JAI BEVERAGES PVT LTD Vs. STATE OF JAMMU AND KASHMIR
LAWS(SC)-2006-5-98
SUPREME COURT OF INDIA (FROM: JAMMU & KASHMIR)
Decided on May 12,2006

JAI BEVERAGES PVT. LTD. Appellant
VERSUS
STATE OF JAMMU AND KASHMIR Respondents


Cited Judgements :-

ADHUNIK ALLOYS AND POWER LTD VS. UNION OF INDIA [LAWS(JHAR)-2007-4-26] [REFERRED TO]
PRINT WELL UNIT-II, QUALITY OFFSET PRINTERS, AMRITSAR AND ORS VS. STATE OF PUNJAB AND OTHERS [LAWS(P&H)-2014-6-114] [REFERRED]


JUDGEMENT

- (1.)The appellant herein claiming to be a "prestigious unit" having a capital investment of over Rs. 25 crores claimed exemption from payment of General Sales Tax and Central Sales Tax under Notification No. SOR 247 of 20.08.1998 issued by the Government of Jammu & Kashmir pursuant to its Industrial Policy of 1998-2003. Under the said Industrial Policy, a package of incentives was offered to industrial units, and in particular to "prestigious units" having a capital investment of Rs. 25 crores or more. The appellant Company set up a soft drink manufacturing unit in Jammu. The claim of the appellant was negatived by the State Government, which led to the filing of two writ petitions before the High Court of Jammu and Kashmir. A learned single Judge of the High Court dismissed the writ petitions holding that the petitioner was not entitled to the incentives claimed under the aforesaid Industrial Policy, as it did not validly acquire the status of a "prestigious unit". Aggrieved thereby the appellant preferred a Letters Patent Appeal which was dismissed in limlne by the judgment and order of the High Court dated 4.10.2004.
(2.)To appreciate the issues involved, it would be necessary to notice the background facts giving rise to this controversy. The facts are as under :-
Pursuant to the Cabinet decision of May 15, 1998, sanction was accorded to the new Industrial Policy 1998-2003 as per Annexures 'A' and 'B' to the package of incentives appended to GO No. 202 IND of 1998 dated 27.05.1998. A package of incentives was offered for the development of large/medium/ small and tiny industries in the State of Jammu and Kashmir. Paragraph 6 of GO No. 202 of 1998 provided that the Industries and Commerce Department shall notify negative lists referred to in the new package of incentives, in consultation with Finance Department.

(3.)The relevant part of the package of incentives contained in Annexure 'B' relates to exemption from payment of General Sales Tax etc. and is as follows ;-
"8. General Sales Tax i. There will be no GST on sales of finished goods by the existing local SSI units till 31.3.2003 and for a period of 5 years from the date of production in case of new SSI units except on items brought on negative list.

ii. There will be no GST on the raw material procured by the local SSI, Medium and Large units except on items brought on the negative list.

iii. There will be no GST on the sale of finished goods manufactured by the new Medium and Large industrial units upto a ceiling on such amount of GST which would have been otherwise payable equivalent to 150% of the total capital investment made in the unit or for a period of 5 years from the date of production whichever occurs earlier, except on items brought on the negative list.

iv. There will be no GST on purchase of machinery and equipment for construction of the factory for a period of 5 years from the date of provisional registration by the SSI units.

v. The above concessions shall also be available to SICOP while acting on behalf of local registered SSI units.

9. Central Sales Tax The local existing SSI units shall be exempt from charging and payment of CST on sale of their finished goods outside the State upto 31.3.2003 and the new SSI units for a period of 5 years from the date of production.

10. Special provision for "prestigious units (1) Not withstanding anything contained in paras 7, 8 and 9 above, prestigious units i.e. those having capital investment of Rs. 25 crores or above shall have the option to avail of full exemption from payment of GST, CST and special/ additional toll tax for a period of 5 years from the date of production or until such amount of exemption reaches the level of 150% of capital investment in the project whichever occurs earlier.

(2) Not withstanding anything contained in para 7, 8 and 9 above those prestigious units which come into commercial production in the year 1998, shall have the option to avail a power tariff freeze at the rate of Rs. 1.50 per unit for a period of five years from the date of commercial production. For purposes of paras 7, 8, 9 and 10 above, all the new units shall also have the option to count the period of 5 years from the date of production or from the succeeding financial year".



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