Madhya Pradesh High Court
Sargodha Shop vs State Of M.P. & Ors on 9 March, 2011
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W.P. No.5262 of 1997
Sargodha Soap & Detergents State of M.P. & ors.
(P) Ltd.
09.03.2011
Shri H.S. Shrivastava, learned Senior Advocate with Shri
Sandesh Jain, Counsel for the petitioners.
Shri Samdarshi Tiwari, G.A. for respondents.
Petitioners have sought following reliefs :-
1. This Hon. Court may be pleased to direct the
respondents to grant eligibility in respect of
additional amount of Rs.2,19,000/- invested in
fixed assets namely the buildings purchased
from Sargodha Chemicals vide agreement
dated 30th March,1991 and 20th April,1991.
2. This Hon. Court may be further pleased to
direct the respondents to amend the eligibility
certificate dated 3.2.1994 as amended vide the
amendment order dated 13.10.1995 to
incorporate relief consequent to the grant of
eligibility in respect of additional amount of
investment in fixed assets amounting to
Rs.2,19,000/-.
3. Any other writ order or direction as this Hon.
Court may consider just and fair in the
circumstances of the case may also kindly be
passed.
Facts of the case are that the petitioner is a small scale
industry registered with the General Manager, District Industries Center, Jabalpur since 7.8.1991 for manufacturing of detergents. Petitioner commenced its commercial production of detergent from 1.6.1991. Petitioner was also registered under the M.P. General Sales Tax Act, 1958 (hereinafter referred to as the Act).
The State of Madhya Pradesh vide Annexure P-1 issued notification No.A-3-11-86(74)-ST-V dated 16.10.1986, No. A- 3-11-86(78)-ST-V dated 16.10.86 and No. A-3-11-86(63)-ST-V
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W.P. No.5262 of 1997Sargodha Soap & Detergents State of M.P. & ors. (P) Ltd.
09.03.2011 dated 30.12.1987 under Section 12 of the Act for grant of incentives to new enterprenures. The petitioner company applied for grant of eligibility certificates to the General Manager, District Industries Center, Jabalpur [for short DIC]. The eligibility certificate was granted to the petitioner in respect of the fixed capital investment in building and machinery amounting to Rs.5,09,279/- excluding the capital investment in factory building as per Annexure P-2. Aggrieved by order Annexure P-2, petitioners preferred an appeal to the State Level Committee on 9.12.1993 claiming that the fixed assets in the shape of factory building were wrongly excluded from the capital investment for which the petitioner was entitled for exemption. In the appeal, an enquiry in respect of the claim of the petitioner seeking exemption in respect of the fixed assets was made through the General Manager, DIC,Jabalpur who recommended that out of the investment of Rs.5,26,000/- in building, the petitioner was entitled for exemption in respect of fixed assets amounting to Rs.5,21,600/- by excluding Rs.4,400/- in respect of investment for boundary wall. A report of the General Manager, DIC, Jabalpur is on record as Annexure P-4.
During the enquiry, petitioner explained that the godown, stores and office building were purchased for Rs.63,000/- and 1,56,000/- respectively from M/s Sargodha Chemicals Industrial Estate, Adhartal, Jabalpur vide agreement dated 30.3.1991 and 20.4.1991. These were new constructions set up by the Vendor and not by his
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W.P. No.5262 of 1997Sargodha Soap & Detergents State of M.P. & ors. (P) Ltd.
09.03.2011 predecessor. The Vendor of the petitioner had invested Rs.29,666/- for which it had availed Sales tax subsidy in the financial year 1971-72 and 1972-73. During the enquiry the petitioner had explained that the earlier building was destroyed due to falling of Chimini in the year 1978-79 and therefore, investment of Rs.40,369.89 was made by the Vendor for the construction of the building. Remaining building was newly constructed and the petitioner was entitled for the subsidy for Rs.2,19,000/-.
The State Level Committee considered the report of the General Manager, DIC, Jabalpur and excluded the investments in respect of these two buildings but considered the investments in respect of 3 items and thereby granted additional benefit to the extent of Rs.2,97,000/- in addition to earlier exemption for Rs.5,09,000/- granted earlier. Thus the petitioner got exemption of total amount of Rs.8,06,000/- in respect of investment of fixed assets. This order is Annexure P-7 by which partially appeal was allowed by the State Level Committee is under challenge in this petition.
The State of Madhya Pradesh also issued a clarification in respect of exemptions to new buildings and also for installation of second hand plant and machinery vide notification No.3/VS(16)/86/10364-10421 dated 12.11.1986 in which it was clarified that if the investment in the old plant and machinery is less than 25% or if the earlier industry had not obtained any benefit in respect of the exemption from tax or deferment of the tax then such industrial unit will be
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W.P. No.5262 of 1997Sargodha Soap & Detergents State of M.P. & ors. (P) Ltd.
09.03.2011 entitled for exemption under the notification. The subsequent notification dated 12.11.86 is filed as Annexure P-8. So far as the order passed by the State Level Committee dated 13.10.95 is concerned, petitioner had unsuccessfully assailed the aforesaid in W.P.346/96 and this petition is in respect of notification dated 12.11.86 Annexure P-8 by which the aforesaid clarification has been issued.
The respondents have filed reply in which they have denied the averments of the petitioner in respect of purchase of the plant and machinery vide agreements dated 30.4.91 and 20.4.91. It is stated that there was no sale of the assets of properties by Sargodha Chemicals and consequently no purchase was made by the petitioner which is evidence from the fact that it was only an agreement between the parties which does not in any manner transfer title in the property to the petitioner and the petitioner is not entitled for the benefit of the said amount merely by changing the name for the purpose of getting benefit of tax exemption.
Shri Shrivastava, learned Senior Advocate submitted that the petitioner had paid consideration, possession was delivered to him under the agreement so the sale was completed and the petitioner was entitled for the eligibility certificate in the matter.
From the perusal of the agreement Annexure P-5, we find that it is an unregistered agreement of sale in respect of building structure on the leased land. The sale under Section 54 of the Transfer of Properties Act ,1882 can be affected only
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W.P. No.5262 of 1997Sargodha Soap & Detergents State of M.P. & ors. (P) Ltd.
09.03.2011 by a registered document and agreement to sale of property does not create any interest in or charge on such property.
In the absence of a registered document in respect of building or structure on the earth, the title could not have been conveyed to the petitioner. In the notification Annexure P-1, sale has not been defined so to explain the meaning of sale, we can take the help of the provisions as contained in the Transfer of Property Act,1882. Section 54 of the Act specifically provides sale how to be made and if the property of the value of one hundred rupees and onwards is to be affected then it can be made only by a registered instrument. In this case admittedly no registered instrument was executed in favour of the petitioner. In absence of which if the State Level Committee rejected the claim of the petitioner in part, no fault is found.
So far as Annexure P/8 is concerned, it is explanatory in nature. Nothing could be brought to our notice on the basis of which this notification can be quashed. On the contrary we find that it was issued to extend benefit of exemption to subsequently purchasers, where vendor could not avail benefit. In absence of any material, such notification cannot be held as bad.
While dismissing this petition we found that on 19.12.1997, an interim order was passed in the matter by which it was directed that the assessment proceedings in respect of the recovery of the sales tax may be completed but recovery be not made till further orders. It appears that for a
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W.P. No.5262 of 1997Sargodha Soap & Detergents State of M.P. & ors. (P) Ltd.
09.03.2011 period of nearabout 13 years, the recovery proceedings remained stayed in this matter. In these circumstances, we impose cost on the petitioner which is quantified to Rs.5000/-.
(Krishn Kumar Lahoti) (Smt. Sushma Shrivastava)
JUDGE JUDGE
vj