D.A. Mehta, J.
1. This petition has been preferred challenging the action of the respondents authority of demanding and recovering the tax on the basis of the certificates issued by the Sales Tax Department on 1.11.1994 and 27.6.1996 being cancelled in the following circumstances.
In 1993, respondent - State of Gujarat announced the scheme titled - Incentive Scheme for Wind Power Generation 1993 (the Scheme) for extending sales tax incentives to industrial undertakings who would set up wind farms in the State of Gujarat so as to curb the gap between demand and supply of power in the State. Pursuant to the said Scheme, the petitioner installed three windmills in two lots at Lambha, Dist: Jamnagar between the period of March 1994 and March 1995. On 1.11.1994, Sales Tax Department issued exemption certificate granting sales tax deferment benefit to the tune of Rs. 41,35,503/- and the said certificate was effective from 31st March, 1994. The period of benefit was available for a span of six years that commenced from 31st March, 1994 and ended on 30th March, 2000. On 27.6.1996, second certificate was issued by the Sales Tax Department for a sum of Rs. 1,25,22,949/- and the said certificate was effective from 30th March, 1995 upto 29th March, 2001.
2. On 9th June, 1998, a cyclone hit coastal regions of the State, more particularly districts of Porbandar and Jamnagar resulting in wide spread damage. The windmills installed by the petitioner company were uprooted resulting in stoppage of production of power. One of the conditions of the Scheme was condition No. 7(b) which reads as under:
(b) The Industrial until will remain in production continuously during the eligible period.
Obviously, as the petitioner could not remain in production continuously during the eligible period, respondent authority issued a notice proposing to recover the amount availed of by the petitioner as sales tax benefit under the Scheme with interest. The notice was issued on 1.12.1999 and followed by notices issued on 29.8.2000, 22.10.2003, 15.12.2003 and 19.1.2004. The petitioner tendered a detailed explanation on 7.12.1999 followed by subsequent letters on various dates pointing out that the demand was unjustified in the facts and circumstances of the case.
3. On 8th March, 2000, the windmills have been reinstalled by the petitioners and this fact is not in dispute. It is the case of the petitioners that despite the aforesaid fact situation, respondent, - Sales Tax authority has held the petitioner liable to pay an amount, because there was, according to the authority, breach of condition No. 7(b) of the Scheme of running the windmill for a continuous period of six years from the date of commissioning.
4. Heard the learned advocate for the petitioners as well as learned AGP on behalf of the respondents. It is accepted position between the parties that the principal issue has been concluded by judgment rendered by this Court on 2nd March, 2006 in Special Civil Application No. 2033 of 2004 in the case of Rolcon Engineering Company Limited v. State of Gujarat and Ors. This Court has held that the restrictive clause of condition No. 7(f) would apply only in a case where the default has occurred by virtue of an act on part of the industrial unit, whereby the unit deliberately ceases to generate electricity during the period of six years as per resolution dated 13.6.1994. In the circumstances, the plea of the respondent authority that, the petitioners are not entitled to any benefit because of breach of the condition cannot be accepted.
5. Another facet of the controversy, which the Court is called upon to decide today is in light of the subsequent resolution dated 11th September, 1994, whereunder, respondent State relaxed the condition of a wind farm running at least for six years continuously from the date of commissioning by providing that such period of six years would be a total of six years comprised of the period of operation prior to the date of cyclone plus the period subsequent to running of the windmill for the balance period after the date of cyclone upon recommissioning the windmill after repairs or re-installation. However, the relaxation has been made subject to the stipulation that such recommissioning takes place within a period of one year from the date of cyclone. Admittedly, the subsequent resolution dated 11th September, 2004 was not placed before the Court when the earlier matter was decided and attention was invited only by way of a review application which came to be rejected by this Court vide order dated 20.7.2006.
6. On behalf of the respondents, it was contended that;
1. Those units who have not at all recommissioned the windmills cannot claim any benefit and are required to be called upon to return the benefit availed of prior to the date of cyclone and;
2. Those units who have recommissioned after the aforesaid period of 12 months as granted by way of relaxation vide subsequent resolution dated 11th September, 2004 also cannot be permitted to avail of any benefit for the balance period remaining out of the block of six years from the initial date of commissioning.
7. As against that on behalf of the petitioners, the contention was that the period of 12 months stipulated by the subsequent resolution is too short and a reasonable period for recommissioning ought to have been granted by respondent State. It was further submitted on behalf of the respondents at this stage that the industrial units who have received insurance claims should not be granted any further benefit even if recommissioning has taken place.
8. In relation to a unit which has been recommissioned, the matter would stand on a different footing as compared to a unit which has not been recommissioned at all. Once the respondent State has come out with a policy that a recommissioned unit is entitled to the benefit originally granted for the balance period, the only question that would survive is as to what would be the reasonable period during which an industrial unit which has suffered extensive damage, can be permitted to restart the operations. Having heard both the learned advocates on this count, the Court finds it just and proper to fix the period at 24 months for the purposes of recommissioning from the date of cyclone considering the factors like shock, arranging for finance and normal period necessary for installation of a new windmill after cleaning up the debris of the windmill destroyed in cyclone. The receipt of insurance claim would fall under the head of arranging for finance for restarting unit and cannot be considered to be a factor adverse so as to disentitle a unit which ultimately restarts its operations within the aforesaid period of 24 months from the date of cyclone.
9. It is made clear that every unit which has availed of benefit upto the date of cyclone is bound to discharge its liability under the Scheme and mere destruction of the windmill cannot absolve such a unit from discharging its liability having availed of benefit for the period upto the date of cyclone. Similarly, for the balance period which is to be computed from the date of recommissioning so as to make up the total period of six years, the unit which has recommenced shall also discharge its liability for the balance period in accordance with the other conditions stipulated by the Scheme.
10. Insofar as the units which are not recommissioned, in light of the earlier judgment dated 2nd March, 2006 referred to hereinabove and what is stated hereinbefore in this judgment, such units shall be liable to discharge their liability for the period prior to the date of cyclone for which the original Scheme provides for in accordance with other terms of the Scheme. To put it differently, respondent shall not be entitled to effect any recovery on the ground of breach of the condition of continuous operation of period of six years, but such bar shall not apply to the unit from discharging its liability, which such unit is otherwise liable to discharge, to the extent the benefit has been availed of in accordance with the other terms of the Scheme.
11. It is further clarified that considering the earlier judgment of this Court in Special Civil Application No. 2033 of 2004 and what is stated hereinbefore in cases of units which are recommissioned within the extended span of 24 months, no interest will be recoverable, but units which have been recommissioned beyond the period of 24 months from the date of cyclone while discharging their liability in accordance with other terms of the Scheme, interest at appropriate rate shall be payable by such unit.
12. In the facts of the present case, admittedly the petitioner herein has recommissioned its wind farm within a period of 24 months from the date of cyclone and hence, respondent State shall not be entitled to effect any recovery on the ground of breach of condition No. 7(b) and the petitioner would be simultaneously required to discharge its liability in accordance with what is stated hereinbefore.
13. The petition is allowed accordingly. Rule made absolute to the aforesaid extent with no order as to costs.