner Of Sales Tax on 8 June, 2011 Bench: J.P. Devadhar, R. S. Dalvi 1 wp842-00 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.842 OF 2000 1. M\/s.Prasad Power Control Pvt. Limited, a Private Limited Company having its registered office […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-123750","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"\nM\/S.Prasad Power Control Pvt. ... vs Commissioner Of Sales Tax on 8 June, 2011 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/ms-prasad-power-control-pvt-vs-commissioner-of-sales-tax-on-8-june-2011\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"M\/S.Prasad Power Control Pvt. ... vs Commissioner Of Sales Tax on 8 June, 2011 - 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