Hon'ble CHOPRA, J. - (1.) - These three writ petitions involve common questions of law, although facts are slightly different, and therefore, they were heard together and are being disposed of by a common Order/Judgment.
(2.) FACTS OF M/S. ARYAN ZINC PRODUCTS CASE; The case of the petitioner is that it has been granted eligibility certificate for exemption (Annexure-2) dated 9.6.1988 under the Incentive Scheme, 1987 which was notified vide Notification dated 23.5.1987 issued under the provisions of Rajasthan Sales Tax Act and the Central Sales Tax Act. This eligibility certificate which was granted by the Screening Committee was renewed upto 7.6.1990. The petitioner has fully availed the said exemption to the maximum extent of the quantum of the incentives as per the eligibility certificate granted to it. The only contention raised by the petitioner is that the Govt. of Rajasthan has now issued a clarification vide. S.O./F.4 (92) FDGr. IV/91-49 dated 7.9.1991 whereby an Explanation has been added to Note-6 in Annexure-C of the said Incentive Scheme, 1987 and it has been clarified that since the inception of the principal notification as amended from time to time, in case of expan-sion/diversification only the sales of goods of expanded production or diversified production, as the case may be shall be entitled to incentive provided for. In other words, the incentives will be, available only on the turnover which is proportionate to the expansion or diversification investment made and the sale tax exemption which has been claimed over the remaining turn over will be liable to tax and interest. Aggrieved against this clarification dated 7.9.1991, the petitioner has filed this writ petition challenging the retrospective operation of that Notification whereby an explanation had been added to Note-6 in Annexure-C of the said Incentive Scheme, 1987. Facts OF M/S. KANSAL UDHYOG CASE: The petitioner firm is a Stainless Steel re-rolling Mill, which has been granted provisional eligibility certificate (Ex. R.2) dated 25.11.1991 under the Incentive Scheme, 1987 by the Screening Committee. This eligibility certificate has been renewed upto 24.11.1992. It is alleged that while issuing this provisional eligibility certificate, a condition has been imposed that the Unit is eligible for incentive for the sale of goods of expanded production only. According to the petitioner, vide notification dated 7.9.1991, the aforesaid explanation has been added to Note- 6 in Annexure-C of the said Incentive Scheme, 1987. It therefore, challenges the prospectively of this explanation by this writ petition. In this case, there is no dispute about the eligible capital investment. The contention of the petitioner firm is that it is entitled to avail the incentives to the extent of eligible investment and the same cannot be restricted to the turn over of the product making it proportionate to the expansion investment and, therefore, it has been prayed that the explanation added to Note-6 in Annexure-C of the said Incentive Scheme, 1987 be struck down. Facts OF M/S. MOHNOT STAINLESS STEEL INDUSTRIES CASE: The petitioner-firm is also a Stainless Steel Re-rolling Mill. M/s. Kansal Udhyog as also the petitioner-firm earlier filed a writ petition before this Court claiming issuance of Eligibility Certificate and it was only under the orders of this Court that provisional eligibility Certificates were issued to them. Earlier, Stainless Steel Re-rolling Mills were included in the list of prohibited Industries which were not entitled to Sales Tax incentives. When that prohibition was removed, this Court passed an order that provisional Eligibility Certificates be issued to the petitioners. Against that order passed by a learned single Judge of this Court, a special appeal has been filed and that is still pending. Be that as it may, in this writ petition, the petitioner has claimed that he has been issued provisional eligibility certificate treating its eligible investment as Rs. 8,11,939/- as against the actual eligible investment claimed by the petitioner amounting to Rs. 20,31,778.08P. Thus, in this writ petition, the petitioner has claimed eligibility for the amount which is higher than what has been allowed to it by the Screening Committee. The rest of the contentions raised by the petitioner are the same which have been raised in Kansal Udhyog's case (supra ). Separate replies to the writ petitions have been filed on behalf of the respondents in all the three writ petitions. It has been contended that the petitioner firms viz., M/s. Kansal Udhyog and M/s. Mohnot Stainless Steel Industries being Stainless Steel Re-rolling Mills, the Development Commissioner, Small Scale Industries, Govt. of India, New Delhi issued a Notification dated 12.1.1988 whereby these Mills were included in the prohibited category of Mills which were not entitled to any incentives but that embargo was removed in view of the liberalised policy of the Govt. of India vide its Notification dated 16.8.1991. Thus, it has been claimed that between 12.1.1988 and 15.8.1991, both these firms were not entitled to any grant of incentives. According to the respondents, M/s. Mohnot Stainless Industries started its production with effect from 13.3.1988 i.e. after the Govt. Notification dated 12.1.1988 was issued and M/s. Kansal Udhyog also started its production with effect from 1.3.1989 and, therefore, both these firms are not entitled to any incentives being granted to them. However, under the orders of this Court, provisional eligibility certificates were granted to them on the basis of their eligible investment but as the Govt. of Rajasthan has added the aforesaid explanation to Note-6 in Annexure-C of the said Incentives Scheme, 1987, incentives cannot be granted to the petitioners over the total investment. It can only be granted on the eligible investment made by them on their expansion project or diversified project.
(3.) IT may be clarified here that all the three Units have claimed that they have expanded their projects. Thus, the eligibility investment made by them is under the head of expansion and not under the head of diversification. Be that as it may, the contention of the respondents is that when any incentive is granted, it can always be granted under certain conditions, which the authorities sanctioning incentives may deem it proper to attach with the Incentive Scheme. It is just, reasonable and proper that when incentive is granted only in relation to the existing Units as regards their eligible investment, which they have made for expansion of their project or for diversification of their project then incentives should be made available only of that expanded/diversified amount and not on the entire project. According to the respondents, M/s. Mohnot Stainless Industries and M/s Kansal Udhyog effected the expansion of their existing Units and they started their commercial production with effect from 13.3.1988 and 1.3.1989 respectively i.e. after the Govt. Notification dated 12.1.1988 was issued and, therefore, they are not eligible to any relief as regards incentives. However, provisional eligibility certificate have been granted to them under the orders of this Court and against the orders passed by a learned single Judge of this Court, a special appeal has been filed and that is still pending. According to the respondents, while issuing provisional eligibility certificates to M/s Mohnot Stainless Industries and M/s Kansal Udhyog, it has been made clear that these Units will be eligible for incentives for the sale of goods of expanded production only. It was further contended that the explanation appended to Note-6 in Annexure-C of the Incentives Scheme, 1987 is retrospective in operation and is perfectly legal and valid. It is in accordance with the settled norms and principle of law and, therefore, it does not deserve to be quashed. Rejoinders have also been filed on behalf of the petitioners in all these three writ petitions and it has been emphasised that in case of a product passing to the finished stage through both the projects, namely old investment project and expansion investment project, it would not be possible to bifurcate value of such goods and to ascertain the value eligible for exemption. It has also been claimed that since the quantum of incentive is fixed on the basis of eligible investment made in the expansion project, there is no reason for restricting the benefit proportionate to the product attributable to the expansion project. In other words, if the incentive is availed at higher value, the assesee would exhaust the incentive earlier and vice versa and, therefore, there is no justification for restricting the benefit in such a proportionate manner. According to the petitioners, the impugned Notification renders the entire Scheme unworkable and has no rationale nexus behind it and, therefore, it deserves to be quashed. ;