Hrishikesh Roy, J.
1. Heard Mr. O.P. Bhati, learned Counsel for the petitioner assisted by Mr. A. Khanal, learned Counsel and Mr. R. Dubey, learned Counsel appearing on behalf of the respondent State.
2. The petitioner who is a dealer under the Assam Finance (Sales Tax) Act, 1956 (since repealed), hereinafter, referred to as 'the 1956 Act' was registered with the sales tax authorities for the purpose of taxation initially as a partnership concern. Thereafter, the partnership was dissolved and the petitioner became a proprietorial concern.
3. The petitioner Industry was set up for manufacture of steel and wooden furnitures having its industrial Unit at Guwahati. The said Unit initially claimed benefit of the incentives offered under the Industrial Policy declared by the Govt. of Assam in the year 1982. The present dispute pertains to the claim made by the petitioner Industry with regard to the benefits sought under the Industrial Policy declared subsequently by the Government of Assam in the year 1986, hereinafter referred to as 'the 1986 Policy'.
4. Under Clause 1.1 in Part II of the 1986 Policy, the new package of incentives was to remain in operation for the period from 1.1.87 to 31.3.90 or till such time the Government may deem it fit. Under Clause 2, the eligible Units have been described to mean 'only new units set up on or after 1987 and the existing units, undertaking expansion, modernisation or diversification at the same location or at any other place in the State of Assam will be eligible for the incentives under the 1986 scheme' provided that 'expansion/modernisation/diversification of an existing industrial unit will also be eligible for the incentives if the total capital investment on plant and machinery in the expansion/modernisation or diversification, as the case may be, is more than 25% of the total fixed capital investment of the existing Unit'.
5. Clause 9 relates to the eligibility certificate which is required to be issued for availing of the incentives and such certificates are to be issued after ensuring that all the norms for eligibility have been fulfilled.
The incentives offered under the 1986 Policy includes sales tax exemption on purchase of raw materials and sale of finished products for a period of five years, as may be decided by the Government of Assam from time to time.
The petitioner was issued an eligibility certificate by the 'Udyog Sahayak', the competent authority, on 29.9.90 granting it exemption from sales tax for the period from 24.3.90 to 23.3.95.
6. The Government of Assam enacted the Assam Industries (Sales Tax Concessions) Act, 1986, hereinafter referred to as 'the Concession Act' in order to grant sales tax exemption on a selective basis to new Industrial Units established in the State on or after 15.10.82 in the shape of exemption from sales tax on raw materials as well as finished products. The Concession Act also seeks to amend the existing law on the subject of sales tax incentives to the industries.
Under Section 2(2) of the Concession Act, a New Industrial Unit has been defined to mean 'an industrial unit for the setting up of which all the effective steps have been completed on or after 15th October, 1982, but before 31 st March, 1990'. This Act is to be operational in terms of the Rules prescribed under the provisions of Section 2(3) of the Concession Act.
7. Section 3 of the Concession Act provides for exemption of raw materials from sales tax to a holder of valid authorisation certificate. Under the provisions of the Act, the certificate of authorisation is to be granted on making of application as provided under Section 4.
Under Sub-section 3B, the State Government is empowered to issue appropriate notification in the Official Gazette to specify the conditions under which the new Industrial Units would be entitled to exemption provided under the Concession Act. The said Section prescribes for a period of five years from the date of commencement of production in such new industrial unit, for entitlement of benefits envisaged under the Concession Act.
The employment norms have been prescribed under Section 16 of the Act to confer the benefit of concession only to such Industrial Units which employ not less than 80% of its total strength from amongst the local populace and, that too, only on production of a certificate to that effect, issued by the competent authority.
8. Under the Concession Act, the Assam Industries (Sales Tax Concession) Rules, 1988 came to be framed, hereinafter referred to as 'the Concession Rules'. Under the Concession Rules, the Superintendent of Taxes has been made the authority in respect of the new Industrial Units for exercising powers under the said Act and the Rules.
Under Rule 2(f) certain categories of raw materials would not be entitled to the benefit of concession provided. Plywood is mentioned as one of the raw material which would not be eligible for the benefits extended to the new Industrial Units under the Concession Act.
Rule 3 prescribes the procedure for applying for authorisation certificate. Rule 4 prescribes the documents to be furnished with such application. Rule 5 provides for additional particulars that are to be incorporated in the application for grant of authorisation certificate.
Rule 11 provides that the certificate of authorisation shall be valid in case of new Industrial Units which has taken all effective steps before 1.8.88 with effect from the date of granting of the certificate and upto a date not beyond five years from the date of completion of effective steps. Rule 15 provides for the classes of raw materials to be specified in the authorisation certificate. Rule 16 requires a declaration to be made on purchase of raw materials in the prescribed form. Rule 20 provides for furnishing of the statement of raw materials purchased by the certificate holder.
9. In the instant case, the authorisation certificate was applied for by the petitioner Industry on 6.1.92 and the said authorisation certificate was granted on 16.10.93 by the Superintendent of Taxes who is the competent authority to issue such certificate. Prior to this, the petitioner Unit had an earlier authorisation certificate for the period from 4.4.85 to 3.4.90. The Superintendent of Taxes, Guwahati, Unit-A completed the assessment in respect of the petitioner Industry by passing the assessment order on 4.2.94 covering different periods and granted sales tax exemption to the petitioner for exemption of tax by holding it to be eligible for such exemption under the provisions of the Concession Act as per the Industrial Policy of the State. The following exemptions were granted by the Assessing Officer:
Period endings Amount of
exemptions granted
31.3.90 10,82,503.00
30.9.90 15,02,332.00
31.3.91 15,12,775.00
30.9.91 6,34,776.00
31.3.92 6,10,075.00
30.9.92 2,77,952.00
31.3.93 5,17,375.00
30.6.93 4,56,876.00
10. The Revisional Authority exercising powers under Section 36 of the Assam General Sales Tax Act, 1993, hereinafter referred to as the 'Sales Tax Act', considered the said assessment order dated 4.2.94 as erroneous and prejudicial to the interest of Revenue and invoking the powers prescribed under Section 36(1) read with Section 74(3)(b) of the said Act, initiated a suo motu revision proceeding and appropriate show cause notices were issued to the petitioner requiring it to show cause as to why the assessment order passed in their favour would not be revised. It was indicated in the show cause notice, inter alia, that authorisation certificate is admissible only to 'new Industrial Units' as per the provisions of the Concession Act and in the present case the Dealer was granted authorisation certificate for a total period of 10 years i.e. from 4.4.85 to 3.4.90 and again from 24.3.90 to 23.3.95, which was outside the provisions of Section 4(3) of the Concession Act. It was further indicated that such exemption of tax on sale of finished products will not extend to the industrial units carrying out expansions under the provisions of the Concession Act. Accordingly, it was put to the petitioner as to whether the Assessing Officer could have allowed sales tax exemption on the basis of the certificate of authorisation and how far the said authorisation certificate is justified an enforceable in law.
11. The Revisional Authority took into account the following issues while exercising his revisional powers:
(i) The first Certificate of Eligibility was valid from 4.4.85 to 3.4.90. That means, the first, certificate ceased to be valid from 4.4.90.
(ii) There is no provision for issue of any fresh certificate to the said unit treating the same as the continued New Industrial Unit or an expanded industrial unit,
(iii) Further, it is also found that the said certificate of Eligibility from 24.3.90 was issued even before expiry of the original certificate of Eligibility, which was valid upto 3.4.90 and, therefore, the irregularity is apparent on the face of the said Certificate of Eligibility. It is also indicative that the industries authority has not acted bonafide in issuing the said Certificate of Eligibility from 24.3.90, that is, even before the expiry of the original Certificate of Eligibility, which was valid upto 3.4.90, as a 'New Industrial Unit' was required to complete all effective steps within the period from 15.10.82 to 31.3.90 in terms of Section 2(2) of the Concession Act.
12. The Revisional Authority took the view that there was no scope for issuing any further authorisation certificate to an existing Unit as a new Industrial Unit or as an expanded Industrial Unit under the Concession Act and, accordingly, it was held that the petitioner Industry was not entitled to certificate of authorisation. It was consequently held that since the assessment order in favour of the assessee has been passed on the basis of such invalid authorisation certificate, the assessment order passed on 4.2.94 was erroneous. On the basis of the aforesaid conclusion, a direction was given to make fresh assessment by treating the entire sale proceeds as taxable.
13. Mr. O.R Bhati, the learned Counsel for the petitioner submits that the Revisional Authority was not competent to exercise his jurisdiction under Section 36 of the Sales Tax Act, inasmuch as the said power cannot be exercised to correct some error committed by the Assessing Authority. The learned Counsel further contended that the certificate of authorisation has been issued in the instant case by the Superintendent of Taxes who is the competent authority to issue such certificate and, accordingly, there is no justification for declaring the assessment order to be erroneous when the assessing authority had acted on the basis of the certificate issued by a competent authority. The final contention made on behalf of the petitioner is that the while exercising powers of suo motu revision, the Revisional Authority is not competent to interfere with an order of assessment only because such order of assessment is wrong. According to Mr. Bhati, such power of suo motu revision can be exercised only when the assessment order is an erroneous order, suffering from jurisdictional error which is distinct from errors relating to determination of liability to pay tax. It is also submitted by Mr. Bhati that if the revisional powers are exercised to correct an error of an assessing authority, the revisional authority trenches on the powers of the assessing authority, which is impermissible in law.
14. Refuting the argument advanced on behalf of the petitioner, Mr. R. Dubey, learned Govt. Advocate submits that in order to determine the entitlement of an industry to exemption from tax, the provisions incorporated under the Assam Industries (Sales Tax Concessions) Act, 1986 and the Rules framed thereunder, namely, the Assam Industries (Sales Tax Concessions) Rules, 1988 are required to be adhered to. Only after an industry fulfills the requirements laid down under the Act and the Rules, it is eligible to obtain authorisation certificate to make it eligible to claim exemption from tax.
15. It is submitted by the learned Govt. Advocate that in the instant case, the petitioner Industry was not a new industry. It was claiming benefit as an industry carrying out expansion and since the petitioner Industry did not fulfill the conditions laid down by the provisions of the Concession Act and the Rules, it was not eligible to the authorisation certificate which was erroneously granted to it by the competent authority. It is also contended that since the petitioner had not applied for such authorisation certificate by fulfilling the conditions laid down under the provisions incorporated under Rule 3, 4 and 5, the Certificate under Rule 11 could not have been issued to the petitioner Industry.
16. The learned Govt. Advocate has also submitted that the benefit of exemption cannot be claimed on the basis of the 1986 policy, but can be claimed only on the basis of the provisions of the Assam Industries (Sales Tax Concessions) Act, 1986 and the Rules framed thereunder. It is further contended that by issuing notification dated 1.8.88, the State Government has extended the benefit of tax exemption in respect of sale of goods produced by a new Industrial Unit in Assam for a period of five years from the date of commencement of production and since the petitioner Industry had commenced production much earlier and had already availed of the benefit of tax exemption as anew Industrial Unit under the earlier prevailing 1982 policy, grant of authorisation certification to make it eligible for further sales tax exemption was totally wrong and was prejudicial to the interest of Revenue and, accordingly, the Revisional Authority had rightly exercised its power to interfere with the assessment order.
17. Responding specifically to the argument advanced by the learned Counsel for the petitioner regarding the scope and ambit of exercise of revisional powers, the learned Govt. Advocate submits that only when an industry is eligible for exemption from payment of tax as provided by the Act and the Rules, the Assessing Authority is competent to grant such exemption. Since in the instant case, exemption was granted by acting on an authorisation certificate which was secured by disregarding the provisions of the Act and the Rules, exercise of power by the Assessing Authority has to be held to be without jurisdiction because of which, the assessment order would become amenable to correction by the Revisional Authority. The learned Counsel in support of his arguments has cited the decision rendered by this Court on 20.3.2007 in WP(C) No, 8478/2001 reported in 2007 (3) GUT 916 (G.E. Lightings (India) Ltd. v. State of Assam).
18. Although elaborate arguments have been advanced by the learned Counsel appearing on behalf of the rival parties, the key question here is whether exercise of powers by the Revisional Authority was justified in the facts and circumstances of the instant case. If one examines the decision cited on behalf of the petitioner reported in (2002) 1 GLR 197 : 2002 (2) GLT 262 (Santalal Mehendi Ratta (HUF) v. Commissioner of Taxes and Ors.). it can be seen that this Court has held that revisional power is exercisable only with regard to jurisdictional error and not for correcting an error which is considered to be a wrong assessment order in the eye of the Revisional Authority.
19. From examining the statements and objects of the Concession Act, it is apparent that the benefit of concession under the Act and the Rules are made available to only new Industrial Units. The benefit of tax concession was to be given on selective basis to new Industrial Units established in the State. Obviously, the said benefit was not to be given to an existing Unit which has already availed of the benefit of exemption of tax under the previous policy declared by the State Government in the year 1982.
20. It has been decided by a Division Bench of this Court in a judgment delivered on 14.11.2006 in a batch of Writ Appeals including Writ Appeal No. 283/97 (M/s Radheshyam Rajendra Prasad and Ors. v. the State of Assam and Ors.) and in Doson Chemicals Pvt. Ltd. and Anr. v. State of Assam and Ors. 2001 (2) GLT 481 that the Industrial units established under the previous policy of the State Government declared in the year 1982 will not be entitled to sales tax concession under the new policy.
21. Thus, it is clear that the petitioner Industry having enjoyed the benefit of sales tax exemption under the earlier 1982 policy, was not entitled to receive further benefit by way of sales tax exemption under the provisions of the Concession Act and the Rules framed thereunder which are available only to new Industrial Units.
Therefore, the authorisation certificate granted to the petitioner Industry although was by the competent authority, was granted erroneously inasmuch as the said certificate was issued without having regard to the provisions incorporated under the Concession Act and the Rules framed thereunder.
Having regard to the provisions of the Concession Act and the Rules and also the decision of this Court reported in Doson Chemicals (supra) and M/s Radheshyam Rajendra Prasad (supra), I am of the considered view the said authorisation certificate dated 15.10.93 was not only erroneously made the basis for grant of exemption, but the Assessing Authority also granted exemption of tax to an old Unit which was not at all eligible to such exemption under the Concession Act.
22. This Court in M/s G.E. Lightings (India) Ltd. (supra) has held that where the Assessing Officer though vested with jurisdiction have exercised it wholly illegally or in an apparently irregular manner, this would be a case of jurisdictional error. When an assessment is done without making the requisite 1 enquiry as is duty bound to made by an officer, this would be a case where exercise of power would be without jurisdiction. I am in respectful agreement with the ratio declared in M/s G.E. Lightings (India) Ltd. (supra). The Revisional Authority in the present case found that the Assessing Authority didn't make the requisite application of mind or made the necessary enquiry as to whether the petitioner was a 'new Industrial Unit' which is eligible to obtain a Certificate of Authorisation under the Concession Act, which is not available to an Old Industrial Unit and disregarding the said obligation, passed assessment order giving benefit of tax exemption to the Old Industrial Unit of the petitioner. The law can't be so helpless to undo an apparent jurisdictional error and revisional powers are clearly available to correct such error which is also prejudicial to the interest of the revenue of the State.
23. Accordingly, in my considered opinion, the order of assessment passed on 4.2.94 suffers from a jurisdictional error which is amenable to revisional powers of the Revisional Authority under the provisions of Section 36(1) of the Assam General Sales Tax Act, 1993.
24. Hence I declare that the impugned order passed on 19.6.2000 by the Deputy Commissioner of Taxes, Guwahati, Zone-A does not suffer from any infirmity requiring interference by this Court since the said order has been passed by exercising powers conferred upon the Revisional Authority within the contour of the provisions of Section 36(1) of the Sales Tax Act.
25. The writ petition is, accordingly, found to be devoid of any merit and the same dismissed.