Judgment:
ORDER
A.M. Sapre, J.
1. The challenge by the petitioner in this petition filed under Article 226/227 of the Constitution is to an order dated July 1, 1992 (annexure P/20) and order dated July 9, 1992 (annexure P/21) by which the petitioner's application for grant of eligibility certificate in respect of the concession or/and exemption from payment of sales tax/entry tax is rejected. Facts that led to filing of this petition lie in a narrow compass. They need mention in brief.
2. There was a proprietory concern of one Shri Prabhudas Shah called Benson Pharmaceuticals. It had one industrial unit engaged in the business of manufacture of pharmaceutical goods at Industrial Estate at Sanwer Road, Indore. This concern had taken loan from MPFC for running this unit. It appears that since the concern, i.e., Benson Pharmaceuticals failed to repay the loan and hence MPFC invoked their powers conferred under Section 29 of the State Financial Corporation Act, 1951 and advertised the aforesaid unit for sale on October 9, 1987. The petitioner submitted its tender for purchase of the defaulted unit. Eventually the petitioner was turned out to be the successful bidder and accordingly the MPFC by their letter dated December 8, 1987 (annexure P/6) accepted the petitioner's offer for Rs. 8,77,832.67 paise. This was then followed by execution of panchnama (annexure P/7) by which the petitioner was actually placed in possession of the unit in question. The petitioner then executed a fresh lease deed (annexure P/10) with Industries Department of State. The petitioner then got themselves registered as small-scale industrial unit vide certificate issued in their favour on March 16, 1988--September 14, 1989 (annexures P/11 & P/12). Since the petitioner was interested in business of manufacture and sale of drugs, they also obtained requisite manufacturing licence from the concerned authorities (annexure 13/14). The petitioner also obtained financial assistance from MPFC for running the unit and then began commercial production in 1988.
3. The petitioner then applied for grant of eligibility certificate in respect of the concession or exemption from sales tax as also entry tax by its application dated April 20, 1990 and April 12, 1990 (annexure P/19). It is this application that was rejected by the General Manager, District Industries Centre, Indore, by impugned order dated July 9, 1992 (annexure P/21) essentially on the ground that since the benefit of sales tax was already availed of by the defaulting unit, i.e., Benson Pharmaceuticals from whom the petitioner had purchased and hence petitioner is not entitled for any benefit. This is what is contained in the order rejecting application of the petitioner :
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4. It is against this rejection the petitioner has felt aggrieved and filed this petition.
5. The State by filing the return supported the impugned rejection and the reasoning contained therein.
6. Heard Shri P.M. Choudhary, learned counsel for the petitioners and Shri P. Verma, learned Government Advocate, for the respondents.
7. Learned counsel for the petitioner while attacking the impugned order (annexure P/20) argued that reasoning contained in the impugned order and that prevailed in rejection of petitioner's application was entirely perverse as also de hors to the very object in granting exemption. It was his submission that the petitioner being an independent unit in itself having no connection whatsoever with the defaulting unit, the petitioner's application had to be considered on its own merit.
8. Learned counsel for the State supported the impugned rejection.
9. Having heard the learned counsel for the parties and having perused the entire record of the case, I am inclined to set aside the impugned order and allow this petition.
10. In my considered opinion, the authorities concerned were not justified in rejecting petitioner's application for grant of eligibility certificate on the ground that since the exemption was granted to defaulting unit and hence it cannot be granted to the petitioner. This reasoning is not sustainable. In my opinion, the petitioner had nothing to do with the defaulting unit as they were the bona fide auction purchaser of the said defaulting unit in auction proceedings held by MPFC under Section 29 of the State Financial Corporation Act, 1951. The petitioner had become owner of the said unit after the auction was knocked down in their favour and they made the payment. In other words, petitioner was in no way concerned with any of the acts and activities of defaulting unit. Whether the sales tax exemption was granted to defaulting unit or not had nothing to do with the petitioner's application for grant of exemption. The business activity of defaulting unit came to an end on and from the date when the unit was sold and transferred to the petitioner in auction by MPFC. The petitioner was entirely a separate and altogether distinct legal entity which acquired the unit for their benefit. The sales tax/entry tax exemption is granted to a person who carries on some business activity on fulfilment of conditions stipulated for grant of exemption. Once the petitioner purchased the unit and became owner thereof on making payment to MPFC, they had become entitled to apply in their own rights to ask for the exemption for carrying on their business. It had to be therefore, considered on its own merit.
11. In my opinion, therefore, the respondent Nos. 1 and 2 had to consider and decide the application dated April 20, 1990 and April 12, 1990 (annexure P/19) for grant of eligibility certificate in payment of sales tax and entry tax on its own merit treating the application to have been made by the petitioner as a distinct industrial unit for the first time and then should have considered whether the petitioner satisfied all the terms and conditions necessary for the grant of eligibility certificate.
12. Accordingly and in view of aforesaid discussion, the petition is allowed, impugned order dated July 1, 1992, annexure P/20, and order dated July 9, 1992 are set aside by issuance of writ of certiorari. The respondent Nos. 1 and 2 are directed to reconsider the application made by the petitioner on April 20, 1990 and April 12, 1990, annexure P/19, afresh on its merits in the light of observations made supra. Let these proceedings be completed within six months from the date of order.
No cost. Security amount if deposited, be refunded to the petitioner as per the rules.