Chattisgarh High Court
State Of Chhattisgarh vs M/S Jayaswal Neco Industries Ltd. ... on 17 September, 2024
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2024:CGHC:36306
NAFR
HIGH COURT OF CHHATTISGARH AT BILASPUR
Reserved for orders on :08/05/2024
Order passed on :17/09/2024
WPC No. 1804 of 2016
1 - State of Chhattisgarh Through The Secretary, Department of Commercial Tax
Department (Registration), Mahanadi Bhawan, Mantralaya, Naya Raipur,
Chhattisgarh (The petitioner No 1 was not a party before the learned Board of
Revenue but has been impleaded as petitioner No. 1 in the instant petition as the
proper course is to implead the State Government through the Secretary of the
concerned department, Chhattisgarh).
2 - Collector of Stamps, Raipur, District Raipur, Chhattisgarh
... Petitioners
versus
1 - M/s Jayaswal Neco Industries Ltd., Raipur Raipur (Formerly known as M/s
Nagpur Alloys Casting Limited), Siltara Growth Centre, Siltara, District Raipur
Chhattisgarh, Chhattisgarh
2 - Chhattisgarh Board of Revenue, Bilaspur, District Bilaspur, Circuit Court Raipur
Chhattisgarh
... Respondents
For Petitioners : Mr. Vinay Pandey, Deputy Advocate General. For Respondent No.1 : Mr. Ashish Surana, Advocate.
Hon'ble Shri Justice Ravindra Kumar Agrawal CAV Order
1. The present petition has been filed by the State against the order dated 14- 03-2016 (Annexure-P/1) passed by the C.G. Board of Revenue, Bilaspur in case No. R.N./14/R/B-103/225/2002-03 whereby the revision filed by the respondent No.1 was allowed and the order dated 31-01-2013 passed by the Collector of Stamps, Raipur (C.G.) has been set aside.
2. Brief facts of the case as emerges from the pleadings of the writ petition as Digitally signed by MOHAMMAD AADIL KHAN 2 / 14 well as documents annexed thereto are that, a lease deed of the land admeasuring 389.704 hectare, situated at Industrial Development Center, Siltara, Raipur was executed in between M.P. Audyogik Kendra Vikas Nigam Ltd. Raipur and Nagpur Alloys Casting Ltd., Siltara on 26-03-1996. The said Nagpur Alloys Casting Ltd. is presently known as M/s Jayaswal Neco Industries Ltd. Raipur. At the time of registration of the said lease dead the stamp duty of Rs.50,000/- was paid as per notification No.F-16/03/92/Eleven/B dated 27-06-1992 issued by the Department of Commerce and Industries, State of Madhya Pradesh on 26-03-1996.
A case for recovery of deficit stamp duty was registered under Section 33 read with Section 40-B and 48-B of the Indian Stamp Act, 1899 and show cause notice was issued to respondent No.1 company. The respondent No.1 company had filed its reply on 19-06-2003 before the Collector of Stamp, Raipur. In the reply, respondent No.1 had submitted that the stamp duty of Rs.50,000/- has been paid on the said lease deed as provided under clause 7 of the notification dated 27-06-1992 issued by the Department of Commerce and Industries. It was further contended in the reply that since Nagpur Alloys Casting Ltd. In whose favour the lease deed was executed had fulfilled all the requisite conditions under the notification dated 27-06- 1992. in consonance of the notification issued by the erstwhile State of M.P., now State of C.G. has also issued notification on 08-10-2004 wherein similar benefits have been granted to the industrial unit having investment of more than Rs.1000 crore. The Collector of Stamp, Raipur after considering the matter comes into conclusion that the notification dated 27-06-1992 was not issued under Section 9(1) of the Indian Stamp Act and the proper stamp duty has not been paid in the instrument in accordance with Schedule I-A of Section 35, Section 40 and Section 48-B of the Indian Stamp Act, 1899. Since the notification dated 27-06-1992 is not issued under Section 9(1) of the Indian Stamp Act, 1899 the benefit of reduction or remittance in stamp 3 / 14 duty cannot be granted to the petitioner and while exercising the powers of Section 40 and 48-B of the Indian Stamp Act, 1899 and also in view of the Schedule I-A of Section 35 of the Indian Stamp Act, 1899, the Collector of Stamp, Raipur vide order dated 31-01-2013 directed the respondent No.1 company to pay the stamp duty of Rs.26,27,830/- and cess at the rate of 5% amounting to Rs.1,31,392/-, total amounting to Rs.27,59,222/- and registration charges amounting to Rs.20,69,470/-. Further after deducting the amount which has been already paid by respondent No.1 company it has been directed to pay deficit stamp duty of Rs.27,09,222/- and registration charges of Rs.20,31,917/-, which total comes to Rs.47,41,139/- and further penalty of Rs.2,00,000/- was also imposed upon the respondent No.1 company.
The order dated 31-01-2013 passed by the Collector of Stamps, Raipur was challenged by respondent No.1 company before C.G. Board of Revenue, Bilaspur by filing the revision. After hearing the parties the C.G. Board of Revenue, Bilaspur has passed the order on 14-03-2016 and came into conclusion that the notification dated 08-10-2004 issued by the State of C.G. granting benefit to the industrial units having investment of more than 1000 crores of rupees is in consonance with the notification dated 27-06- 1992 issued by the erstwhile State of M.P. and further held that the respondent No.1 company has paid the stamp duty of Rs.50,000/- which is under the notification dated 27-06-1992 and has set aside the order dated 31-01-2013 passed by the Collector of Stamp, Raipur. The order passed by the C.G. Board of Revenue, Bilaspur dated 14-03-2016 is under challenge in the present writ petition filed by the State Government.
3. Respondent No.1 company has filed its return denying the adverse allegation against respondent No.1 company and submitted that in the year 2000 when the erstwhile M.P. was bifurcated and the State of C.G. came into existence in view of Section 2(f), 78 and 79 of the M.P. Re-organization Act, 2000 the 4 / 14 Special Incentive Scheme was directed to be continued in the State of Chhattisgarh and the new Industrial policy was framed in the year 2001 to 2006 and the commitment of the erstwhile State of M.P. is honoured by State of C.G. and the benefits have been extended to the industrial units of the State of C.G. It is also submitted that in the year 1996 when the lease deed was presented before the Sub-Registrar for its registration, the notification dated 27-06-1992 was considered and the deed was registered. Till formation of the new State of C.G., i.e., upto 31 st of October, 2000 nobody had challenged the said deed or the stamp duty paid in the said deed. After three years of the formation of the State of C.G., in the year 2003, the Collector of Stamp, Raipur, C.G. has initiated the proceeding for recovery of deficit stamp duty and declared that the stamp duty was wrongly computed and demanded the requisite stamp duty along with penalty. By the notification dated 27-06- 1992 the erstwhile State of M.P. has given concession under the Special Incentive Schemes for Integrated Steel Plants which will be contributing in the State, making a capital investment of more than Rs.1000 crores.
4. It is also replied by the respondent No.1 company that after lapse of more than 7 years the case for recovery of deficit stamp duty was registered against respondent No.1 in which the Collector of Stamps has directed to pay Rs.49,41,139/- towards the deficit stamp duty and registration charges and penalty. The order dated 31-01-2013 passed by the Collector of Stamps, Raipur is set aside by the C.G. Board of Revenue, Bilaspur which is strictly under the law and the respondent No.1 has correctly paid the stamp duty of Rs.50,000/- as provided under the notification dated 27-06-1992.
5. It is further stated in the reply of respondent No.1 that clause 7 of the notification dated 27-06-1992 clearly notifies that stamp duty for each document shall be either 2% or Rs.50,000/- whichever is less will be applicable on each document, therefore, the Collector of Stamps, Raipur had passed the order dehors the notification dated 27-06-1992. The State of 5 / 14 Chhattisgarh, Department of Finance and Planning has issued subsequent notification under Section 9 of the Indian Stamp Act, 1899 to grant exemption/benefits whereby the stamp duty was reduced from 7.5% to 2% on the instrument of sale/lease executed in favour of the integrated steel plants with capital investment of more than Rs.1000/- crores and the maximum limit of the stamp duty is Rs.50,000/-. The notification dated 08-10- 2004 issued by the State of C.G. is in continuation and consonance with the earlier notification dated 27-06-1992. The principles of promissory estoppel is also applies in the present case as the notification dated 27-06-1992 as well as 08-10-2004 promised the industries who invested more than Rs.1000/- crores are liable to pay the stamp duty of maximum Rs.50,000/- on the sale/lease deed executed in their favour and under the industrial policy in new State of C.G. the notification dated 08-10-2004 was issued which also confirms the earlier notification dated 27-06-1992 and thus, the C.G. Board of Revenue has rightly exercised its jurisdiction and correctly interpreted the previsions of the notification dated 27-06-1992 and 08-10-2004 as well as the Schedule IA of Section 35 of the Indian Stamp Act, 1899 and has rightly passed the order dated 14-03-2016.
6. Learned counsel for the petitioners would argued in support of their petition and submits that C.G. Board of Revenue has passed the impugned order without proper appreciation of the notification dated 27-06-1992 issued by the erstwhile State of M.P. as well as the notification dated 08-10-2004 issued by the State of C.G. He would further submit that the Board of Revenue has committed grave illegality in holding that the notification dated 08-10-2004 issued by the State of C.G. is in continuation with the notification dated 27- 06-1992 issued by the State of M.P. He would further submit that the notification dated 08-10-2004 is an independent notification issued by the Department of Commerce and Industries in exercise of its power under Section 9 of the Indian Stamp Act, 1899, whereas, the earlier notification 6 / 14 dated 27-06-1992 was not issued in exercise of powers under Section 9 of the Indian Stamp Act, 1899. Therefore, the petition may be allowed and the impugned order dated 14-03-2016 (Annexure-P/1) passed by the C.G. Board of Revenue be set aside.
7. Per contra, learned counsel for respondent No.1 company has supported the impugned order dated 14-03-2016 and submitted that the C.G. Board of Revenue after considering the entire facts and circumstances of the case as well as proper appreciation of the notification dated 27-06-1992 and 08-10- 2004 has passed the order which is strictly in accordance with law and needs no interference.
8. I have heard learned counsel for the parties and gone through the documents annexed with the writ petition by either of the parties.
9. The notification dated 27-06-1992 was issued by the erstwhile State of M.P., Department of Commerce and Industries, Bhopal under the especial incentive scheme for establishment of integrated steel plants having capital investment of more than 1000 crores of rupees. Although, it is nowhere mentioned in the said notification that it has been issued by exercising powers conferred under Section 9 of the Indian Stamp Act, 1899, but the stamp duty payable under the said notification has been mentioned in the clause 7 of the said notification which reads as under:-
Þ¼‰½ LVkEi M~;wVh-& LVkEi M~;wVh dh vf/kdre lhek „ izfr'kr ;k #i;s ‡Œ]ŒŒŒ/- tks Hkh de gks] izR;sd MkD;wesaV ds fy, ykxw gksxh-ß
10. The respondent No.1 who has established the steel industry in the State of C.G. (erstwhile State of M.P.) was granted benefit of reduced payment of stamp duty in the lease deed executed in his favour by the erstwhile State of M.P. Without any objection the said lease deed was got registered on 26-03- 1996 in favour of respondent No.1 and the stamp duty of Rs.50,000/- has been paid in the said lease deed under the notification dated 27-06-1992.
11. On 01-11-2000 the erstwhile State of M.P. is bifurcated and a new State of 7 / 14 C.G. came into existence and the rights of assets and liabilities has also been bifurcated between the two states under the M.P. Reorganization Act, 200. When the new State of C.G. came into existence in the year 2000, another notification was issued on 08-10-2004 by the State of C.G., Finance and Planning Department, Commercial Tax (Registration) Department, Raipur in exercise of powers under Section 9(1)(a) of the Indian Stamp Act, 1899 and the limits of stamp duty was reduced from 7.5% to 2% in the sale/lease deed executed in favour of the steel industries established under the notification dated 27-06-1992. The notification dated 08-10-2004, though issued by exercise its power under Section 9(1)(a) of the Indian Stamp Act, 1899, but the language of this notification reflects that the same has been issued in consonance of earlier notification dated 27-06-1992 issued by the erstwhile State of M.P.. The relevant part of the notification dated 08-10-2004 (Annexure-P/4) is necessary to be reproduced here for ready reference:-
Þdzekad ,Q 10&63&2003 & ok-d- ¼ia-½ ikap ¼76½ & Hkkjrh; LVkEi vf/kfu;e] 1899 ¼1899 dk la[;kad 2½ dh /kkjk 9 dh mi/kkjk ¼1½ ds [k.M ¼d½ }kjk iznRr 'kfDr;ksa dk iz;ksx esa ykrs gq;s] jkT; 'kklu ,rn~}kjk okf.kT; ,oa m|ksx foHkkx dh vf/klwpuk dzekad ,Q 16&3&92@11@ch-] fnukad 27-06-1992 eas ;Fkkizko/kkfur #i;s 1000 djksM+ ¼,d gtkj djksM+ #i;s½ ls vf/kd iwath os"Bu okys ,dhd`r LVhy Iyk.V~l ds i{k esa fu"ikfnr fodz;@iV~Vs dh fy[krksa ij] mDr vf/kfu;e dh vuqlwph I &Þdß ds vuqPNsn 23 ,oa 35 ds varZxr izHkk;Z LVkEi 'kqYd dh nj] #i;s 50]000@& dh vf/kfu;e lhek ds v/;/khu jgrs gq;s 7-5 % ls ?kVkdj 2-0% djrh gSAß
12. Though the notification dated 27-06-1992 does not disclose that it has been issued in exercise of its power under Section 9 of the Indian Stamp Act, 1899, yet benefit of reduction of the stamp duty was extended to the respondent No.1 which was recognized by the Deputy Registrar at the time of registration of the lease deed and got the lease deed registered 8 / 14 considering that appropriate stamp duty has been paid on the instrument. The notification dated 27-06-1992 creates a promissory estoppel in favour of the respondent No.1 that if he install a steel industry in the State of M.P., (now State of C.G.) they will reduce the requisite stamp duty on the instrument upto Rs.50,000/- or 2% of the value of the deed whichever is lesser. The said promissory estoppel cannot be taken away as the deed has already been registered and after about 7-8 years a subsequent notification was issued by the State Government.
13. In the matter of Lloyd Electric and Engineering Limited Vs. State of Himachal Pradesh and others, (2016) 1 SCC 560, the Hon'ble Supreme Court in para 14 and 15 that:
"14. ........Once the Council of Ministers has taken a decision to extend the 2004 Industrial Policy and extend tax concession beyond 31-3-2009, merely because the Excise and Taxation Department took time to issue the notification, it cannot be held that the eligible units are not entitled to the concession till the Department issued the notification.
15. It has to be noted that the Finance Department of the State Government had concurred with the proposal of the Department of Industries to extend the tax concession beyond 31-3-2009 till 31-3- 2013 and the Council of Ministers had accordingly taken a decision also. No doubt, the statutory notification issued by the Excise and Taxation Department under Section 8(5)(b) of the Act on 18-6-2009 has stated that the eligible units will be entitled to the concession with immediate effect. Merely because such an expression has been used, it cannot be held that the State Government can levy the tax against its own policy. The State Government is bound by the policy decision taken by the Council of Ministers and duly notified by the Department concerned viz. Department of Industries."
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14. In the matter of M/s S.V.A. Steel Re-Rolling Mills Ltd. Etc. Vs. State of Kerala and Ors. Etc., (2014) 4 SCC 186, the Hon'ble Supreme Court in para 23 and 30 that:-
"23. In the instant case, no case had been made out by the respondent State that the appellants had committed any breach or were not entitled to any of the benefits or concessions which had been offered to them by the respondent State. In the circumstances, the respondent State was bound to give the benefits which had been assured to the appellants.
30. Before laying down any policy which would give benefits to its subjects, the State must think about pros and cons of the policy and its capacity to give the benefits. Without proper appreciation of all the relevant factors, the State should not give nay assurance, not only because that would be in violation of the principles of promissory estoppel but it would be unfair and immoral on the part of the State not to act as per its promise."
15. In the matter of Amrit Banaspati Co. Ltd. and another Vs. State of Punjab and another, (1992) 2 SCC 411, the Hon'ble Supreme Court in para 10, 11 and 12 that:-
"10. But promissory estoppel being an extension of principle of equity, the basic purpose of which is to promote justice founded on fairness and relieve a promisee of any injustice perpetrated due to promisor's going back on its promise, is incapable of being enforced in a court of law if the promise which furnishes the cause of action or the agreement, express or implied, giving rise to binding contract is statutorily prohibited or is against public policy. What then was the nature of refund which was promised by the government? Was such promise contrary to law and against public policy? Could it be enforced in a court of law? Taxation is a sovereign power exercised by 10 / 14 the State to realise revenue to enable it to discharge its obligations. Power to do so is derived from entries in Lists I, II and III of the Seventh Schedule of the Constitution. Sales tax or purchase tax is levied in exercise of power derived from an Act passed by a State under Entry 54 of List II of VIIth Schedule. It is an indirect tax as even though it is collected by a dealer the law normally permits it to be passed on and the ultimate burden is borne by the consumer. But 'the fact that the burden of a tax may have been passed on to the consumer does not alter the legal nature of the tax' (Halsbury's Laws of England. Vol. 52, paragraph 20.04). Therefore even a legislature, much less a government, cannot enact a law or issue an order or agree to refund the tax realised by it from people in exercise of its sovereign powers, except when the levy or realisation is contrary to a law validily enacted. A promise or agreement to refund tax which is due under the Act and realised in accordance with law would be a fraud on the Constitution and breach of faith of the people. Taxes like sales tax are paid even by a poor man irrespective of his savings with a sense of participation in growth of national economy and development of the State. Its utilization by way of refund not to the payer but to a private person, a manufacturer, is an inducement to set up its unit in the State would be breach of trust of the people amounting to deception under law.
11. Exemption from tax to encourage industrialisation should not be confused with refund of tax. They are two different legal and distinct concepts. An exemption is a concession allowed to a class or individual from general burden for valid and justifiable reason. For instance tax holiday or concession to new or expanding industries is well known to be one of the methods to grant incentive to encourage industrialisation. Avowed objective is to enable the industry to stand 11 / 14 up and compete in the market. Sales tax is an indirect tax which is ultimately passed on to the consumer. If an industry is exempt from tax the ultimate beneficiary is the consumer. The industry is allowed to overcome its teething period by selling its products at comparatively cheaper rate as compared to others. Therefore, both the manufacturer and consumer gain, one by concession of non-levy and other by non- payment. Such provisions in an Act or Notification or orders issued by Government are neither illegal nor against public policy.
12. But refund of tax is made in consequence of excess payment of it or its realisation illegally or contrary to the provisions of law. A provision or agreement to refund tax due or realised in accordance with low cannot be comprehended. No law can be made to refund tax to a manufacturer realised under a statute. It would be invalid and ultra vires. The Punjab Sales Tax Act provided for refund of sales tax and grant of exemption in circumstances specified in Sections 12 and 30 respectively. Neither empowered the Government to refund sales tax realised by a manufacturer on sales of its finished product. Refund could be allowed if tax paid was in excess of amount due. An agreement or even a notification or order permitting refund of sales tax which was due shall be contrary to the statute. To illustrate it the appellant claimed refund of sales tax paid by it to the State Government on sale made by it of its finished products. But the tax paid is not an amount spent by the appellant but realised on sale by it. What is deposited under this head is tax which is otherwise due under the provisions of the Act. Return or refund of it or its equivalent, irrespective of form is repayment or refund of sales tax. This would be contrary to Constitution. Any agreement for such refund being contrary to public policy was void under Section 23 of the Contract Act. The constitutional requirements of levy of tax being for the welfare of the 12 / 14 society and not for a specific individual the agreement or promise made by the government was in contravention of public purpose thus violative of public policy. No legal relationship could have arisen by operation of promissory estoppel as it was contrary both to the Constitution and the law. Realisation of tax through State mechanism for the sake of paying it to a private person directly or indirectly is impermissible under constitutional scheme. The law does not permit it nor equity can countenance it. The scheme of refund of sales tax was thus incapable of being enforced in a court of law."
16. From perusal of the documents annexed with the writ petition it appears that after notification dated 27-06-1992, within one year the respondent No.1 company has got lease deed registered in his favour and was entitled for reduction of the stamp duty in the said deed and thus under the notification dated 27-06-1992, the Sub-Registrar has not committed any illegality in computing the requisite stamp duty leviable for the lease deed under the said notification dated 27-06-1992. Further, the said lease deed was executed on 25-03-1996 and the registered on 26-03-1996.
17. From the perusal of the material produced in the writ petition it does not appear as to on which date the case for recovery of deficit stamp duty was registered against the respondent No.1 and it comes that respondent No.1 has filed his reply on 19-06-2003. The said lease dead was got registered on 26-03-1996 and after more than 7 years the case was registered against the respondent No.1.
18. There is State amendment of M.P. under Section 48B which came into existence in the year 1991 by M.P. Act 24 of 1990, S.4 (21-1-91), which reads as under:-
"48B. Original instrument to be produced before the Collector in case of deficiency. -- Where the deficiency of stamp duty is noticed from a copy of any instrument, the Collector may, by order, require the 13 / 14 production of original instrument from a person in possession or in custody of the original instrument for the purpose of satisfying himself as to the adequacy of amount of duty paid thereon, if the Original Instrument is not produced before him within the period specified in the order it shall be presumed that the original document is not duly stamped and the Collector may proceed in the manner provided in this Chapter.
Provided that no action under this Section shall be taken after a period of five years from the date of execution of such instrument."
19. As per the provisions of Section 48B of the Indian Stamp Act, no action under this Section shall be taken after period of 5 years from the date of execution of such instrument. The lease deed was executed on 26-03-1996. Within a period of five years from the date of its execution and registration no action was taken either by erstwhile State of M.P. or the new State of C.G. and it is only after about more than 7 years the case was registered which is apparently barred by the limitation as provided under Section 48B of the Indian Stamp Act, 1899.
20. Further, the said case against respondent No.1 was registered upon a letter dated 21-05-2003 issued by the Inspector General of Stamp, C.G., Raipur, whereas, the original lease deed has to be examined about its requisite stamp duty and merely on the basis of the letter issued by the Inspector General, Stamp the case cannot be registered. Further, from the material available in the case, it appears that the case was registered in the year 2003 after receiving the letter dated 21-05-2003 from the Inspector General (Registration) in which respondent No.1 had filed his reply on 19-06-2003 whereas the notification is issued by the State of C.G. on 08-10-2004, meaning thereby prior to issuance of the said notification dated 08-10-2004 the case has already been registered against the respondent No.1, then it cannot be said that the recovery of deficit stamp duty, if any, is under the 14 / 14 notification dated 08-10-2004, therefore, no benefit can be extended to the State Government by the notification dated 08-10-2004 as there was no notification on the date when the case was registered against the respondent No.1 and under the old notification of year 1992 the benefit has already been granted to the respondent No.1 which subsequently cannot be taken away.
21. For the foregoing reasons this Court is of the opinion that the C.G. Board of Revenue has rightly considered the material produced before him while deciding the revision filed by the respondent No.1 and there is no infirmity or illegality found in the order impugned passed by the learned C.G. Board of Revenue, Bilaspur.
22. In the result, the petition is liable to be and is hereby dismissed. No order as to cost.
Sd/-
(Ravindra Kumar Agrawal) Judge Aadil