B.P. Dharmadhikari, J.
Three different industries i.e. Small Scale Units (SSI) have filed these writ petitions for quashing and setting aside the amendment made to Section 41C of the Bombay Sales Tax Act, 1959 (hereinafter referred to as the Act), on the ground that it is ultra-vires the Articles 14 and 19(1)(g) of the Constitution of India. There was also a challenge to Section 41D of the said Act but during the course of hearing, it has been given up.
2. To state the challenge very briefly, the petitioners urge that Eligibility Certificates given to them under the Package Incentive Scheme of 1979 do not contain any ceiling on the quantum of benefits / incentives envisaged thereunder. By the impugned amendment effected in the year 1995, that ceiling on quantum has been added retrospectively and taxes otherwise exempt with penalty are being claimed.
3. We have heard Shri M.G. Bhangde, learned Senior Advocate with Shri V.V. Bhangde, learned counsel for the petitioners and Mrs. Dangre, learned Additional Government Pleader for the respondents, on various dates.
4. During hearing, on 26.07.2013, affidavit has been filed on record by the petitioners to demonstrate that the Eligibility Certificates issued to them in terms of 1979 Scheme have not been affected, by the alleged modification or amendment made to it vide Government Resolution dated 05.07.1982. The facts stated in this additional affidavit have not been denied by the respondents during later hearings and till date.
5. The provisions of Section 41C of the Act stipulate that Eligibility Certificates issued to units like the petitioners shall be deemed to be automatically cancelled on the date on which the cumulative quantum of benefits received by such unit, whether before or after the amendment, exceeds the monetary ceiling provided in the relevant package scheme of incentives. This provision has been further amended with effect from 01.10.1995. As per this subsequent amendment, sub-clause (I) in clause (a) in Section 41C of the Act is substituted and a concept of Approved Gross Fixed Capital Investment at the time of grant of Eligibility Certificates has been added. Thus, by virtue of this amendment, if the cumulative quantum of benefits received by the petitioners exceeds this âapproved gross fixed capital investmentâ, their Eligibility Certificates automatically gets cancelled from the date on which it so exceeds.
6. Shri Bhangde, learned Senior Advocate, submits that in Eligibility Certificates issued to the petitioners or then, in their Entitlement Certificates, there is no such condition or rider. He invites attention to 1979 Scheme as formed on 05.01.1980 to urge that the Scheme was made more broad based so as to speed up the industrialization in developing regions of the State. According to him, as per clause 1.2 of this modified Package Scheme of Incentives (hereinafter referred to 1979 Scheme), the Scheme remains unaltered and though Government can make amends to it after giving six months notice, commitments already made cannot be affected by any such amendment. He further points out that as per 1979 Scheme, which was in operation for a period from 01.08.1979 to 31.03.1983, all the petitioners submitted their applications within the stipulated time and their applications were found complete in all respects but have been granted subsequently i.e. much after the grant of certificate of eligibility to other similar small scale industries. With the result, the period of eligibility of seven years or nine years, as stipulated in their certificates, could not expire before 1995. The amendment with effect from 01.10.1995 has thus affected the petitioners only while other units enjoyed all benefits for the during the entire eligibility period without any ceiling.
7. Edible oil companies already functioning in the State complained of hostile treatment to them because of more benefits conferred on new Oil companies under 1979 Scheme. They approached this Court and their grievance was upheld by this Court in the case of Olympic Oil Industries Ltd. vs. State of Maharashtra, reported at 1987 STC (65) 191. Because of this litigation, the applications of the petitioners remained pending for no fault on their part and have been disposed of belatedly. They also point out that there was heavy rush of applicants in last two days before closing date and Development Corporation of Vidarbha Limited, could not process all those applications due to administrative difficulties. Few complaints were made to Anti Corruption Bureau and officers of that Bureau seized some records for investigation. Ultimately, the records were returned and applications submitted by the petitioners and other units were then looked into by Respondent No. 5. Same were then forwarded by Respondent No. 5 to Respondent No. 4 in 1990 for issuance of entitlement certificate. Respondent No. 4 then referred matters to Respondent No. 3 â Commissioner and as the office of the Commissioner did not take any steps, the petitioners approached their association. The said association by name âUdyog Manchâ then submitted representations to various authorities including the Hon'ble Chief Minister. The entitlement certificates were then issued sometimes in 1991. The Industries Commissioner was directed to investigate into the cause of delay, who in turn asked the Joint Director to investigate. At that juncture, total 19 applications were pending. 14 were approved and five applications were rejected. Thus, this approval was eight years after closure of the Scheme in 1983. The matter was then placed before the High Level Committee to decide whether benefit of 1979 Scheme should be extended and High Level Committee answered in affirmative. Accordingly, Eligibility Certificates have been issued to respective petitioners in which capital cost of their unit is also mentioned.
8. Shri Bhangde, learned Senior Advocate, submits that all other units which had applied along with the petitioners could enjoy benefit of full exemption as their period of eligibility expired before 1995. The petitioners, therefore, cannot be made to suffer for belated release of Eligibility Certificate to them. The petitioners are entitled to equal treatment and hence amended provision which denies it to them, is arbitrary and violative of Article 14. He points out this amendment affects only 14 industries. Grounds (xvii) and (xxvii) as raised in the petition are pressed into service for said purpose.
9. The judgment of the Hon'ble Apex Court in the case of Tata Motors Ltd. vs. State of Maharashtra , reported at (2004) 5 SCC 783 and unreported judgment of Division Bench of this Court dated 08.06.2011 in Writ Petition No. 842 of 2000, are relied upon to show how principles of estoppel are attracted in such situation.
10. Mrs. Dangre, learned Additional Government Pleader, invites attention to various clauses of 1979 Scheme to show that it restricted quantum of benefit to either 90% or 80% as the case may be and contained a provision for review of fixed capital investment. She submits that the amendments made to Section 41C are in this background. She points out that the petitioners are covered under Part (I) as per clause 4.3 of 1979 Scheme. The said Scheme underwent significant changes on 05.07.1982 and as per those changes, the ceiling has also been imposed on small scale units under said Part (I). A small scale unit cannot, therefore, get total exemption exceeding 100% of fixed capital investment during the period of its eligibility. 1979 Scheme as amended on 05.07.1982 was in force when the petitioners' applications were considered. The provisions of Section 41C as amended are in consonance with this amendment to scheme and, therefore, the challenge to constitutionality of said section has to fail.
11. She has also invited our attention to Eligibility Certificates and Entitlement Certificates as issued to respective petitioners to urge that it contain stipulation about cost of unit and also a provision of review insofar as total period of eligibility is concerned.
12. The purpose of amendment to Section 41C of the Act is sought to be explained and justified by inviting our attention to reply filed in Writ Petition No. 853 of 1996. She contends that the petitioners were right from day one, subject to this quantum ceiling and hence challenge to validity of Section 41C of the Act at their instance is unsustainable. She has also attempted to point out that the judgment of this Court dated 25.09.2009 does not consider challenge to amendment. Similarly, judgment in Writ Petition No. 842 of 2000 is also sought to be distinguished. Our attention has also been invited to judgment dated 10 .6.2013 delivered in Writ Petition No. 313 of 2010 at in case of M/s. Jindal Poly Films vs. The State of Maharashtra and Others.
13. Shri Bhangde, learned Senior Advocate, in his reply arguments, submitted that the amendment dated 05.07.1982 has come into force with effect from 10.01.1983 and applications submitted by the petitioners are prior to that date. Plea based upon said amendment is not raised in reply but has been urged orally, thereby taking the petitioners by surprise. The reply has not been amended by the State and amendment has been produced before this Court during oral arguments for the first time. By such an amendment, in any case, vested rights cannot be taken away. He also invites attention to clause 4 of the amendment to show that option has been given to certificate holders and without their consent the amended provisions cannot be extended to them. He further attempts to demonstrate that computation of 100% of fixed capital investment as per amendment dated 05.07.1982 is during and for entire period of eligibility while Section 41C of the Act speaks of Gross Fixed Capital Investment as approved on the date of issuance of Eligibility Certificate. He requested the Court to permit the petitioners to place on record the necessary facts in the light of 5.7.1982 amendment. Accordingly, on 23.07.2013, by a reasoned order, after noticing these developments, we adjourned the matter on 25.07.2013 for further consideration. The said order reads as under :
CORAM :B.P. DHARMADHIKARI and A.S. CHANDURKAR, JJ.
DATED :JULY 23, 2013.
The matters were heard and after the respondents finished arguments, matters were adjourned to today to hear reply arguments and to find out fate of Writ Petition No. 4825/1995 then pending at Bombay. Today it is pointed out to us that because of separate judgment delivered in Writ Petition No.1381/1996 on 25.09.2009, Writ Petition No. 4825/1995 was disposed of. A copy of this separate judgment is produced by the State Government on record as part of their reply in Writ Petition No. 853/1996.
ShriM.G. Bhangde, learned Senior Counsel with Shri R.M. Bhangde, learned Counsel appearing for petitioners in his reply arguments pointed out that the amendment to 1979 Scheme has not been pleaded in defence and was relied upon only during the oral arguments. He asserts that entitlement and eligibility certificates issued to petitioners are under un-amended 1979 Scheme. He further points out that the Scheme as amended in the year 1982 restricts the incentive quantum to 100% of the fixed capital investment during the period of 7 years. According to him in case of petitioners, even this restriction was never implemented.
Mrs. Dangre, learned Additional Government Pleader at this stage pointed out that the petition does not contain any specific statement in this respect, and has been filed only with apprehension that in future petitioners may exceed the ceiling imposed by Section 41C of which validity has been assailed. Whether during eligibility period, the ceiling could have or has actually been exceeded, has not been pleaded and is not on record.
In view of these arguments, we place the matters for further consideration on 25.07.2013.â
On 26.07.2013, an affidavit came to be filed by the Petitioners and matter was then adjourned to 29.7.2013, 31.7.2013,1.8.2013 and 6.8.2013. It could be heard further on 14.8.2013 and closed for judgment on 16.8.2013.
14. Shri Bhangde, learned Senior Advocate, in his further reply, has submitted that the Eligibility Certificates issued to the petitioners do not speak of any approved gross fixed capital investment and their certificates are under original or 1979 Scheme. It does not corelate the quantum of incentivesto be availed with the capital investment at all. The power to review or power to amend is not sufficient to take away the vested rights or then to defeat the commitments made in basic 1979 Scheme. He further submits that in present facts, amendment to the Scheme as per Resolution dated 05.07.1982 was never acted upon and is, therefore, not attracted. He also invites attention to facts disclosed in affidavit filed on 26.07.2013 to demonstrate how the amended Section 41C has been actually used against the petitioners. Learned Senior Advocate points out that the Additional Government Pleader did not dispute facts disclosed in said affidavit tendered by him. She also could not point out whether the amendment as per Section 41C was in fact implemented in case of any other units. He contends that as validity of a legislation has been challenged, it does not depend upon the acquiescence or otherwise of/by the petitioners.
15. Mrs. Dangre, learned Additional Government Pleader, in reply maintains her earlier arguments. She submits that Eligibility Certificate of the petitioners show that 1979 Scheme as amended in 1982 has been applied to them and, therefore, only a provision for review appears in their Eligibility Certificates. She further points out that amended Section 41C applies to the petitioners' units after 01.10.1995. Our attention has also been invited to Writ Petition No. 854 of 1996, particularly para 4 to show that the petitioner therein had exceeded the permissible quantum of benefits. She, therefore, prays for dismissal of writ petition.
16. At threshold, it is necessary to note that challenge to S.41C only needs scrutiny in as much as challenge to S.41D has not been pressed and is given up by the Petitioners. Section 41C of the Bombay Dales Tax Act,1959 has been added to the statute book vide State Amendment Act XIX of 1996 and come into force on 8.6.1995. Its impact on 1979 sales tax incentive scheme as notified on 5.1.1980 and in vogue from 1.8.1979 till 31.3.1983 needs evaluation. Earlier scheme ie 1976 scheme had expired on 31.7.1979. Before proceeding further, it will be appropriate to mention events material for deciding the controversy involved in present petitions.
A--Petitioner M/s Vidarbha Winding Works in WP 846 of 1996 applied for eligibility certificate on 7.1.1983. Petitioner M/s Kailash Poly Industries in WP 854 of 1996 has also given the same date as date of its application. Petitioner M/s Chandrapur Vidyut Conductor Pvt. Ltd. in WP 853 of 1996 has applied for eligibility certificate on 30.12.1982.
B-- The eligibility certificate of M/s Vidarbha Winding Works is dated 27.9.89 and period of 7 years during which benefits of incentive scheme were available to it is from 16.11.1991 to 15.11.1998. Its capital cost noted therein is Rs. 3,40,000/ only. The eligibility certificates of M/s Kailash Poly Industries are dated 27.2.91 and 16.11.1992 for period of 9 years during which benefits of incentive scheme were available to it. The said period is from 25.7.1992 to 15.9.2000 and capital cost of Unit according to it is Rs. 44,828/only. The eligibility certificates of M/s Chandrapur Vidyut Conductor Pvt. Ltd. in WP 853 of 1996 is dated 9.10.1989 and for period of 7 years from 1.2.1990 to 31.1.1997 while capital cost of said Unit noted in it is Rs. 92,813/only.
C--Petitioner M/s Vidarbha Winding Works in WP 846 of 1996 started production in March,1989. It is registered under Bombay Act wef 14.3.1989 and central sales tax wef 17.3.1989. Petitioner M/s Kailash Poly Industries in WP 854 of 1996 started production on 20.1.1985. It is registered under Bombay Act wef 19.9.1990. Petitioner M/s Chandrapur Vidyut Conductor Pvt. Ltd. in WP 853 of 1996 started production on 10.1.1983. It is registered under Bombay Act wef 22.6.1989 and central sales tax wef 22.6.1989
17. Provisions of 1979 Scheme as on 5.1.1980:--
According to Petitioner, incentives were applied for under the original scheme as notified on 5.1.1980 and hence, provisions therein as on said date govern its unit. It is not in dispute that sales tax incentive as prescribed in clause 5 ie Part I are relevant in present matter. These benefits are conferred vide Clause 5.1 only upon a new unit like Petitioner and not a near new unit. Clause 5.2 grants exemption from sales tax, general sales tax or purchase tax and central sales tax. Clause 5.5 is the important provision to understand the Scheme and it restricts the entitlement of a âPioneer Unitâ qua benefit enjoyable every year and also qua its total quantum which can be availed during the entire period of 7 years. The quantum of benefit enjoyable each year is equal to sales tax liability of the previous year. Important condition in it is:-- âThe total quantum of sales tax incentive during the period of eligibility will, however, be determined in such manner that at no point of time the cumulative sales tax incentive exceeds 90% of the cumulative Gross Fixed Capital Investment of the Pioneer unit.â The phrase âGross Fixed Capital Investment â is defined in Clause 2.7. It needs to be noted that in case of Pioneer Unit, if eligibility is spread over to extended period, still it remains subject to this ceiling of 90% as per Clause 5.9. Clause 5.10 of the Scheme contemplates monitoring and review of fixed capital investment of Medium/Large Scale Units with a view to ensure that incentive availed does not mismatch with its permitted quantum. Pioneer Unit is the status conferred upon only one unit in Taluk or Panchayat Samiti, depending upon their location as per Clause 3. Petitioner unit does not fall in that category. Thus unlimited incentives are not envisaged under the original Scheme of 1979 only for Pioneer Units and Medium/Large Scale Units. But then it also envisages âcumulativeâ sales tax incentive and the âcumulativeâ Gross Fixed Capital Investment. It does not restrict the quantum of benefits available only to initial fixed capital investment. Clause 1.2 empowers the State Government to amend the Scheme after giving 6 months notice but then the commitments already made can not be affected by such an amendment.
18. Provisions of 1979 Scheme as on 7.1.1983:--
According to Respondents, Scheme itself comprehends within itself the applicability of amendments made to original scheme from time to time. Thus, date on which incentives were applied for determines the provisions applicable to the Petitioner unit. The scheme seen in Clause 5.10 of original scheme in relation to Medium/Large Scale Units has been extended to the Small Scale Units like Petitioners as per resolution dated 5.7.1982 after expiry of period of 6 months therefrom ie after 6 months notice in terms of Clause 1.2 of the original scheme. Thus the scheme for monitoring of Gross Fixed Capital Investment of the SSI has been in force since 10.1.1983 and scrutiny to curb incentives enjoyed at par with Medium/Large Scale Units is permitted thereafter. This amendment also introduces Sales Tax Deferral Scheme in Part I of the original scheme but the same is not relevant in present matters. This procedure or control is definitely a new measure. The ceiling of 100% of âGross Fixed Capital Investmentâ never existed for SSI and enjoyment of this basic unlimited entitlement is adversely affected thereby. The amendment adds the ceiling limit of 100% of the Gross Fixed Capital Investment of the Petitioner unit during the period of eligibility on quantum of incentives. A new safeguard has also been added to check breach of this ceiling limit. It provides for cancellation of the eligibility certificate if while monitoring, the fact of utilization of incentives in excess the ceiling imposed, is discovered. Thus a new limitation has been added to the original scheme w.e.f. 10.1.1983. This limitation results in curtailment of incentives already assured under original scheme. Clause 1.2 of the original scheme assumes importance in this backdrop and it stipulates that :-- âThe modified Package Scheme of Incentives shall remain in operation for the period from August 1,1979 to March 31,1983. Government may at any time after giving six months notice, make any amendments to the Scheme but the commitments already made shall not be effected by any such amendment.â The use of word âeffectedâ appears to be inadvertent and correct word to be employed is âaffectedâ.
19. As already noted above, the Petitioners applied for grant of eligibility certificates under the original Scheme or unamended scheme. The provision for monitoring the gross capital investment came to be added wef 10.1.1983. Eligibility of respective Petitioners has been examined and they are issued eligibility certificates few years after such amendment. Petitioners also started their production either in 1985 or then in 1989, as the case may be. These dates are already noted by us above. Question in this situation is whether by 5.7.1982 amendment to 5.1.1980 GR, any commitment already made to Petitioners can be said to have been violated! Stand of the Petitioners' Counsel that though the eligibility certificates issued to them did contain a provision for review to monitor the proportionate exhaustion of incentives qua the gross capital investment, the said stipulation was never implemented and Petitioners were allowed to avail the incentives without any ceiling limit, has not been disputed by the Respondents. The entitlement of Petitioners to eligibility is not in dispute and the only question is of their right to continue to enjoy the unlimited incentives for full period of 7 years or 9 years, as the case may be. In absence of amendment as done on 5.7.1982 wef 10.1. 1983, also their entailment to continue could not have come into dispute. Thus, this amendment to Scheme and addition of S. 41C to Bombay Sales Tax Act are the grounds to justify denial of the full benefit period to them. Their eligibility has not been cancelled on any other ground and it is not the defence that it ceased to be a SSI unit due to huge or unauthorized expansion of plant/unit. Respondents do not urge that the Units of Petitioners got transformed into either Medium Scale or Large Scale Units during this benefit period because of such investments.
20. It is in this background that the word âcommitmentâ in last part of Clause 1.2 above ie âcommitments already made shall not be affected by any such amendmentâ needs to be construed. This part itself implies that the commitments not made till then can be varied ie the Scheme itself may be changed to alter the arrangement qua any particular matter prospectively. The Respondents have urged that the Scheme itself was changed on 5.7.1982 wef 10.1.1983. But then there is no argument that commitment made to Petitioner was not as per original scheme. It is not the contention that Scheme prevailing on the date of eligibility certificate is relevant and decisive. On the contrary, the facts reveal that arrangement as amended on 10.1.1983 was never implemented in case of Petitioners. The Petitioners admittedly have applied prior to 10.1.1983 and most probably with knowledge of proposed change in the original scheme. But then, their applications were in terms of original ie unamended scheme and with a view to secure that benefit. (( As per Clause 1.2 of the 1979 Scheme, it was to remain in force from 1.8.1979 till 31.3.1983. Clause 2.10 treats a unit for setting up of which at-least one of the final effective steps has been completed after 1.8.1979 as a new unit. Sub-para of paragraph 4 of this 1982 modification envisages SSI units governed by original Scheme of 1979 and gives them option to choose to come under Scheme as modified after expiry of 6 months from 5.7.1982. It is not in dispute before us that the Petitioners had applied prior to said expiry. Hence, their eligibility and entailment as on said date has been appreciated and they are found entitled to the benefit of the Scheme. Form of eligibility certificates issued to different types of Units appear to be one and same. Clause in eligibility certificate issued to Petitioners showing the permissibility of review or scrutiny at the end of 2/3/5 years expressly restricts itself to medium or large scale units with a view to determine and check the excessive availing of the incentives by them. There is no such stipulation qua the Small Scale Industries. The entailment certificate contains a clause which allows Petitioners to enjoy the benefits during the period of validity of certificate. In case of Petitioners, none of these certificates prescribe a ceiling or show a provision for its premature determination on the ground of alleged overdrawal. It will be fruitful to first determine the perspective to be adapted while appreciating such Schemes.
21. In PepsicoIndia Holdings (P) Ltd. v. State of Kerala, (2009) 13 SCC 55, at page 77 , Hon. Apex Court has observed :
â53. An exemption notification and a notification withdrawing the benefit granted would, however, stand on different footings. For the said purpose, the industrial policy is required to be kept in mind. It must also be taken into consideration for the purpose of construing the exemption notification. In A.P. Steel Re-Rolling Mill Ltd. v. State of Kerala9 this Court held: (SCC pp. 741-42, paras 32 and 34-35)
â32. The general principles with regard to construction of exemption notification are not of much dispute. Generally, an exemption notification is to be construed strictly, but once it is found that the entrepreneur fulfils the conditions laid down therein, liberal construction would be made.* * *
34. A question as to whether, in a given situation, an entrepreneur was entitled to the benefit under an exemption notification or not, thus, would depend upon the facts of each case. A bare perusal of the Notification dated 6-2-1992 issued by the first respondent would show that the purport and object thereof was to grant benefit of a concessional power tariff which came into force on and from 1-1-1992. The phraseology used in the said notification postulates that the benefit was to be granted in regard to the âenhanced power tariff. Thus, where the new units had started production between 1-1-1992 and 31-12-1996, such exemption was available to the entrepreneurs.
35. Evidently, except in a situation as might have been existing in Hitech Electrothermics that any application filed by the entrepreneur had not been processed within a reasonable time, in which case benefit might not be denied on equitable ground; in cases where there has been a substantial failure on the part of the industrial unit to obtain such benefit owing to acts of omission and commission on its part, in our opinion, no such benefit can be given.â
Law laid in HitechElectrothermics and Hydropower Ltd. v. State of Kerala, (2003) 2 SCC 716, at page 719 is as under:
â5. On a perusal of the industrial policy of the Government, unequivocally indicating that concessional tariff rate would be given as well as the order of the Electricity Board adopting the same, it can be safely held that such concession could be availed of by the industrial units for a period of five years from the date, they start such production between 1-1-1992 and 31-12-1996. In this context the stand of the Board as well as the State Government cannot be held to be devoid of any substance when admittedly the commercial production of the appellants unit did not start till 31-12-1996. But the question for consideration is when the Government has itself come forward alluring industrial units to set up their industries and when under the provisions of the Electricity Act, every consumer has the right to get the supply of power and in the case in hand, when power allocation has been made in favour of the appellant as early as in 1995, and yet the same power could not be supplied for such non-supply of power, the commercial production could not start by 31-12-1996, would it at all be equitable to deny the relief to the appellant by giving a literal interpretation to the incentive scheme of the Government as adopted by the Board? Our answer to this question must be in the negative. There are several documents ----......-----......------- â¦..... ------- â¦......... Suffice it to say that the appellant has been denied power supply by the Board in appropriate time, which has prevented the appellant from starting the commercial production by 31-12-1996. This being the position, and having regard to the gamut of the circumstances, starting from the government policy resolution and culminating in setting up of the factory by the appellant in Kerala and commencing the production of ferro alloys, though not by 31-12-1996, we are of the considered opinion that granting the concessional tariff for a period of three years instead of five years, as indicated in the policy resolution would meet the ends of justice and we, accordingly, so direct. Be it stated that the appellant has been enjoying the concessional tariff on the basis of interim orders of the court and, therefore, that should be taken into account and due adjustment would be made in computing the period of three years, for which we are directing for grant of concessional tariff. The impugned judgment of the Kerala High Court is set aside and these appeals are allowed to the extent indicated above.â
Following judgment of Hon. Apex Court may be relied upon to gather how such provisions in the Scheme need to be considered. In CST v. Industrial Coal Enterprises, (1999) 2 SCC 607, at page 616 , Hon. Apex Court observes :
â11. In CIT v. Straw Board Mfg. Co. Ltd. this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision.â
22. We find that the Division Bench of this Court considers the original 1979 Scheme as also amendment made to it vide GR dated 5.7.1982 in judgment reported at 2008 (12) LJSoft 203-2008(S) Bom.C.R. 92- Vinods/o Ratilal Patira Vs. Commissioner of Sales Tax and ors. However this judgment considers the position of law prevailing prior to addition of S.41C to the State Act. Petitioners in this reported judgment had set up their industries in backward areas of State in order to take advantage of a Package Scheme of incentives. The Division Bench did not allow Government to go back on a representation made by it in the matter of concessions in taxation holding that conditions prescribed for eligibility for exemption can not be altered by subsequent notification, since eligibility once earned is not lost. Division Bench, in para 11 observes that exemption was to be availed up to a fixed percentage of capital investment "during the above period", i.e. during the period for which sales tax incentive was admissible. This ruled out the interpretation that the sales tax exemption was to be restricted to the gross fixed capital investment referred to in the eligibility or entitlement certificate. In view of this, both the communications impugned in two writ petitions before said Division Bench were held unsustainable. With reference to the cost value mentioned in the eligibility certificate, the Division Bench noted that the reference in both these clauses is to 'cumulative gross fixed capital investment with reduction of written off, etc.'. It held that the concept of cumulative gross fixed capital investment obviously ruled out the possibility of the gross fixed capital investment being restricted to amount mentioned in the eligibility certificate at the time of commencement of the activity, or availing the Scheme and all ongoing additions within the prescribed time-limit of period of exemption were permitted. We find this logic and exposition good even in present writ petitions.
23. Another Bench has taken similar view in 1997(I)Mah.L.J 395 âPerfect Foundries Pvt. Ltd. and Ors. Vs. State of Maharashtra and Ors. Package Scheme of Incentives came in force retrospectively from 1.8.1979 and it comprised mainly of incentive qua Sales Tax, reliefs in electricity tariff, Octroi etc. By resolution dated 5.7.1986 scheme was modified and provided further reliefs in sales tax. Petitioner there was granted eligibility certificate on 19.9.82 for 7 years from 1.10.1982 to 30.9.1989 to avail the facility of deferral scheme of sales tax. Section 15A(1) of Bombay Sales Tax Act, 1959 on 1.4.59 was amended by State of Maharashtra providing for levy of Additional Tax in the case of dealers whose turnover exceeds Rs.10,00,000/- per year. Section 9 introduced from 13.7.1986 whereby turnover @ 1.25% in goods specified in schedule `C' thereof was payable by the dealer whose turnover on all sales exceeded Rs.12,00,000/- per year. Notice dated 8.3.88 was issued to petitioner by Sales Tax Officer for non payment of additional tax from 1.7.84 and turnover tax from 30.7.86 and a demand notice for additional tax for period from 1.7.86 to 31.7.86 and 1.12.86 to 30.7.87 and demand notice dated 21.4.88 for additional tax and turnover tax for period from 1.7.87 to 31.12.87. While quashing these notices and demands, the Division Bench observes that although the Scheme as modified by Government Resolution of 1982 speaks of sales tax, general sales tax and purchase tax, the same is deemed to be extended also to the additional tax and turnover tax as they are based on sales.
24. Section 41C has been added by Maharashtra Amendment Act 12 of 1995 wef from 8.6.1995 and it reads:--
â-Section 41C- Cancellation Of Certificate Of Entitlement (1) Notwithstanding anything contained in this Act, or in any judgment, decree or order of any Court or Tribunal to the contrary, the Certificate of Entitlement issued in favour of an Eligible Unit by the Commissioner in respect of any Package Scheme of Incentives -
(a) shall be deemed to have been automatically cancelled on the date on which -
(i) the cumulative quantum of benefits received by such unit, -
(A) being a Small Scale industrial unit governed by the 1979 Package Scheme of Incentives as calculated from the 1st of October, 1995 exceeds" the approved gross fixed capital investment of such unit at the time of grant of the Eligibility Certificateâ, or
(B) not being an unit referred to in entry (A) above, exceeds at any time, whether before or after, the date of commencement of Maharashtra Tax Laws (Levy, Amendment and Validation) Act, 1995, the monetary ceiling as provided in the relevant Package Scheme of Incentives.
(ii) the period for which a Certificate of Entitlement was granted to an Eligible Unit, expires; or
(iii) the Certificate of Registration granted to an Eligible Unit has been cancelled;
(b) shall be cancelled by the Commissioner, after giving the Eligible unit an opportunity of being heard, if it is noticed that the grant of Certificate of Entitlement is inconsistent with any of the provisions of this Act, rules or notifications framed or issued under the Act or any of the relevant Package Schemes of Incentives.
(2) On and from the date of such cancellation, such unit shall cease to be eligible to claim any exemption from payment of tax under entry 136 or, as the case may be, under entry E-3" of the Schedule to the notification issued under section 41 and such unit shall surrender to the Commissioner, the Certificate of Entitlement, together with all declarations in Form 'BC', within fifteen days from the date of such cancellation. -â
S.41C(1) (a) (i) (A) above is the relevant part with which we are concerned here. It introduces a new concept viz. âthe approved gross fixed capital investment of such unit at the time of grant of the Eligibility Certificateâ. The eligibility certificates of Petitioners nowhere show âthe approved gross fixed capital investment of such unit at the time of grant of the Eligibility Certificateâ. It only mentions capital cost of project. Respondents have also not pointed out what this phraseology exactly implies. Perusal of original Scheme dated 5.1.1980, particularly its Clause 2.7 dealing with Gross Fixed Capital Investment shows how Gross Fixed Capital Investment is to be computed. It is Gross Fixed Capital Investment at the beginning of the year plus additions, if any, made to Gross Fixed Capital Investment during the year, less the original value to the unit of any Fixed Assets written off/disposed of/sold during the year. This Clause shows that in basic scheme of 1979, there is no provision for determining Gross Fixed Capital Investment at the commencement or on date of grant of Eligibility Certificate. It proves that it is an annually fluctuating norm with relation to which the entailment of Medium Scale or Large Scale Units may require computation qua that year and every year keeping in mind the ceiling imposed by the Scheme, where-ever same applies. Findings of this Court in Vinods/o Ratilal Patira Vs. Commissioner of Sales Tax and ors. (supra) clinch this aspect. This also reveals that in case of SSI Units like Petitioners, as there is no such ceiling in the original 1979 Scheme, this exercise or annual workout is not called for. The Petitioners get full incentive and exemption for additions which qualify as Gross Fixed Capital Investment every year for the entire period and duration of their eligibility certificates. Even if amendments as effected on 5.7.1982 are held relevant, that amendment also limits entailment to â100% of the Fixed Capital Investmentâ during the entire period of eligibility. Therefore, even 5.7.1982 modification does not restrict Petitioners' entailment to the capital investments at the start or establishment of the SSI unit. Claus 4 of this 1982 modification while bringing it in force from 10.1.1983 also expressly permit units governed by 1979 Scheme to continue under original scheme unless they opt for modified scheme. The Petitioners never opted for 5.7.1982 modification and all through continued under 1979 Scheme. Petitioners also submit that their Gross Fixed Capital Investment at the start of the production is being treated as approved Gross Fixed Capital Investment to compute their entailment. Effort is to show that thus subsequent additional investments are being ignored. Respondents do not dispute this. We find that in case of MSU/LSU, their entailment would be determined every year afresh even after amended S.41C and they get increased exemption for additions made during that year. In a hypothetical matter, their entailment at 80% or 90% of the Gross Fixed Capital Investment, may, during the length of entire eligibility period, exceed the first or initial figure thereof at the start of production. The intention of the framers of 1979 Scheme or 1982 modification was never to deny this benefit of additional investment to SSI units like the Petitioners. Affidavit filed vide stamp no. 7234/13 in WP 846 of 1996 shows Sales Tax Department has found that said Petitioner has exhausted the ceiling available to it and hence determined the tax liability of Petitioner at Rs. 16,77,547/- in 1995-96. In year 1996-97, Rs. 36 Lac approximately is assessed as tax and with penalty, total demand is of Rs. 62,27,104/-. Petitioner is assessed in same manner for later years also. Respondents have not denied any of this. Thus, except for 14 units who got entailment and eligibility certificates belatedly for no fault on their part, all other SSI Units completed their benefit period without any ceiling and got exemptions for full eligibility period by computing the Gross Fixed Capital Investment as per sub-clause III of Clause 2.7 of 1979 Scheme. If the incentives of Petitioners alone are now confined initial year, it would be unjust and treating them unequally. Most of the Units in all these three categories have already exhausted the full benefits for entire term as per original Scheme. SSI units like Petitioners enjoyed that benefit without any ceiling for whole period assured by the eligibility certificates. Petitioners are being subjected to ceiling only because of late processing of their applications by the Respondents though the same were moved well within time-limit . Their incentive period could not expire before the 1995 amendment for no fault on their part. S.41C(1)(a)(i)(A) therefore becomes a special legislation only for them.
25. Findings of this Court in Vinods/o Ratilal Patira Vs. Commissioner of Sales Tax and ors. (supra) also show that for medium or large scale units, the incentive scheme does not provide for pegging down their entitlement to the initial year of grant of eligibility certificate. S.41C(1)(a)(i)(B) of the Act also does not use words to limit it or relate it to time of grant of eligibility certificate to them. Said provision also does not have the effect of denying the âcumulativeâ benefit to these MSU/LSU as it employs the words âas provided in the relevant package scheme of incentivesâ. Thus, prima-facie, only SSI units are subjected statutorily to such pegging down to the initial year and this may also amount to hostile discrimination as such an attempt is already found contrary to the 1979 Scheme in Vinods/o Ratilal Patira Vs. Commissioner of Sales Tax and ors. (supra) in respect of MSU/LSU. However, no such arguments are advanced before us and hence, we do not find it necessary to dwell more on this aspect.
26. Perusal of paragraph 29 of the recent Division Bench judgment of this Court in case of M/s. Jindal Poly Films vs. The State of Maharashtra and Others (supra) relied upon by learned Addl.G.P. shows that there a validating amendment vide S. 41BB of the Act has been upheld observing that it can have retrospective effect. The impugned provision was already added in 2001 and it was not an enabling provision but laid down ceiling on the entitlement of an eligible unit by limiting the quantum of benefits only to part of its turn-over of sales and purchases to be worked out by applying a ratio to be prescribed by the State Government. On same lines, a provision came to be added to S.93(1) in 2002 . The Division Bench found that legislation allowed benefit only on proportionate part of turn over. In earlier challenge, vide the judgment dated 13.10.2008 in case of Pee Vee Textiles, the earlier Division Bench had found that in absence of Rules prescribing the ratio, the Deputy Commissioner was not justified in issuing an administrative order imposing the ceiling. It therefore quashed the administrative circular and consequential recoveries. This lead to revenue implication of Rs.500 Crores and hence State came out with an over-riding legislation. and substituted S/s. (1), (1A) and (1B) of S. 93 retrospectively which fell for consideration in M/s. Jindal Poly Films. Thus the law envisaged, a Rule framed by the State Government for its implementation and the authorities had acted in absence of such Rule but on the basis of the executive instructions and had denied the benefits. This implementation and denial was found bad by the High Court and that necessitated huge refunds to the units. State Government cured that lacuna of the absence of Rules prescribing the Ratio by the subsequent validating amendment. This has been upheld but then retrospective levy of penalty is found bad in M/s. Jindal Poly Films. Thus controversy addressed to was in relation to a remedial measure permitted by the legislature and its faulty execution. The fault was removed by the validating legislation. Facts at hand are entirely different and a liability not foreseen by the SSI units like Petitioners is being imposed retrospectively which upsets their calculations, proliferation, financial structuring and prospects etc. looked into by such units at thresh-hold while evaluating feasibility of putting their project in comparatively undeveloped or underdeveloped area as also impact of incentives und