(1.)This civil appeal by grant of special leave is directed against the judgment and order dated 31/7/2003 passed by a Division bench of the High Court of Jharkhand by which it has been declared that Tata cummins Ltd. , an assessee under Bihar finance Act, 1981, is entitled to the benefit of the Industrial Policy, 1995 read with the notifications no. 478 and 479 both dated 22/12/1995. By the impugned judgment the appellant-State and Commercial Taxes department under the Bihar Finance Act are directed to adjust the refundable amount of Rs. 54.5 crores towards sales tax dues from the assessee for the accounting year commencing on and from 1/4/2004.
(2.)The facts giving rise to this civil appeal, briefly, are as follows:" (1) In the year 1993, the Government of bihar had announced an Industrial Policy with a view to attract investments and setting up of industries in the State. In the year 1995, the policy was modified partially. In its introduction, the policy set out the aims and objectives of the policy as to create an environment for optimum utilization of the state resources, to provide quality infrastructure for rapid industrialization, to attract investments to generate economic activities, reviving potentially viable and closed industries, to boost exports of goods manufactured in the State and to simplify procedures of decision making. As part of the incentives, the policy envisaged allotment of land in Growth Centres to corporate for setting up industrial units on lease for 99 years with option for renewal. It also envisaged sales tax exemptions to attract investment and to sustain industrial development in the State. Accordingly, new units were allowed the facility of either "set off" or "exemption" at their choice, of sales tax on purchase of raw materials during the period envisaged in clause 16 (1) of the policy. Similarly, by clause 16 (2) , the benefit of exemption/set off on sales tax on sale of finished goods was allowed with option to the new units either to choose deferment of payment of sales tax or exemption of sales tax for the period mentioned therein. This policy regarding sales tax incentive was sought to be implemented by two notifications, SO nos. 478 and 479 both dated 22/12/1995. One of the pre-conditions for the grant of the benefit of the Industrial policy, 1995 under the above notifications was that the proprietor/partner/holding company must have its exclusive ownership over the building in which the factory of the unit is situated. However, if the factory of the unit was installed on a leased land or in a building taken on lease, exemption would be admissible when such land or building or both have been acquired by way of a registered lease for a minimum period of 15 years. The lease was to be in favour of the proprietor of the unit or any partner of the firm or in favour of the holding company. (2) According to Tata Cummins Ltd, it had taken a lease of the land from TELCO, its partner in the joint venture, though a formal lease had not been executed. TELCO had a registered lease for a term of 99 years from TISCO which had a valid lease from the government at the time when lease was granted by TISCO to TELCO. Since the land was held by TELCO, which had 50% interest in Tata Cummins Ltd. , the unit was eligible for the benefit. Its more important claim was that it was the owner of the building in which its factory was set up and under the first part of the notification, the exclusive ownership of the building being with tata Cummins Ltd. , it was entitled to the benefit of exemption regarding sales tax as envisaged in clauses 16.1 and 16.2 of the policy. (3) Tata Cummins Ltd. applied to the deputy Commissioner of Commercial taxes claiming the benefit of exemption under the above two notifications. (4) On 2.12.1998, the Deputy Commissioner rejected the claim of Tata Cummins ltd. on the ground that the Head lease from the government in favour of TISCO had expired and until and unless the Head lease in favour of TISCO stood renewed, Tata cummins Ltd. was not entitled to claim the benefit of exemption from payment of sales tax. Consequently, the claim made by Tata cummins Ltd. was rejected, Since then, the Head lease has been renewed. (5) Thereafter, Tata Cummins Ltd. challenged the decision of the Deputy Commissioner in writ petition no. 2689 of 2000. The division Bench held that Tata Cummins Ltd. not having a valid lease from the State Government or from TELCO, it could not claim the benefit of the exemption under the above two notifications. Thus, the order of Deputy commissioner was upheld. (6) Tata Cummins Ltd. thereafter challenged the decision of the Division Bench in this Court by way of petition for special leave to appeal nos. 20375 and 20376 of 2000. (7) During the pendency of the petitions for special leave to appeal, it was found that the Deputy Commissioner had passed the above order without the approval of the Joint commissioner as required under the above two notifications. Therefore, the Joint Commissioner called for the records of the case to examine the question of exemption afresh after issuing notices to the Deputy commissioner and Tata Cummins Ltd. (8) When the Supreme Court, thus, took up the petitions for special leave to appeal for final decision, the proceedings initiated by the Joint Commissioner (Administration) were brought to its notice. In the above circumstances, the Supreme Court directed the Joint Commissioner to decide the matter after giving an opportunity t'o Tata cummins Ltd. to make a representation and file necessary documents and to decide the matter without being influenced by the impugned decision of the High Court which was challenged in appeal before this court. (9) Vide order dated 24.5.2003, the Joint commissioner after noticing the above arguments of Tata Cummins Ltd. held that the land on which the factory was constructed by Tata Cummins Ltd. was subleased land of TELCO from TISCO; that, telco had allotted a portion of its leased land to Tata Cummins Ltd. ; that, as per the agreement between TISCO and TELCO, the latter had no right to allot part of the land to any other company; and that, Tata cummins Ltd. had requested TISCO to execute a lease but the lease agreement had not been executed. In the circumstances, the Joint Commissioner came to the conclusion that the assessee had neither legal title nor ownership over the land on which the factory was established and nor was it in a position to produce a registered lease deed for a term of 15 years or more for getting the benefit of exemption under the above two notifications. (10) This order of the Joint Commissioner dated 24. 05.2003 was challenged by Tata cummins Ltd. and TELCO vide writ petition no. 2587 of 2003. By the impugned judgment, the Division Bench of the High Court held that Tata Cummins Ltd. was the exclusive owner of the building in which the factory was located and consequently the assessee had fulfilled/complied with clause 6 of the said notification no. 478 read with clause 8 of the said notification no. 479. The division Bench also noticed the contention of the assessee having invested Rs. 302 crores in the project and having paid taxes to the tune of about Rs. 600 crores. (11) By the impugned judgment, Tata cummins Ltd. was declared to be entitled to the benefit of the Industrial Policy, 1995 read with the above two notifications no. 478 and 479 both dated 22.12.1995. Accordingly, the State government and the Commercial Tax Department have been directed to adjust the refundable amount of rs. 54.5 crores towards sales tax liability of Tata Cummins Ltd. for the accounting year commencing from 1.4.2004. "
(3.)The facts found by the High Court are, that, after obtaining 37.19 acres of land from telco, out of the lands held by TELCO from TISCO under a sub-lease, Tata cummins Ltd. established its factory in its building. The building was constructed by tata Cummins Ltd. The industry started its production on and from 1/1/1996. TELCO was the 50% owner in the Joint Venture known as Tata Cummins Ltd. The object of insisting on the ownership of the building or a lease for 15 years, was only to ensure that the industry did not run away after taking the advantage of the benefit granted under the Policy and that the company was really a bona fide investor of capital in the industry intended to be run in the State for a reasonable length of time. It is in this background that one has to see the investments made by Tata Cummins Ltd. As stated above, Rs. 302 crores were invested by Tata Cummins Ltd. which employs more than 800 workmen and which has paid taxes of about Rs. 600 crores. In the context of these facts, we are of the view that the assessee herein is not a fly-by-night operator. We are confining this judgment to the facts of the present case. The above figures are not disputed. We are satisfied on the basis of the above figures that the industry set up by the Tata Cummins Ltd. will contribute to the industrial growth and development of the State.