PERMOD KOHLI,J. - (1.) COMMON challenge is made to Notification No. S.O.201 dated 30th March, 2006, issued under Section 7(3)(b) of' the Bihar Finance Act, 1981, whereby and whereunder, Notification Nos. S.O.478 dated 22nd December, 1995, S.O.57 dated 2nd March, 2000, S.O.479 dated 22nd December, 1995 and S.O.58 dated 2ndMarch, 2000 have been withdrawn. A further, challenge is to another Notification No. S.O.202 dated 30th March, 2006, issued under Section 8(5)(a) of the Central Sales Tax Act, 1956, whereby, Notification No. S.O.481 dated 22nd December, 2005 has been withdrawn. Apart from challenging the aforementioned notifications, constitutional validity of the provisions of Section 95(3)(ii) and Section 96(3) of the Jharkhand Value Added Tax Act, 2005 is also questioned. In view of the commonality of the grounds of challenge, all these writ petitions were heard together and are being disposed of by this common judgment.
(2.) ALL the petitioners herein have established their industrial units in the unified State of Bihar before its bifurcation. The factual background leading to filing of these writ petitions is almost similar. Additionally in W.P. (T) No. 2664 of 2006 (Tata Steel Ltd. v. State of Jharkhand and Ors.) and W.P. (T) No. 5130 of 2006 (Ram Krishna Industries v. State of Jharkhand and Ors.) there are concluded judgments in favour of the petitioners. In the case of Tata Steel Ltd. the final judgment is by the Apex Court whereas in the later case the final judgment is by the High Court of Jharkhand. It is useful to refer to factual background emerging from the pleadings of the parties. In the year, 1995 the State Government formulated and notified its Industrial Policy, 1995. The salient features of this policy are enumerated in paragraph No. 4, which are reproduced hereunder: Create an environment for optimal utilization of State's agro climatic, mineral and human resources; provide quality infrastructure for accelerated industrialization of the State; attract investment to generate economic activities employment, incomes and growth; revive potentially viable and closed industries; boost exports of goods in production of which the State enjoys comparative advantages; and simplify procedures to expedite and impart transparency in decision making. Besides providing various facilities like allotment or government land, power, water, export promotion and various other infrastructural and other allied facilities for the development of industries in the State of Bihar, with a view to achieve its economic growth, the policy also provided for thrust industries for accelerated development in the State. The identification of thrust industries was with a view to utilize the resources and advantages of the State.
(3.) CLAUSE 16 of the Industrial Policy provides for sales tax incentives. Clause 16.1 and 16.2 allow exemption for the new industries whereas Clause 16.3 provides sales tax exemption for the existing industries, undertaking expansion/diversification. Relevant extract of Clause 16 of the policy is reproduced hereunder: 16. SALES TAX INCENTIVES Sales Tax benefits play an important role in attracting and directing investment and in sustaining industrial development in a State.16.1 Sales Tax on purchase of raw materials: New Units will be allowed the facility of either 'Set Off' or 'Exemption' at their choice, on purchase of raw materials within the State. New units opting for deferment of Sales Tax on sale of finished goods (vide para 16.2) will, however, be eligible for 'Set Off' only on purchase of raw materials. The period of exemption for new units will be limited to 10 years for category 'A' and 8 years for Category 'B' District from the date of commencement of production of the Unit.16.2 Sales Tax on sale of finished goods for new unite: New Units, in addition to the benefit of 'Exemption'/ 'Set Off' of Sales Tax on purchases, will also have the option to choose deferment of exemption of Sales Tax (both bihar Sales Tax (BST) and Central Sales Tax (CST) on sale of finished goods for a period of 10 years for category 'A' and 8 years for category 'B' Districts from the date of production of the unit with a ceiling of 100% of the fixed investment made by the unit. However, those industries which are considered 'Thrust Industries' as listed earlier in Para 15 (excluding Telecommunication, Computers, Software/ Hardware and Electronics Industries) as also industries located in 'A' category Backward district's the ceiling for deferment would be 150% of the fixed investment. The ceiling for deferment linked to the fixed investment in regard to Telecommunication, Computer, Software/ Hardware and electronics Industries would be 300% of the fixed investment made by the unit. The amount of sales tax collected under Sales Tax deferment option would require to be returned in equal six monthly installments in such manner so that the entire amount is returned by the 13th year from the commencement of deferment option. 16.3 Units undertaking expansion/diversification Such units should be given identical treatment as new units for their expanded/diversified capacity and incremental production both in purchase of raw materials and for sales tax on finished goods. All such incentives will be admissible to such units which are covered by the definition of expansion/diversification as given in the Annexure. Incremental production means:The incremental production shall mean the excess of actual production over 2/3 of the originally installed capacity or the highest production in 3 years immediately preceding the year in which such expansion/diversification commenced, whichever of the two is higher. ;