WP(C) Nos. 78 and 79 of 2014. Case: Meghalaya Bitchem Private Limited and Ors. Vs The State of Meghalaya and Ors.. Meghalaya High Court

Case NumberWP(C) Nos. 78 and 79 of 2014
CounselFor Appellant: A. Saraf, Sr. Advocate, A. Goyal, K. Choudhury, P. Baruah and L. Islam, Advocates and For Respondents: N.D. Chullai, Sr. Govt. Advocate and S. Sen Gupta, Govt. Advocate
JudgesU. N. Singh, C.J. and S. R. Sen, J.
IssueCentral Sales Tax Act, 1956 - Sections 8, 9; Meghalaya Value Added Tax Act, 2003 - Sections 116, 16, 45
Judgement DateJanuary 13, 2016
CourtMeghalaya High Court


U. N. Singh, C.J.

  1. One of two writ petitions, namely, WP(C) No. 78/2014 (Meghalaya Bitchem Private Ltd. V. State of Meghalaya & Ors.) has been filed, inter alia, with prayers to call for records, issue a Rule calling upon the respondents to show cause as to why a writ in the nature of Certiorari or a like one for setting aside and quashing the impugned orders of Assessment dated 15.11.2013 and Notices of Demand in pursuance thereof not be issued, as to why a writ in the nature of Mandamus not be issued directing the respondents to restrain, recall, refrain and/or forbear from giving effect to the impugned orders of Assessment dated 15.11.2013 and the Notices of Demand issued in pursuance thereof.

  2. The brief facts of this case as set out in the pleadings are that the Company is registered under the provisions of the Companies Act, 1956, having its registered office situated at 9th Mile, Baridua, Byrnihat, Ri-Bhoi District, Meghalaya. The petitioner-company is represented by Shri Pabitra Mahanta, Assistant Manager, Finance, who is interested in the day-to-day affairs of the company. All the share holders of the company are the citizens of India and, as such, they claim to be entitled to all the rights and privileges as guaranteed by the Constitution of India and the laws framed thereunder from time to time.

  3. All the respondents, being official respondents are also situated in the State of Meghalaya at Shillong or Ri-Bhoi.

  4. In the second petition namely, W(C) No. 79/2014 also, almost same nature of prayers with similar statement as regards locus standi etc. has been made. However, the address of the registered office of the Company is shown as 10th Mile, Mawsmai village, GS Road, Ri-Bhoi District, Meghalaya. The Company is represented by Shri Subir Singha, AGM-Finance and the date of impugned order of Assessment sought to be quashed is 21.1.2014.

  5. The impugned orders of Assessment namely, dated 15.11.2013 in the case of WP(C) No. 78 of 2014 and dated 21.1.2014 impugned in WP(C) No. 79 of 2014 were passed by the Superintendent of Taxes, Ri-Bhoi District, Meghalaya, in purported exercise of powers under Section 9 of the Central Sales Tax Act, 1956, read with Section 45 of the Meghalaya Value Added Tax Act for the financial year ending on 31st March, 2013. In pursuance thereof, the notices of demand were also issued. The Superintendent of Tax, Ri-Bhoi (respondent No. 4) raised the demand after rejecting the claims of entitlement of 99% remission of tax payable under the Meghalaya Industries (Tax Remission Scheme), 2006, on the ground that, under this Scheme there is no provision for extension of period of eligibility for new industrial units that have undergone expansion, modernization and diversification. As per the contention on behalf of the petitioner-companies, the impugned orders of Assessment are passed beyond the jurisdiction of the authority who, while rejecting the entitlements of the petitioner-Companies to claim benefits of exemption, has raised the demand in clear violation of the Scheme of 2006, and also in derogation of the order dated 07.01.2008 and 08.09.2009, passed by the Director of Industries-cum-Member Secretary, Single Window Agency, Meghalaya, whereby he has accorded an ex-post facto approval to petitioner's industrial unit for (i) expansion and modernization programme and (ii) grant of eligibility certificate which was issued by appropriate authority on 30.05.2011.

  6. We have heard learned counsel for parties and perused the pleadings of writ petition.

  7. Learned counsel appearing for the petitioner submitted that, admittedly there was no other Industrial Policy except the Policy of 1997 and there was a Single Window System. The Government, vide letter dated 07.01.2008 through Director of Industries, Meghalaya, granted benefits in the case of expansion of manufacturing capacity of the industrial units. The certificates of eligibility were also issued under the Meghalaya Industrial Policy, 1997 on 30.05.2011 to the petitioners, after taking into account the fact that the commercial production of the petitioner unit in WP(C) No. 78 of 2014 started on 25th March, 2005 and in WP(C) No. 79 of 2014 it commenced on 12.12.2004. Besides, the petitioner unit in WP(C) No. 78 of 2014 had undertaken further expansion w.e.f. 15.12.2009, whereas, in the case of petitioner unit in WP(C) No. 79 of 2014, it was undertaken on 16.12.2009. However, later a Notification was issued by the Government of Meghalaya, Department of Excise, Registration, Taxation and Stamps, whereby, in exercise of powers conferred under sub-section (3) and (4) of Section 116 of the Meghalaya Value Added Tax Act, 2003 (Meghalaya Act 2 of 2005), the Governor of Meghalaya amended clause 2 and deleted clause 3(2)(b) of the Meghalaya Industries (Tax Remission) Scheme, 2006. The words, "on or before 30.04.2005", used after "Single Window Agency" were omitted. The proviso added to clause 3(2)(b) and the note provided thereunder appearing in the Meghalaya Industries (Tax Remission) Scheme, 2006 were also deleted. The Notification amending clause 2 was to come into force with retrospective effect namely w.e.f. 16.10.2006 and deletion of the proviso and the note thereunder in clause 3(2)(b) was to come into force with immediate effect.

  8. Learned counsel for the petitioner submitted that the exemption and benefits provided to the units for finished products in accordance with the Policy of 1997 could not have been interfered with or taken away by the Department of Taxation as the Taxation Department is only an implementing agency. Moreover, there was no restriction that once the benefits were granted, the same could not be granted again on expansion of the unit. It is not open for the Taxation Department to re-examine the Policy and Scheme and to find out the eligibility of industrial units for grant of certificate of authorization to such units. Learned counsel for the petitioners also cited in support of his contentions the following judgments of Hon'ble the Apex Court, namely, (i) (1988) 3 SCC 570 [Para 5](Assistant Commissioner of Commercial Taxes (Asst) Dharwar and Ors. v. Dharmendra Trading Company and Ors); (ii) (2005) 6 SCC 292.

  9. It is the submission of the petitioner that, under the Scheme of 2006, it is no where provided that an industrial unit which was established as new unit as per the Meghalaya Industrial Policy 1997 and subsequently underwent the expansion was not entitled to the benefits of tax remission under the Scheme of 2006. The only condition required was that the industrial unit shall not be a non-eligible unit under the Meghalaya Industrial Policy 1997 and the same must be approved by the Single Window Agency on or before 30.4.2005. It also appears that Meghalaya Value Added Tax Act, 2003 was enacted to provide for and consolidate the laws relating to levy of Value Added Tax on sales and purchases of goods within the State of Meghalaya. The said Act was published in the Gazette of Meghalaya Extraordinary No. 25 dated 4.3.2005 vide Notification No. LL(B)53/2002/314. In exercise of powers conferred under sub-section(3) and (4) of Section 16 of the VAT Act, the Governor of Meghalaya was pleased to frame the Meghalaya Industries (Tax Remission) Scheme 2006 substituting the Meghalaya Industries (Sales Tax Exemption) Scheme 2001, for providing alternative benefits in lieu of the benefits enjoyed by the eligible units under the...

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