KAY VEE AAR LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) THE writ petitioner is a company incorporated under the Indian Companies Act, 1956. It was initially registered as a medium scale industrial unit with the Director-General of Technical Development (hereinafter referred to as "d. G. T. D. " ). It started commercial production on November 30, 1987. Government of India by a Notification No. S. O. 232 (E) dated April 2, 1991 enhanced the investment limits in fixed assets in plant and machinery for the purpose of categorising an industry as small-scale industrial unit. By the said notification option was given to me registered medium scale industries falling within the enhanced limit of investment to register themselves as small-scale industrial units or to continue as medium scale unit. In view of the said notification petitioner-company opted for registering itself as a small-scale industry with effect from September 28, 1991. The petitioner-company as a medium scale industry was admitted into the benefit of Industrial Policy Resolution, 1989 (in short, "i. P. R. 1989") and was given exemption from liability to pay sales tax for a period of five years from April 1, 1990. The State Level Empowered Committee constituted under the I. P. R. , 1989 in its 5th meeting held on March 20, 1995 recommended that the newly converted small-scale industrial units would be given benefits as admissible to small-scale industrial units for the prescribed period reduced by the period during which incentive was enjoyed as medium scale unit. On March 23, 1995, Joint Director of Industries intimated the aforesaid decision of the State Level Empowered Committee to the General Manager, District Industries Centre, Balasore. In the said intimation it was mentioned that Government Orders m the matter would be communicated to the General Manager, District Industries Centre as and when received. On October 27, 1995 petitioner-company submitted a representation to the Commissioner-cum-Secretary, Industries Department, Government of Orissa requesting him to pass necessary order for giving effect to the decision of the State Level Empowered Committee. In spite of repeated approach no decision was communicated by the State Government. The writ petitioner filed O. J. C. No. 11175/96 before this Court for appropriate direction. On October 14, 1996, said writ application was disposed of with a direction to the Secretary, Industries Department to dispose of the petitioner's representation within six months from the date of receipt of die order. Thereafter on February 3/4, 1997, Deputy Secretary of the Industries Department intimated the writ petitioner that the State Government had decided not to allow benefits to the writ petitioner as small-scale industrial unit as there was no provision in I. P. R. , 1989 for giving sales tax incentives to a medium scale industrial unit downgraded to a small-scale industrial unit. The writ petitioner has filed the present writ application challenging the aforesaid decision of the State Government as communicated by the Deputy Secretary being annexure 3 to the writ application.

(2.) THERE is no dispute about the relevant basic facts in this case. It is admitted that the petitioner-company was/is entitled to the incentives given in I. P. R. 1989 as a continuing unit of 1986 Policy. Only question to be determined is whether an industry downgraded from medium scale to small-scale was entitled to the sales tax benefit of I. P. R. 1989 as a small-scale unit or not.

(3.) BY S. R. O. No. 790/90 dated August 16, 1990, the State Government granted exemption under section 7 of the Orissa Sales Tax Act to various classes of medium and large scale industrial units. Under item No. 3 of the Schedule continuing medium and large industrial units set up on or after August 1, 1980 where fixed capital investment commenced on or after August 1, 1990 and prior to April 1, 1986 and the units had gone into commercial production after April 1, 1986, such exemption was granted for 7 years for units set up in districts other than Phulbani, Bolangir and Kalahandi from December 1, 1989 or the date of commercial production, whichever was later.