Rajasthan High Court - Jaipur
Om Shiv Shakti Cement Pvt. Ltd. And Ors. vs The State Of Rajasthan And Ors. on 28 September, 1988
Equivalent citations: [1989]72STC437(RAJ)
Author: S.C. Agrawal
Bench: S.C. Agrawal
JUDGMENT S.C. Agrawal, J.
1. These writ petitions raise common questions for consideration and, therefore, they are being disposed of by a common order.
2. In Sub-section (2) of Section 4 of the Rajasthan Sales Tax Act, 1954, it has been provided that where the State Government is of the opinion that it is necessary or expedient in the public interest so to do, the State Government may, by notification in the Official Gazette, exempt, whether prospectively or retrospectively, from tax the sale or purchase of any goods or class of goods or any person or class of persons on such conditions and on payment of such fee as may be specified in the notification. Similar provision with regard to grant of exemption from Central sales tax is contained in Sub-section (5) of Section 8 of the Central Sales Tax Act, 1956. In exercise of the aforesaid power conferred by Sub-section (2) of Section 4 of the Act and Sub-section (5) of Section 8 of the Central Sales Tax Act, the State Government issued two notifications dated 23rd May, 1987 whereby it introduced two Schemes called the "Sales Tax Incentive Scheme for Industries, 1987" (hereinafter referred to as "the Incentive Schemes"). The Incentive Scheme under Section 4(2) of the Rajasthan Sales Tax Act has been issued in order to exempt industrial units from payment of tax under the Rajasthan Sales Tax Act on the sales of the goods manufactured by them within the State, in the manner and to the extent and for the period as covered by the notification. The Incentive Scheme under Section 8(5) of the Central Sales Tax Act has been issued in order to exempt industrial units from payment of tax under the Central Sales Tax Act on the sales made in the course of inter-State trade or commerce of the goods manufactured by them within the State, in the manner and to the extent and for the period as covered by the notification. Both the Incentive Schemes introduced by the said notifications came into operation with effect from 5th March, 1987 and are to remain in force up to 31st March, 1992. The provisions of the Incentive Schemes are identical and they are applicable in the areas mentioned in annexure A to the notifications to new industrial units, industrial units covered by 1985 dispensation, sick units and to expansion and diversification of existing units. Under Clause 4 of the Incentive Schemes the industrial unit which is granted eligibility certificate under the abovementioned notifications is exempted from payment of tax on sales made within the State of the goods manufactured by it. The quantum of sales tax exemption and the period of eligibility of exemption are prescribed in annexure C to the Incentive Schemes. Clause 7 of the Incentive Schemes makes provision for grant of eligibility certificate and requires the industrial unit eligibile for sales tax exemption under the Incentive Schemes to make an application in form A appended to the notifications to the Member-Secretary of the appropriate screening committee as mentioned in Clause 2(k) of the Incentive Schemes within 90 days of the publication of the notifications or commencement of commercial production, whichever is later. The screening committee has been empowered to pass appropriate orders for sanction/refusal of eligibility certificate and in case of sanction of eligibility certificate, the sanction is to be conveyed in writing to the assessing authority concerned and the assessing authority is required to issue the eligibility certificate in form B appended to the notifications within a period of seven days from the date of receipt of the sanction. Clause 8 of the Incentive Schemes lays down that the eligibility certificate once granted, shall be normally valid for a period of one year and the eligible units desirous of extending the period of the eligibility would have to apply for renewal of the eligibility certificate in form A to the Commercial Taxes Officer having jurisdiction, not less than one month before the expiry of the eligibility period of the certificate and the Commercial Taxes Officer is required to dispose of the said application within a period of 15 days of the receipt of the application and in the event of failure to do so, the applicant is required to apply for renewal to the appropriate screening committee and' the said committee is required to dispose of the application before the expiry of the eligibility period of the original certificate. The said clause also prescribes that the renewal shall be made for one year at a time. Clause 9 of the Incentive Schemes lays down that the industrial unit covered by the Incentive Schemes shall be subject to all the provisions of the Act and the Rules made thereunder and the terms and conditions contained in the notification and of the assessing authority, after affording an opportunity of being heard to the industrial unit, is satisfied that the breach of any conditions has been committed, he shall, after obtaining prior permission of the Commissioner of Commercial Taxes, levy tax on the finished goods not taxed under the tax exemption scheme, as if there was no exemption and there was escapement of tax.
3. In Writ Petitions Nos. 3141 of 1987, 3310 of 1987, 1157 of 1988 and 1169 of 1988, the petitioner is M/s. Om Shiv Shakti Cement Private Limited, a private limited company, having a small-scale unit at Sikar and it manufactures and sells Portland cement. The said unit of the said petitioner commenced production from 11th September, 1985. The said petitioner submitted applications for grant of eligibility certificates under both the Incentive Schemes on 12th June, 1987, on the basis that it is a "new industrial unit covered by 1985 dispensation". The case of the said petitioner is that while the said applications of the petitioner were pending consideration, the assessing authority, viz., the Commercial Taxes Officer, Sikar, passed orders dated 6th October, 1987 making provisional assessment under Section 7-B of the Rajasthan Sales Tax Act in relation to the turnover for the month of July, 1987 and for the period 12th June, 1987 to 30th June, 1987 and issued demand notice for the recovery of the tax assessed under the said assessment orders and further a notice dated 21st October, 1987 was issued under Section 7-B of the Rajasthan Sales Tax Act in relation to the turnover for the months of August and September, 1987. In Writ Petition No. 3141 of 1987, the said petitioner has prayed that a writ, order or direction be issued directing the issuance of the eligibility certificate to the petitioner under the Incentive Scheme and also for quashing the assessment orders and demand notices dated 6th October, 1987 and for issue of a writ of prohibition and prohibiting further proceedings on the basis of notice dated 21st October, 1987. It appears that assessment orders and demand notices dated 6th October, 1987 were also issued by the assessing authority under Section 9 of the Central Sales Tax Act read with Section 7-B of the Rajasthan Sales Tax Act and a notice dated 21st October, 1987 was also issued under Section 9 of the Central Sales Tax Act read with Section 7-B of the Rajasthan Sales Tax Act. Writ Petition No. 3310 of 1987 has been filed by the petitioner to challenge the aforesaid assessment orders and demand notices dated 6th October, 1987 and the notice dated 21st October, 1987. After the filing of these writ petitions eligibility certificates were granted to the petitioner under the Incentive Schemes on 8th February, 1988 and the said eligibility certificates have been made effective from 8th February, 1988 to 7th February, 1989. Assessment order dated 6th November, 1987 was also passed by the assessing authority under Section 7-B of the Rajasthan Sales Tax Act and under Section 9 of the Central Sales Tax Act read with Section 7-B of the Rajasthan Sales Tax Act in respect of the period 1st August, 1987 to 30th September, 1987 in pursuance of the notices dated 21st October, 1987 under challenge in Writ Petitions Nos. 3141 of 1987 and 3310 of 1987 referred to above. The petitioner, therefore, filed Writ Petitions Nos. 1157 of 1988 and 1169 of 1988 to challenge the said assessment orders dated 6th November, 1987 and the demand notice issued for the recovery of the tax assessed under these assessment orders. In these writ petitions the petitioner has submitted that the eligibility certificates issued to the petitioner under both the Incentive Schemes should be operative from 12th June, 1987, the date of submission of the applications by the petitioner and the petitioner is entitled to avail the exemption under the Incentive Schemes on the turnover subsequent to 12th June, 1987.
4. Writ Petitions Nos. 3228 of 1987 and 6 of 1988 are composite petitions in relation to grant of eligibility certificates under both the Incentive Schemes wherein also the petitioners have challenged the assessment orders passed under Section 7-B of the Rajasthan Sales Tax Act and under Section 9 of the Central Sales Tax Act read with Section 7-B of the Rajasthan Sales Tax Act and the demand notices issued for the recovery of the tax assessed under these assessment orders. The petitioners in both these writ petitions carry on business of manufacture of cement in a mini cement plant and they commenced commercial production after 1st April, 1985 and had applied for grant of eligibility certificates in the category of new industrial unit covered by 1985 dispensation. In Writ Petition No. 3228 of 1987 the applications for grant of eligibility certificates under both the Incentive Schemes were submitted on 15th June, 1987. In Writ Petition No. 6 of 1988 the said applications for grant of eligibility certificates were submitted on 16th June, 1987. The eligibility certificates under both the Incentive Schemes were granted to the petitioners in these writ petitions on 8th February, 1988 and the same are operative for the period from 8th February, 1988 to 7th February, 1989. The case of the petitioners in these writ petitions is that the eligibility certificates should have been granted with effect from the date of submission of the applications and the petitioners are entitled to claim exemption from tax under the Incentive Schemes on the basis of the eligibility certificates granted to them with effect from the date of submission of their applications for grant of eligibility certificates.
5. Applications have been submitted on behalf of the respondents in these writ petitions for dismissal of the writ petitions as having become infructuous for the reason that eligibility certificates have been granted to the petitioners. The said applications have been opposed by the petitioners on the ground that the grant of the eligibility certificates to the petitioners does not put an end to the grievances raised by the petitioners in the writ petitions inasmuch as the eligibility certificates that have been issued have been made effective from the dates of issuance of the eligibility certificates whereas the case of the petitioners is that in the event of the grant of the eligibility certificates it is to be operative with effect from the date of submission of the applications and the petitioners are entitled to claim exemption from tax under the Incentive Schemes with effect from the date of submission of the applications for grant of eligibility certificates. In view of the aforesaid submission of the petitioners it cannot be said that writ petitions are liable to be dismissed as having become infructuous and it is necessary to examine the question whether in the event of grant of the eligibility certificates under the Incentive Schemes, the said certificate is to be made operative with effect from the date of the grant of said certificate or with effect from the date of submission of the application. If the said question is answered in favour of the petitioners they would be entitled to claim exemption from tax under the Incentive Schemes with effect from the date of submission of the applications and the assessment orders passed under Section 7-B of the Rafasthan Sales Tax Act and under Section 9 of the Central Sales Tax Act read with Section 7-B of the Rajasthan Sales Tax Act and the demand notices issued for the recovery of the tax assessed under those assessment orders will have to be quashed.
6. The learned counsel for the petitioners have urged that taking into consideration the object and purpose underlying the grant of exemption under the Incentive Schemes and the various provisions in the Schemes as well as the forms that have been prescribed for application as well as for the eligibility certificate, the eligibility certificate is to be operative with effect from the date of submission of the application and not with effect from the date of grant of the certificate. In this connection it has been urged that in the Incentive Schemes no time-limit has been prescribed within which the eligibility certificate may be granted after the submission of the application and if the eligibility certificate is to be operative with effect from the date of issuance of the certificate, it would result in great hardship to the industrial unit in whose case for grant of eligibility certificate has been unduly delayed and the said unit would not be able to compete in the market and the whole object and purpose underlying the granting of exemption from tax under the Incentive Schemes would be frustrated inasmuch as the object underlying the Incentive Scheme is to encourage the growth of the specified categories of industrial units by making their products competitive in the market. In support of this submission the learned counsel have placed reliance on the decisions of the Supreme Court in Mathra Parshad and Sons v. State of Punjab [1962] 13 STC 180, Assessing Authority v. Patiala Biscuits Manufacturers Pvt. Ltd. [1977] 39 STC 381 and State of U.P. v. Haji Ismail Noor Mohammad & Co. [1988] 70 STC 101. The learned counsel have also placed reliance on the decision of this Court in Nathmal Tarachand v. Commissioner of Sales Tax, Rajasthan [1963] 14 STC 1000, the decision of the Orissa High Court in Subhash Chandra Ghosh v. State of Orissa [1970] 26 STC 211 and the decision of the High Court of Punjab and Haryana in Chandra Industries v. Punjab State [1972] 29 STC 558.
7. Shri G.S. Bapna, the learned counsel appearing for the respondents, has, on the other hand, submitted that the eligibility certificate, on being granted, is to be operative with effect from the date of issuance of the certificate and it cannot be given retrospective effect so as to be operative with effect from the date of the submission of the application. Shri Bapna has also urged that an industrial unit would not suffer any prejudice on account of the eligibility certificate being made effective from the date of issuance of the certificate because the benefit of the Scheme would be available to the unit for a period of five years from the date of issuance of the certificate and in cases where the grant of eligibility certificate is delayed, the said delay would not in any way affect the enjoyment of the concession under the Incentive Scheme by the said unit. Shri Bapna also urged that for the purpose of grant of the eligibility certificate an industrial unit has to satisfy various requirements contained in the Incentive Scheme and the application submitted by the unit has to be scrutinised by the screening committee and only after the screening committee is satisfied that the unit fulfils the requirements of the Incentive Scheme the screening committee sanctions the grant of the eligibility certificate and thereafter the assessing authority is required to issue the eligibility certificate and that a time-limit of seven days is prescribed for the assessing authority to issue the eligibility certificate from the date of the receipt of the sanction. Shri Bapna has also invited our attention to notifications of the Government (published in the Rajasthan Gazette dated 3rd March, 1988) dated 5th February, 1988 whereby both the Incentive Schemes notified under the notifications dated 23rd May, 1987 have been amended and Sub-clause (d) has been inserted in Clause 7 whereby it has been prescribed that the benefit of the Incentive Scheme shall be available from the date of issue of the eligibility certificate. The said amendment in Clause 7 of the Incentive Schemes does not apply to these cases because here the eligibility certificates were granted on 8th February, 1988, i.e., prior to 3rd March, 1988, the date of the publication of the notifications dated 5th February, 1988 in the Rajasthan Gazette. Shri Bapna has, however, submitted that the aforesaid amendment is clarificatory in nature and it only makes it clear that the benefit of the Incentive Scheme would be available from the date of the eligibility certificate.
8. Before we deal with the aforesaid contentions of the learned counsel for the petitioners, we may refer to the decisions on which reliance has been placed by the learned counsel for the petitioners.
9. In Mathra Parshad and Sons v. State of Punjab [1962] 13 STC 180, the question which came up for consideration before the Supreme Court was whether the notification exempting manufactured tobacco from the levy of sales tax by including item 51 in the Schedule under the East Punjab General Sales Tax Act, 1948, has to be given effect from the date of the notification or from the beginning of the financial year. The Supreme Court held that the tax under the East Punjab General Sales Tax Act was yearly and was to be paid on the taxable turnover of a dealer and that the exemption, whenever it came in, in the year for which the tax was payable, would exempt sales of those goods throughout the year, unless the Act said that the notification was not to have this effect, or the notification fixed the date for the commencement of the exemption. The Supreme Court found that in that case the notification did not fix the date from which the exemption was to operate. It was, therefore, held that the exemption must operate for the whole year, during which it was granted. In Nathmal Tarachand v. Commissioner of Sales Tax, Rajasthan [1963] 14 STC 1000, a Division Bench of this Court followed the aforesaid decision of the Supreme Court in Mathra Parshad and Sons v. State of Punjab [1962] 13 STC 180 and held that the grant of an exemption certificate under Section 4(2) of the Rajasthan Sales Tax Act before the end of the accounting year 1955-56 to a registered dealer carrying on the business in gold and silver bullion and ornaments, operated for the entire business transacted in that year. In that case this Court found that the notification by which exemption was granted was silent about the date of commencement of the exemption.
10. With regard to these decisions it may be stated that it is not the case of the petitioners also that the eligibility certificate once granted is to be operative for the whole of the assessment year. Their case is that the eligibility certificate once granted is to be operative with effect from the date of submission of the application. The said decisions do not touch on this aspect and, therefore, they are not of much relevance. In the Assessing Authority v. Patiala Biscuits Manufacturers Pvt. Ltd. [1977] 39 STC 381 (SC), the question was as to whether the certificate of registration granted under the provisions of Section 5 of the Punjab General Sales Tax Act, 1948 is to be given retrospective effect with effect from the date of filing of the application for registration or is to be operative from the date of grant of the certificate. After examining the provisions of the Punjab General Sales Tax Act, the Supreme Court held that the registration certificate granted under Section 7 of the said Act was operative from the date of the application. In that case the learned counsel for the Assessing Authority placed reliance on Sub-section (1) of Section 7 of the Act which provided that "no dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered and possesses a registration certificate" and laid emphasis on the words "registered and possesses a registration certificate". It was submitted that Sub-section (1) of Section 7 postulates that a dealer having a taxable turnover cannot validly carry on a business unless he is actually registered and is in physical possession of the registration certificate issued under Section 7. The Supreme Court did not accept the said contention and held that the words, "has been registered and possesses a registration certificate" in Sub-section (1) of Section 7 of the Punjab General Sales Tax Act, have to be construed in accord with the general tenor of the section as a whole and in a manner which would avoid oppressive, unreasonable and anomalous results. The Supreme Court approved the observations of the High Court of Punjab and Haryana in Chandra Industries v. Punjab State [1972] 29 STC 658 that it could never be the intention of the legislature that a dealer liable to pay tax who has in compliance with the requirements of Sub-sections (2) and (3) of Section 7 done all which lay in his power to obtain the registration certificate, should pull down his shutters and keep his business closed under pain of being punished under Section 23(1) and await indefinitely the pleasure and leisure of the prescribed authority in issuing the registration certificate and that adoption of such a construction would be to make the applicant liable to punishment for the laches and delays of the authority and its office.
11. In State of U.P. v. Haji Ismail Noor Mohammad & Co. [1988] 70 STC 101, the question for consideration before the Supreme Court was as to whether Rule 25-A(5) of the U.P. Sales Tax Rules, 1948 which stipulates that a recognition certificate issued for the purpose of Section 4-B of the U.P. Sales Tax Act, 1948 shall take effect from the date of its issue is inconsistent with, does not carry out the purposes of and, therefore, is ultra vires, Section 4-B of the U.P. Sales Tax Act, 1948. Section 4-B of the U.P. Sales Tax Act makes provision for grant of special relief to certain manufacturers of notified goods and the said relief is in the form of exemption from tax or at such concessional rate as may be notified by the State Government provided the dealer holds a recognition certificate issued under Sub-section (2) in respect thereof. In that case the respondents before the Supreme Court had applied under Section 4-B(2) to the prescribed authority in the prescribed form for the grant of the recognition certificate on 21st March, 1969 and the recognition certificate was granted on 5th December, 1969 and the tax relief was confined to the turnover of purchases made after 6th December, 1969 and relief in respect of the turnover prior to that date was refused on the basis of the condition in Sub-rule (6) of Rule 25-A which provided that such certificate shall take effect from the date of its issue. The Allahabad High Court had held that the efficacy of the recognition certificate becomes material and relevant at the time of quantification of the purchase tax, i.e., when the assessment order is being drawn up and that the requirements of Section 4-B are substantially complied with if the certificate is available to the dealer at the time the liability to tax the turnover in question is sought to be determined subject to the requirement that the turnover is after the date of the application filed by the dealer for issue of a certificate. Before the Supreme Court the learned counsel appearing on behalf of the State laid stress on the words "dealer holds a recognition certificate" contained in Clause (a) of Sub-section (1) of Section 4-B and it was urged that the said language postulates that the dealer should hold recognition certificate at the time of the purchase and that it would not be sufficient compliance with the statute if the dealer comes to hold it subsequently. The Supreme Court rejected the said contention of the learned counsel for the State and observed that the construction placed on the provision by the High Court was eminently plausible one and that there was nothing basically wrong in the approach of the High Court that the statutory language does not insist upon the contemporaneity of the holding of the certificate with the purchases and that it is sufficient if the dealer, subsequently, comes to hold certificate in respect thereof. The Supreme Court also observed that to insist upon a contemporaneity of the purchases and the certificate would also amount to qualifying the word "holds" in the section by adding the words "at the time of purchases". In that view of the matter the Supreme Court affirmed the view of the High Court. Sub-rule (5) of Rule 25-A which provided that the certificate shall take effect from the date of its issue was ultra vires the provisions of Section 4-B.
12. The provisions of the Incentive Scheme may now be examined in the light of the decisions referred to above. As pointed out earlier the Incentive Scheme gives exemption from sales tax to certain specified classes of industrial units located in certain specified areas and the quantum of sales tax exemption and the period of eligibility of exemption is prescribed in annexure C to the Incentive Scheme. For the purpose of availing of the said exemption it is necessary for an industrial unit to obtain an eligibility certificate. Sub-clause (a) of Clause 4 of the Incentive Scheme reads as under :
4. Exemption from tax on sales.-(a) An industrial unit, which is granted eligibility certificate under this notification shall be exempted from payment of tax on sales made within the State of the goods manufactured by it. The quantum of sales tax exemption and the period of eligibility of exemption will be as per annexure C.
13. Clause 7 which provides for grant of eligibility certificate reads as under:
7. Grant of eligibility certificate.-(a) An industrial unit eligible for sales tax exemption under the Incentive Scheme would be required to make an application in form A appended to this notification to the Member-Secretary of the appropriate screening committee, as mentioned in Clause 2(k) within 90 days of the publication of this notification or commencement of commercial production, whichever is later.
(b) An industrial unit covered by Clause 2(b) opting for the benefit under this Incentive Scheme would be required to convey its option in form A to the Member-Secretary of the appropriate 'screening committee as mentioned in Clause 2(k) within sixty days of the publication of this notification.
(c) The screening committee may pass appropriate orders for sanction/ refusal of eligibility certificate. In case of sanction of eligibility certificate, such sanction shall be conveyed in writing to the assessing authority concerned who shall issue eligibility certificate in form B appended to this notification within a period of seven days from the date of the receipt of the sanction.
Explanation.-Where an industrial unit opts for sales tax deferment, it shall not be entitled to get benefit under this notification.
14. Clause 8 provides for renewal of eligibility certificate and it reads as under:
8. Renewal of eligibility certificate.-The eligibility certificate once granted shall be normally valid for a period of 1 year. The eligible unit desirous of extending the period of the eligibility would have to apply for renewal of the eligibility certificate in form A to the Commercial Taxes Officer having jurisdiction not less than one month before the expiry of the eligibility period of the certificate. The CTO shall dispose the said application within a period of 15 days of the receipt of the application. In case the application has not been so disposed within the said period or renewal has not been granted, the CTO shall cease to have jurisdiction to decide the case and the applicant shall apply for renewal to the appropriate screening committee thereafter. The committee shall generally dispose the application before the expiry of the eligibility period of the original certificate or renew the certificate, as the case may be. Renewal shall be made for 1 year at a time.
15. Sub-clause (k) of Clause 2 defines "screening committee for eligibility certificates" and reads as under :
2. (k) Screening committee for eligibility certificates.-In order to avail the facility available under the Incentive Scheme, the applicant industrial unit will have to obtain sanction from the State or District level screening committees, as the case may be.
(i) The State level screening committee which will grant sanction in respect of large scale units will consist of the following:-
1. Secretary Industries. Chairman.
2. Chairman-cum-Managing Director. RIICO. Member.
3. Commissioner, Commercial Taxes Department. Member.
4. Director of Industries. Member-
Secretary.
(ii) The District level committee will grant sanction to medium and small-scale units and will consist of the following :-
(1) Collector (Industries) of the district. Chairman.
(2) Representative of the sales tax department Member.
(nominated by CCT).
(3) Branch Manager, concerned of Raj. Financial Member.
Corpn.
(4) General Manager, District Industries Centre. Member-
Secretary.
(5) Representative of RIICO in case of medium Member.
scale units where RIICO is the lead institution.
16. Form A appended to the Incentive Scheme is the form prescribed for application for the sanction/renewal of eligibility certificate. At S. No. 10 in the said form the applicant has to indicate the period for which eligibility certificate or renewal is applied for. At S. No. 13 of the form the applicant has to indicate turnover/estimated turnover both under the Rajasthan Sales Tax Act and the Central Sales Tax Act for the period applied for and at S. No. 14 he has to indicate the tax liability from the commencement of the exemption till the expiry date of the last eligibility certificate (a) on the sales under the Rajasthan Sales Tax Act and (b) on the inter-State sales under the Central Sales Tax Act.
17. A perusal of the aforesaid provisions in the Incentive Schemes shows that the application for the grant of eligibility certificate has to be considered by the appropriate screening committee and only after the screening committee has sanctioned the grant of the eligibility certificate, the certificates to be issued by the assessing authority. Under Sub-clause (c) of Clause 7 it is prescribed that the assessing authority concerned shall issue the eligibility certificate within a period of seven days from the date of receipt of sanction, but no time-limit is prescribed for the, consideration of the applications by the screening committee. Similarly in the matter of renewal under Clause 8 the time-limit of 15 days is prescribed for consideration of the application for renewal by the Commercial Taxes Officer having jurisdiction but in the event of the failure on the part of the Commercial Taxes Officer to dispose of the application within the said period, the matter has to be considered by the appropriate screening committee and no time-limit is prescribed for consideration of the said application by the screening committee to dispose of the said application, though it is laid down that the screening committee shall generally dispose of the application before expiry of the eligibility period of the original certificate. Furthermore, form A prescribed for the application for sanction of the eligibility certificate, also indicates that in the application, the applicant has to indicate the period for which eligibility certificate or renewal is being applied and the figures with regard to turnover and the tax liability has to be filled in by him on that basis only. This would indicate that the general tenor of the provisions contained in the Incentive Schemes is that the eligibility certificate is to be operative with effect from the date on which the application is submitted and not with effect from the date on which the certificate is issued.
18. The Incentive Schemes are intended to give protection to certain specified categories of industries by giving them tax concession so that they may be in a better position to compete in the market. The industries which are entitled to claim the protection of the Incentive Schemes are : (i) new industrial unit which commences commerial production during the operative period of the Incentive Schemes; (ii) an industrial unit which commenced commercial production on or after 1st April, 1985 and was entitled for interest-free sales tax loan scheme under 1985 dispensation ; (iii) sick industrial unit which has incurred cash losses in two complete accounting years immediately before 1st April, 1987 and is likely to continue to incur cash losses in the current and/or the next financial accounting year and has an erosion on account of cumulative cash losses to the extent of 50 per cent or more of its net worth and being potentially viable is taken up by Central or State level financial institution or a bank; (iv) an industrial unit which has undertaken expansion by increase in the value of fixed capital investment by not less than 25 per cent of the net fixed assets of the existing project and accompanied by an increase in the production to the extent of at least 25 per cent of the original licensed/registered capacity; and (v) an industrial unit which has undertaken diversification by launching of new product line under the same company, firm or partnership provided that the total fixed capital investment in such a diversification exceeds at least 25 per cent of the value of the net fixed assets of the original project. The abovementioned categories of industrial units suffer from certain handicaps which place them at a disadvantage in comparison to the established industrial units. The tax concessions given under the Incentive , Schemes are intended to enable these industrial units to get over these handicaps to a certain extent. A delay in the availability of the concessions under the Incentive Schemes is bound to have an adverse effect on the viability of these units because they will not be able to avail the said concession in the initial teething period when the need for such concessions is greater. Such delay in availability of the concessions is inevitable if the eligibility certificate is to be operative from the date of issue because no time-limit is fixed for consideration of the application for grant of eligibility certificate by the screening committee. This delay would be avoided if the eligibility certificate is held to be operative with effect from the date of submission of the application because a time-limit has been prescribed in Clause 7 of the Incentive Schemes for the submission of the application and it will be in the interest of the industrial unit to submit the application at the earliest.
19. It is possible to visualise cases where applications for grant of eligibility certificates may be submitted by the industrial units on the same date and the application of one unit may be placed for consideration before the screening committee soon after the submission of the said application and the eligibility certificate may be granted to it within a few days whereas in the case of the other unit the grant of the eligibility certificate may be delayed by months on account of meeting of the screening committee not being convened. This would result in two persons similarly situate being treated unequally which is impermissible. Such a consequence would be avoided if the eligibility certificate, on being granted, is made operative with effect from the date of submission of the application.
20. In this context it would be pertinent to note that although the applications for the grant of eligibility certificates were submitted by the petitioners in writ petitions in June, 1987 the eligibility certificates were issued on 8th February, 1988, i.e., after nearly eight months. In the reply filed on behalf of the respondents it has been stated that there were some deficiencies in the applications and the petitioners were asked to remove the same and clarification was also sought from the petitioners in certain matters. We, however, find that the said deficiencies were not the real cause for the delay in the grant of the eligibility certificates because the deficiencies were promptly removed and the clarifications sought were also given. The delay in the grant of eligibility certificates was actually due to the fact that guidelines with regard to the grant of eligibility certificates under the Incentive Schemes were issued by the State Government on 1st December, 1987 and thereafter the meeting of the screening committee was held on 27th January, 1988 for consideration of the applications of the petitioners. This shows that the petitioners cannot be held responsible for the delay in the grant of eligibility certificates and the said delay was on account of the time taken by the authorities in issuing the guidelines and in convening the meeting of the screening committee. If the eligibility certificate is to be operative with effect from the date of issue, the petitioners would be denied the benefit of the scheme for the period of nearly eight months taken in granting the said certificates even though the petitioners are in no way responsible for the said delay. In other words if the construction placed by the respondents is accepted and it is held that the eligibility certificate is to be operative from the date of issue, it would lead to oppressive, unreasonable and anomalous results which would be avoided if it is held that the eligibility certificate is to be operative with effect from the date of submission of the application. In our opinion the reasons which weighed with the Supreme Court in the Assessing Authority v. Patiala Biscuits Manufacturers Private Ltd. [1977] 39 STC 381 for holding that the certificate of registration granted under the provisions of Section 5 of the Punjab General Sales Tax Act is to be operative with effect from the date of submission of the application for registration are equally applicable to the present cases relating to date from which the eligibility certificates granted under the Incentive Schemes would be operative.
21. Shri Bapna has laid emphasis on the language used in Sub-clause (a) of Clause 4 of the Incentive Schemes and the words "an industrial unit which is granted eligibility certificate". Shri Bapna has urged that these words mean that the exemption under Clause 4 would be available with effect from the date of grant of the eligibility certificate. In our opinion the said language in Sub-clause (a) of Clause 4 of the Incentive Scheme does not militate against the construction placed by us that eligibility certificate when granted should be operative with effect from the date of the application and not with effect from the date of issuance of a certificate. In this regard it may be mentioned that in Clause (a) of Sub-section (1) of Section 4-B of the U.P. Sales Tax Act, the words used were "dealer holds a recognition certificate" and in State of U.P. v. Haji Ismail Noor Mohammad & Co. [1988] 70 STC 101 it was urged on behalf of the State before the Supreme Court that the said language postulates that the dealer should hold a recognition certificate at the time of the purchase and that it would not be sufficient compliance of the statute if the dealer comes to hold it subsequently. The Supreme, Court rejected the said contention and held that the statutory language does not insist upon the contemporaneity of the holding of the certificate with the purchase and that it is sufficient if the dealer subsequently comes to hold the certificate in respect thereof. In our opinion the aforesaid reasons are equally applicable to the present cases and it must be held that the language used in Sub-clause (a) of Clause 4 of the Incentive Schemes does not insist upon the contemporaneity of the holding of eligibility certificate and the sale and that it is sufficient if the dealer is granted eligibility certificate subsequently.
22. For the aforesaid reasons we are of the opinion that under the Incentive Schemes the eligibility certificate on being granted, is to be made operative with effect from the date of application and not from the date of issuance of the said,certificate.
23. As regards the amendment introduced in the Incentive Schemes by notification dated 5th February, 1988 whereby Sub-clause (d) has been inserted in Clause 7 of the Incentive Schemes, it may be stated that the said Sub-clause (d) is similar to Sub-rule (5) of Rule 25-A of the U.P. Sales Tax Rules, 1948 which was struck down by the Supreme Court in State of U.P. v. Haji Ismail Noor Mohammad & Co. [1988] 70 STC 101. Since in the present cases the eligibility certificates were issued on 8th February, 1988, i.e., prior to the publication in the Gazette dated 3rd March, 1988 of the notification dated 5th February, 1988 whereby Sub-clause (d) has been inserted in Clause 7 of the Incentive Schemes and the said amendment is not applicable to the eligibility certificates issued in the present cases, we have not considered it necessary to examine the validity of Sub-clause (d) inserted in Clause 7 of the Incentive Schemes.
24. In the result the writ petitions are allowed and it is declared that the eligibility certificates that have been issued to the petitioners under the Incentive Schemes would be operative with effect from the dates of the applications submitted by the petitioners and not with effect from the date of issuance of the said certificates. The petitioners are entitled to exemption from tax under the Incentive Schemes on the basis of the eligibility certificates with effect from the date of submission of the applications and the assessment orders passed by the assessing authority under Section 7-B of the Rajasthan Sales Tax Act and under Section 9 of the Central Sales Tax Act read with Section 7-B of the Rajasthan Sales Tax Act in respect of the period subsequent to the date of submission of the applications for grant of the eligibility certificates and the demand notices issued by the assessing authorities for the recovery of the tax assessed under the assessment orders are quashed. The parties are left to bear their own costs in these writ petitions.