Gauhati High Court
M/S B N Industr5Ies Pvt. Ltd vs The State Of Assam And 7 Ors on 12 January, 2024
Author: Devashis Baruah
Bench: Devashis Baruah
Page No.# 1/41
GAHC010025442015
THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Case No. : WP(C)/6977/2015
M/S B N INDUSTR5IES PVT. LTD.
A COMPANY INCORPORATED UNDER THE PROVISIONS OF INDIAN
COMPANIES ACT AND HAVING THEIR REGISTERED OFFICE AT
KAMAKHYA UMANANDA BHAWAN, A.T. ROAD, GUWHAATI - 781001 IN
THE DISTRICT OF KAMRUP M, ASSAM, REP. B THROUGH THEIR
DIRECTOR SRI BIMAL KUMAR NAHATA, S/O LT. BACHHRAJ NAHATA,
RESIDENT OF A.T. ROAD, GUWAHATI- 781001.
VERSUS
THE STATE OF ASSAM AND 7 ORS
REP. BY THE COMMISSIONER and SECRETARY TO THE GOVT. OF ASSAM,
FINANCE TAXATION DEPARTMENT, DISPUR, GUWAHATI-781006.
2:COMMISSIONER and SECRETARY TO THE GOVT. OF ASSAM
INDUSTRIES and COMMERCE DEPARTMENT
DISPUR
GUWAHATI-781006.
3:THE COMMISSIONER OF TAXES
KAR BHAWAN
DISPUR
GUWAHATI - 781006.
4:THE ADDL. COMMISSIONER OF TAXES
KAR BHAWAN
DISPUR
GUWAHATI - 781006.
Page No.# 2/41
5:THE SUPERINTENDENT OF TAXES
UNIT-C
GUWAHATI KAR BHAWAN
DISPUR
GUWAHATI- 781006.
6:THE DIRECTOR OF INDUSTRIES and COMMERCE
ASSAM
GUWAHATI-21.
7:THE ADDL. DIRECOR OF INDUSTRIES U.S.
DIRECTORATE OF INDUSTRIES
ASSAM
GUWAHATI -21
Linked Case : WP(C)/6978/2015
M/S B.N. INDUSTRIES PVT. LTD.
A COMPANY INCORPORATED UNDER THE PROVISIONS OF INDIAN
COMPANIES ACT AND HAVING THEIR REGISTERED OFFICE AT KAMAKHYA
UMANANDA BHAWAN
A.T. ROAD
GUWHAATI - 781001 IN THE DISTRICT OF KAMRUP M
ASSAM
REP. B THROUGH THEIR DIRECTOR SRI BIMAL KUMAR NAHATA
S/O LT. BACHHRAJ NAHATA
RESIDENT OF A.T. ROAD
GUWAHATI- 781001.
VERSUS
THE STATE OF ASSAM AND 6 ORS
REP. BY THE COMMISSIONER and SECRETARY TO THE GOVT. OF ASSAM
FINANCE TAXATION DEPARTMENT
DISPUR
GUWAHATI-781006.
2:COMMISSIONER and SECRETARY TO THE GOVT. OF ASSAM
INDUSTRIES and COMMERCE DEPARTMENT
DISPUR
GUWAHATI-781006.
3:THE COMMISSIONER OF TAXES
Page No.# 3/41
KAR BHAWAN
DISPUR
GUWAHATI - 781006.
4:THE ADDL. COMMISSIONER OF TAXES
KAR BHAWAN
DISPUR
GUWAHATI - 781006.
5:THE SUPERINTENDENT OF TAXES
UNIT-C
GUWAHATI KAR BHAWAN
DISPUR
GUWAHATI- 781006.
6:THE DIRECTOR OF INDUSTRIES and COMMERCE
ASSAM
GUWAHATI-21.
7:THE ADDL. DIRECOR OF INDUSTRIES U.S.
DIRECTORATE OF INDUSTRIES
ASSAM
GUWAHATI -21.
Advocate for the Petitioner : Mr. K. N. Choudhury, Sr. Advocate
Mr. D. Saraf, Advocate
Advocate for the respondents: Mr. A. Kalita,
SC, Industries Department, Assam
Mr. B. Choudhury,
SC, Finance & Taxation Deptt.
BEFORE
HONOURABLE MR. JUSTICE DEVASHIS BARUAH
Date of Hearing : 05.10.2023
Date of Judgment : 12.01.2024
JUDGMENT AND ORDER (CAV)
Heard Mr. K. N. Choudhury, the learned senior counsel assisted by Mr. D. Saraf, the
learned counsel for the petitioner. Also heard Mr. A. Kalita, the learned counsel appearing on
behalf of the Industries Department of the Government of Assam and Mr. B. Choudhury, the
learned counsel appearing on behalf of the Finance and Taxation Department of the
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Government of Assam.
2. Both the writ petitions are taken up together taking into account the similarity of the
issues involved. At the outset, it is relevant to take note of WP(C) No.6977/2015 which
relates to the assessment year 2005-2006 and WP(C) No.6978/2015 which relates to the
assessment years 2006-07; 2007-08; 2008-09; 2009-2010 and 2010-11.
3. The facts as could be discerned from the writ petitions are that the petitioner is a
registered dealer under the provisions of the Assam Value Added Tax Act, 2003 (for
short, 'the Act of 2003') and the Central Sales Tax Act, 1956 (for short, 'the Act of
1956'). The Government of Assam had formulated an Industrial Policy in the year 1997
with the goal to provide an effective thrust to expeditious promotion and growth of all
industries with a view to creating a strong industrial base and employment opportunities
in various directions. In the said Industrial Policy of 1997, the State of Assam had
formulated a package of incentives for promotion and setting up of industrial units and
revitalization of sick industrial units in the State. The period of said new package of
incentives was to be with effect from 01.04.1997 and to remain in operation for a period
of 5 years or till such time as the Government may think fit and proper. The Government
also reserved its right to make any amendment to the said Scheme. In terms with Clause
4.2 of the said Industrial Policy Resolution, 1997, the effective date was 01.04.1997 and
from that date the 1991 Incentive Scheme under the Industrial Policy, 1991 ceased to be
operative unless otherwise provided. Clause 4.3 (ii) stipulated what is an Eligible Unit.
In terms with the said definition, an Eligible Unit means only New Units set up on or
after 01.04.1997 and existing units undergoing expansion, modernization, diversification
at the same place in the State of Assam on or after 01.04.1997 by making additional
investment on fixed capital by not less than 25%. The said Industrial Policy Resolutions
further mandated the terms and conditions under which an Eligible Unit would be
entitled to the incentives. Clause 4.4 stipulates the Eligibility. Clause 4.5 relates to
Eligibility Certificate. This certificate of eligibility is a certificate which is required to be
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issued by the Udyog Sahayak of the Directorate of Industries/District Industries Centre
for SSI sector and the Assam Industrial Development Corporation Ltd. (AIDC) for the
medium and large sector industries. The said certificate is to be issued after ensuring that
all the criteria for eligibility have been fulfilled to the full satisfaction of the concerned
Udyog Sahayak. In terms with sub-clause (ii) of Clause 4.5, no right or claim for any
incentive under the Scheme shall be deemed to have been conferred by the Scheme
merely by virtue of the fact that the industrial unit had fulfilled on its part the conditions
of the scheme and the incentives/subsidies cannot be claimed as a matter of right. In
terms with sub-clause (iii) of Clause 4.5, the incentives under the Scheme cannot be
claimed unless the Eligibility Certificate had been issued under the Scheme by the
Implementing Agency concerned and the unit had complied with the
stipulations/conditions of Eligibility Certificate. As per sub-clause (iv) of Clause 4.5, the
decision of the Implementing Agency, subject to such directions as Government may
issue from time to time in that regard, shall be final and binding. Clause 4.7 stipulates
who would be the Implementing Agency. The Implementing Agency as per the said
clause in respect to SSI sector shall be the Director of Industries, District Industries
Centres and for the medium and large scale sector, it would be AIDC Ltd.
4. Chapter 5 of the said Industrial Policy Resolutions, 1997 stipulates the package of
incentives. Amongst the various incentives granted under the said Industrial Policy of
1997, Sales Tax Exemption was one of it. Clause 5.4 of the said Industrial Policy
Resolutions relates to the incentive of stipulates sales tax exemption. The said Clause
5.4 being relevant for the purpose of the instant dispute is reproduced herein under:-
"5.4 SALES TAX EXEMPTION
All new units and existing units going in for expansion/diversification/modernsation will
be granted sales tax exemption for sale of finished products and purchase of raw materials as
per following scale :
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Category SSI/Tiny/SSSBEs Medium and Large
New unit 7 years subject to 7 years subject to maximum of 150% of fixed
maximum of 150% of capital 7 years subject to maximum of 100 % of
fixed capital 7 years fixed capital investment
subject to maximum of
100 % of fixed capital
investment
Units undergoing 7 years subject to 7 years subject to maximum of 90 % of additional
expansion/diversificati maximum of 100% of fixed capital investment
on/modernisation additional fixed capital
investment.
Sick/Relief 3 Years subject to 3 years subject to maximum of 100% of additional
Undertaking Units maximum of 100% of investment made for Rehabilitation
additional investment
made for Rehabilitation.
In the case of Electronic industries the tax benefit is up to 250% of fixed capital
investment spread over a maximum period of 7 years in view of low fixed capital investment."
At this stage, it is pertinent to mention that the terms 'finished product' and 'raw
materials' have been defined in Clause 4.3 ((vi) and 4.3 (xii) of the Industrial Policy of
1997 respectively. It is pertinent to observe that the term 'finished product' was defined
as the item manufactured by the eligible unit as considered under the project/scheme
approved by the concerned term lending agency and/or by the implementing agency,
together with byproduct/scrap, which may get generated as incidental to and during the
main production activity.
5. Clause 6 of the said Industrial Policy Resolution stipulates the procedure for
implementation and monitoring.
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6. Interestingly, the State Government did not issue any notification on the basis of the
Industrial Policy Resolution, 1997 but invoked the powers conferred under Sub-Section
(4) of Section 9 of the Assam General Sales Tax Act, 1993 (for short, 'the Act of 1993'),
whereby the Governor of Assam framed the Assam Industries (Sales Tax Concession)
Scheme, 1997 (for short, 'the Scheme of 1997') for grant of relief by way of sales tax
exemption to the eligible industrial units in the manner stated therein. It is very pertinent
to mention herein that the power reserved by Section 9 (4) of the Act of 1993 permitted
granting relief to any class of industries upon producing such goods as may be specified
in the Scheme to be formulated on the raw materials or inputs purchased by such
industries within the State or on manufactured goods sold by such industries with the
State or in course of inter State trade or commerce. Accordingly, the grant of sales tax
exemption on sale of finished products in terms with the Industrial Policy, 1997 became
grant of sales tax exemption on sale of manufactured goods within the State or in course
of inter State trade or commerce. Therefore, the definition contained in Section 2 (22) of
the Act of 1993, i.e. the definition of 'manufacture' became very relevant.
7. In terms with the said Scheme of 1997, more particularly Clause 2, the eligibility
criteria was defined. A perusal of the said Clause stipulates that the eligible industrial
units in Category A industries are new industrial units, Category B are those industries
which carry out expansion, modernization and diversification to the minimum extent of
25% increased in fixed assets at the same location or at other place in the State of
Assam. Emphasis has been laid that their commercial production had to be after
01.04.1997. Category C are those industries which were declared as relief undertaking
by the Government of Assam under the Assam Industrial Relief Undertaking (Special
Provisions) Act, 1984 or units declared sick by the State Government/Director of
Industries under any Scheme/Act of the Government of Assam. It is also seen from the
said Scheme of 1997 that there are certain categories of industries which were not
eligible for any benefit under the said Scheme of 1997. From the said list, it appears that
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originally there were 27 numbers of industries which were subsequently reduced to 17
vide the notification dated 06.10.1999. Clause 3 of the said Scheme of 1997 stipulated
the limits of sales tax exemption to the eligible units. The same is peri-materia to Clause
5.4 of the Industrial Policy Resolutions of 1997 which has already been quoted herein
above. It is however pertinent to note that the benefit of sales tax exemption would be on
purchase of raw materials and on sales of finished products manufactured by the
Industrial Unit. Clause 5 of the Scheme of 1997 stipulates the procedure for applying for
the grant of eligibility certificate which is also similar to the terms employed in the
Industrial Policy Resolutions, 1997. It is of relevance to note that a conjoint reading of
all the Sub-Clauses of Clause 5 would show that the duty of the Authority/Committee to
verify was in respect to the investments made, the fulfilling of the required conditions
and norms etc. However, there appears to no mention that the Implementing Agency
would decide as to whether the finished products would come within the ambit of
'manufacture'. Clause 6 of the Scheme of 1997 stipulates the period of validity of
Eligibility Certificate. In terms with Clause 6 (a) (i), the period of validity of an
eligibility certificate shall be 7 years from the date of commencement of production of
an eligible unit of Category A or 7 years from the date of commencement of production
after the expansion/modernisation/ diversification by an eligible industrial unit of
Category B. It was also mandated the period of 7 years shall stand reduced upto the date
when the unit reaches the maximum permissible limit of exemption as per Clause 3 or
up to the date of closure of the eligible industrial unit of the Category A or Category B,
if the date of closure, if any, occurs prior to the expiry of the period of 7 years.
8. Clause 7 of the Scheme of 1997 deals with the issuance of certification of
Authorization by the Assessing Officer. This particular Clause has a lot of significance
for the purpose of the instant dispute. Sub-clauses (a) and (b) of Clause 7.I relates to the
manner in which the application for issuance of Authorization certificate is to be filed up
and issued. It is relevant to note that issuance of the Eligibility Certificate would not
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automatically without any verification lead to the issuance of the Certificate of
Authorization. The Certificate of Authorization would be issued only to those industrial
units granted the Eligibility Certificate and subject to further verification to be carried
out by the Assessing Officer in terms with Sub-Clause (b) of Clause 7.I of the Scheme of
1997.. Sub-clause (c) stipulates that the Assessing Officer shall have the authority to
withhold the issuance of the certificate of authorization or refuse to grant it if the
application and the documents accompanying therewith are not found to be in order and
the conditions laid down for the purpose are not fulfilled or if any information furnished
is not correct. Clause 7.III stipulates renewal of Certificate of Authorization. A perusal of
the said clause which also has a vital significance for disposal of the instant writ petition
shows that the Certificate of Authorization shall remain valid for a year only, i.e. up to
the end of financial year and thereafter shall be renewed after examination of annual
return for each financial year or for a fraction of the financial year till the eligible
industrial unit reaches the maximum permissible limit of sales tax exemption as
specified in the Clause 3 of the Part-I of the Scheme of 1997. It also stipulates that the
concerned Assessing Officer of the area shall examine the return furnished in Form VIII
by the eligible unit and pass necessary orders as and when the unit reaches the maximum
limit of sales tax exemption thereby withdrawing the certificate of authorization with
intimation to the Authority granting the eligibility certificate besides taking action, for
realization of the due taxes and for violation of the provision, if any, under the
provisions of the Act of 1993.
9. In the backdrop of the above prelude, let this Court take note of the facts involved
in the instant writ petitions. The petitioner herein claiming to be encouraged on the basis
of Industrial Policy of the year 1997 as well as the incentives so announced set up its
industry and started commercial production on 20.04.2001. The petitioner applied to the
Director of Industries, Government of Assam for issuance of eligibility certificate under
the said Industrial Policy of 1997 and thereupon an Eligibility Certificate
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No.DI(US)102/2001/499-500 dated 11.02.2001 was issued in favour of the petitioner by
the Additional Director of Industries(U.S.), Government of Assam. The said Eligibility
Certificate is enclosed as Annexure-A to the writ petition in WP(C) No.6977/2015. From
a perusal of the said Eligibility Certificate, it reveals that the petitioner commenced
commercial production w.e.f. 20.04.2001. The finished products for which the petitioner
would be entitled for the benefit under the Industrial Policy of 1997 are in respect to (i)
packaged drinking water (ii) pet bottles (iii) pet jars. The incentives have also been
mentioned in the Eligibility Certificate to be sales tax exemption on sale of finished
products and on purchase of raw materials for a period of 7 years w.e.f. 20.04.2001 to
19.04.2008 subject to a maximum of Rs.125.34 lakhs (150% of the fixed capital
investment) whichever is earlier. It is also seen that the Superintendent of Taxes had also
issued the Certificate of Authorization on 23.07.2002 wherein the list of finished
products mentioned therein were packaged drinking water, pet bottles and pet jars. The
period of validity of the said Authorization Certificate was mentioned to remain valid
from 20.04.2001 to 19.04.2008. At this stage, this Court again finds it relevant to
observe that the said Authorization Certificate on the face of it, was contrary to the
Clause 7.III of the Scheme of 1997 in as much as the Certificate of Authorization as per
the said clause was to remain valid for 1 year only and was to be renewed after
examination of annual return for each financial year.
10. It is also seen from the records that the petitioner started production of soda water
w.e.f 04.09.2002 and again applied to the Director of Industries and Commerce, Assam
for issuance of additional Eligibility Certificate under the Industrial Policy of 1997 and
to specify and control the additional incentive due to them as promised in the said
Industrial Policy of 1997. On such request made, an Eligibility Certificate was issued on
30.09.2004 in favour of the petitioner by the Director of Industries and Commerce,
Assam for undergoing expansion, modernization or diversification and amongst the
finished products which were earlier three, i.e. packaged drinking water, pet jars and pet
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bottles; soda water was also brought within the fold of the finished products. A
Certificate of Authorization was also issued by the Senior Superintendant of Taxes
whereby apart from the three finished products, the soda water was also inserted. It is
also relevant to note that the said Certificate of Authorization was stated to be valid from
04.09.2002 to 03.09.2009 which as already observed herein above was contrary to
Clause 7.III of the Scheme of 1997. Be that as it may, the petitioner continued to avail
the benefits of the Scheme of 1997 without any difficulties in respect of all the finished
products till the subsequent developments narrated herein infra.
11. On 01.05.2005, the Act of 2003 was brought into force and the Act of 1993 was
repealed under Section 107 (1) of the Act of 2003. It is interesting to note Section 109 of
the Act of 2003, which relates to transitional provisions. For the purpose of the instant
dispute, Sub-section (4) of Section 109 of the Act of 2003 is of great significance for
which the same is quoted herein under:-
"(4) In respect of a registered unit which had been enjoying the benefits of Sales Tax concession
under the Assam Industries (Sales Tax Concessions) Scheme, 1997 and any other such schemes
immediately before the appointed day and it would have continued to be so eligible for any
period which is to end after the appointed day had this Act not come into force, the Government
may formulate appropriate scheme in conformity with the provisions of this Act to substitute the
said Scheme for the period commencing on or after appointed day:
Provided further that when exemption is granted in the form of remission, the eligible
unit shall be entitled to retain the part or whole of tax collected by way of subsidy from the
Government subject to maximum permissible monetary limit and/or time limit and other
conditions as may be prescribed in the appropriate scheme."
It is pertinent to mention that the proviso to the Sub-section (4) of Section 109 of the
Act of 2003 was inserted w.e.f. 30.03.2007.
12. From a perusal of the above Sub-Section (4) of Section 109 of the Act of 2003, it
transpires that in respect of a registered unit which was already enjoying the benefits of
Sales Tax concession under the Scheme of 1997 and any other such Scheme
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immediately before 01.05.2005 and it would have continued to be so eligible for any
period which is to end after the appointed day, i.e. 01.05.2005 had the Act of 2003 not
come into force, the Government was empowered to formulate appropriate Scheme in
conformity with the provisions of the Act of 2003 to substitute the said Scheme for the
period commencing on or after appointed day. The proviso added to Section 109 (4) of
the Act of 2003 stipulates that eligible unit would be entitled to retain the part or the
whole of the tax collected by way of subsidy from the Government subject to its
entitlement. This proviso was added to bring the sales tax exemption in conformity with
the Tax Remission Scheme.
13. The State of Assam accordingly, in terms with the Sub-Section (4) of Section 109
of the Act of 2003 formulated the Assam Industries (Tax Remission) Scheme, 2005
thereby substituting the Scheme of 1997. The said Assam Industries (Tax Remission)
Scheme, 2005 is hereinafter for the sake of convenience referred to as "the Scheme of
2005". A perusal of the said Scheme of 2005 would reveal that the said Scheme was
framed for continuing the conferment of benefits being enjoyed by eligible industrial
units under the Scheme of 1997 by way of remission of tax to those units in conformity
with the provisions of the Act of 2003 in the manner specified therein. Therefore, it
would be seen that the power conferred upon the Government to formulate a Scheme in
terms with Section 109 (4) of the Act of 2003 was to be in conformity with the
provisions of the Act of 2003 and the Scheme of 2005 was also formulated to grant
benefits in conformity with the provisions of the Act of 2003.
14. Clause 2 of the said scheme of 2005 defines the Eligibility. It was specifically
mentioned that industrial unit which is or was in commercial production before the
commencement of the Act of 2003 and was already found eligible for exemption under
the Scheme of 1997 as per the eligibility criteria of the Industrial Policy of Assam, 1997
or the Industrial Policy of Assam, 2003 shall be treated as an eligible industrial unit.
Clause 3 of the Scheme of 2005 stipulates the limits on tax remission for an eligible unit.
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As per sub-clause (1) of Clause 3, where an eligible unit registered under the Act of
2003 manufactures any goods in Assam, other than those declared in Clause 2 as not
eligible, 99% of tax payable of such unit according to its return in respect of such goods
manufactured in such unit shall be eligible for remission or continue to be eligible for
remission until the amount of such tax payable exceeds the unavailed quantum of
monetary ceiling or the extended unexpired period of eligibility whichever is earlier. At
this stage, if this Court reflects back upon Clause 3 (3) of the Scheme of 1997, it would
show that the entitlement of sales tax exemption was on sales of manufactured finished
products and on purchase of raw materials. Similarly, as per Clause 3 (1) of the Scheme
of 2005, an eligible unit registered under the Act of 2003, manufacturing any goods in
Assam then 99% of the tax payable by such unit according to its return in respect of sale
of such goods manufactured in such unit shall be eligible for remission to the extent of
the unavailed benefits. This Scheme of 2005 of granting tax remission was subsequently
codified in the form of the proviso to Section 109 (4) of the Act of 2003. It is however
very significant to mention that the benefits in terms with the Scheme of 2005 can only
be availed if the goods are manufactured by the eligible unit within the State of Assam.
15. Clause 4 of the Scheme of 2005 stipulates the issuance of a Certificate of
Entitlement by the prescribed authority. In terms with Sub-Clause (1) of Clause 4, the
eligible unit holding a Certificate of Authorization issued under the Scheme of 1997 as
on the date of commencement of the Act of 2003 has to make an application in the
format appended to the Scheme of 2005 to the prescribed authority within one month
from the date of commencement of the Act of 2003. However, the delay in submitting
the application can be condoned by the prescribed authority for sufficient reason. It
further stipulates that upon receipt of the application, the prescribed authority after
satisfying himself that the application is correct and complete in all respect shall issue a
Certificate of Entitlement in the Format-II appended to the Scheme of 2005 in lieu of the
Certificate of Authorization, ordinarily within 30 days. It also stipulates that the said
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Certificate of Entitlement shall be issued for a financial year only. Clause 4 (2) of the
Scheme of 2005 stipulates that those eligible industrial units which are not holding the
Certificate of Authorization in terms with the Scheme of 1997 can also apply so in the
same manner as was required to be applied by an eligible industrial unit holding the
Certificate of Authorization issued under the Scheme of 1997. In terms of sub-clause (d)
of Clause 4 (2) of the Scheme of 2005, the prescribed authority could withhold the
issuance of the Certificate of Entitlement or refuse to grant it, if the application and the
documents accompanying therewith are not found to be in order and the conditions laid
down for the purpose are not fulfilled or if any information furnished is/are not correct.
Clause 6 of the Scheme of 2005 stipulates that the Certificate of Entitlement shall be
valid for one year only, i.e. upto the end of the financial year and thereafter shall be
renewed after examination of the annual return for each financial year or for a fraction
of the financial year till the eligible industrial unit reaches the maximum permissible
limit of tax remission as specified in Clause 3 of the Scheme of 2005. This Clause 6 of
the Scheme of 2005 is peri-materia to Clause 7.III of the Scheme of 1997.
16. In the backdrop of the above and moving forward, it is relevant to mention that the
petitioner herein on 21.09.2005 submitted an application for the grant of the Certificate
of Entitlement. Admittedly, the said certificate of Entitlement has not issued by the
prescribed authority. There is also no challenge to the actions of the Prescribed Authority
in not issuing the Certificate of Entitlement.
17. The petitioner submitted the annual return of turnover for the assessment year
2005-2006; 2006-2007; 2007-2008; 2008-2009; 2009-2010 and 2010-2011 claiming tax
remission to the extent of 99% of the output tax payable under the Act of 2003 and the
Central Sales Tax Act, 1956. The said self assessment returns so submitted stood
concluded as the concerned respondent authorities did not initiate any proceedings for
audit assessment or best judgment assessment. However, subsequently, the Assessing
Officer initiated proceedings for re-assessment of the petitioner under Section 40 of the
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Act of 2003 and also under Section 9 (2) of the Act of 1956 in the second half of the
calendar year 2013. In respect of the assessment year 2005-06, orders of re-assessment
was passed on 31.03.2014. In respect to the assessment years 2006-2007; 2007-2008;
2008-2009; 2009-2010 and 2010-2011, five separate re-assessment orders were passed
on 31.05.2014. The re-assessment order dated 31.03.2014 passed by the Assessing
Officer pertaining to the assessment year 2005-2006, the Petitioner preferred Appeals
before the Deputy Commissioner of Taxes (Appeals) and the re-assessment order dated
31.03.2014 was set aside by two separate orders by the Appellate Authority dated
17.06.2014. Thereupon, the Assessing Officer preferred a revision before the
Commissioner of Taxes. Vide the impugned order dated 11.08.2015, the order dated
17.06.2014 passed by the Appellate Authority was set aside by the Additional
Commissioner of Taxes in so far as it related to exemption of tax allowed on sale of
packaged drinking water. However, relief was granted for tax remission to the petitioner
in respect of sale of pet bottles, pet jars and soda water. In respect to the five re-
assessment order passed on 31.05.2014 pertaining to the assessment year 2006-2007;
2007-2008; 2008-2009; 2009-2010 and 2010-2011, the petitioner preferred ten revision
petitions before the Commissioner of Taxes challenging the said five re-assessment
orders dated 31.05.2014. Vide a common order dated 11.08.2015, the Additional
Commissioner of Taxes disposed of the said revision petitions thereby denying the claim
for tax remission on sale of packaged drinking water. The Additional Commissioner of
Taxes, however, granted the relief of tax remission to the petitioner in respect of the sale
of pet bottles, pet jars and soda water and also in respect of assessment of the turnover of
pet bottles and pet jars sold as independent products separately at applicable rates and
also in respect of submission of three forms.
18. Both the writ petitions thereupon were filed challenging the orders dated
11.08.2015 passed by the Additional Commissioner of Taxes in the revision proceedings
whereby the petitioner's claim for tax remission in respect of packaged drinking water
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was negated. The instant writ petitions were filed sometime in the first week of
November, 2015. The impugned orders dated 11.08.2015 were stayed by this Court vide
separate orders dated 26.11.2015 in both the writ petitions.
19. The records reveal that the Commissioner of Taxes had filed an affidavit-in-
opposition in WP(C) No.6977/2015 supporting the orders dated 11.08.2015 passed by
the Additional Commissioner of Taxes which were impugned in both the writ petitions.
It was categorically mentioned that the petitioner filed an application on 13.04.2013
before the Assessing Officer as well as the Commissioner and Secretary to the
Government of Assam, Industries and Commerce Department for cancellation of the
registration certificate obtained by it under the provision of the Act of 2003 and the Act
of 1956 citing the ground of closure of the petitioner's business w.e.f. 01.04.2013. It was
mentioned that the closure of the business just after the expiry of the validity period of
the eligibility certificates would fairly suggest that the petitioner had no intention of
really setting up its permanent industry but only to derive windfall gains posing as an
entrepreneur. It was mentioned that for the purpose of entitlement of the sales tax
exemption under the Scheme of 1997 or the sales tax remission under the Scheme of
2005, the petitioner had to manufacture finished products and conversion of raw water
into packaged drinking water would not come within the ambit of manufacture. It was
mentioned that the authority concerned without considering the same had issued the
eligibility certificate in respect to the packaged drinking water and for that, the State
cannot be deprived of its revenue. Further to that, it was mentioned that the
Commissioner of Taxes had issued a clarification on 30.09.2008 that conversion of raw
water into packaged drinking water does not amount to manufacture for the purpose of
conferment of benefit and this clarification was upheld by this Court in the case of NE
Packaged Drinking Water Manufacturer's Association and Others vs. the State of Assam and
Another, reported in (2013) 2 GLR 557. It was therefore stated that there is no infirmity in
the impugned order dated 11.08.2015 whereby the benefit of tax remission was denied in
Page No.# 17/41
respect to the packaged drinking water was concerned.
20. The records also reveal that the Industries Department of the Government of
Assam had also filed an affidavit-in-opposition wherein a similar stand has been taken to
what was taken by the Commissioner of Taxes in it affidavit-in-opposition. It was
categorically stated that the Certificate of Eligibility, in so far as packaged drinking
water was concerned was granted erroneously without taking into consideration that
conversion of raw water into packed drinking water would not come within the ambit of
manufacture.
21. The record further reveals a common affidavit-in-reply was filed by the petitioner
to the affidavit-in-opposition of both the Commissioner of Taxes as well as the
Industries Department reiterating its stand taken in the writ petitions. In the affidavit-in-
reply, the petitioner's stand was that the respondent authorities and more particularly the
Industries Department had with open eyes granted exemption on the finished products
which included packaged drinking water and the Sales Tax Department cannot sit over
the said decision and refuse to grant exemption to the petitioner in respect to packaged
drinking water.
22. In the backdrop of the above pleadings and discussion on the relevant provisions
narrated supra, let this Court record the respective submission of the learned counsels for
the parties.
23. Mr. K. N. Choudhury, the learned senior counsel appearing on behalf of the
petitioner submitted that by virtue of Section 109(4) of the Act of 2003, the petitioner
herein who was enjoying the benefit under the Scheme of 1997 would be entitled
without any further verification to the Scheme as formulated in terms with Section 109
(4) of the Act of 2003. The learned senior counsel submitted that when the petitioner
has already been issued an Eligibility Certificate under the Industrial Policy of 1997 by
the Industries Department, coupled with the Certificate of Authorization issued under the
Scheme of 1997, the petitioner would be entitled to the benefit under the Scheme of
Page No.# 18/41
2005. Non-granting the benefit under the Scheme of 2005 was contrary to the Industrial
Policy Resolutions of 1997; Section 109 (4) of the Act of 2003 as well as the Scheme of
2005. He submitted that this aspect of the matter was not taken into consideration in the
proper perspective by the Additional Commissioner of Taxes in passing the impugned
order dated 11.08.2015. The learned Senior Counsel relying on the judgment of the
Supreme Court in the case of Vadilal Chemicals Ltd. vs. the State of Andhra Pradesh and
Others, reported in (2005) 6 SCC 392 submitted that when an Eligibility Certificate had
been issued by the Department of Industries and Commerce after due verification, the
Taxation Department of the Government of Assam could not go beyond the same and
was bound to issue the Certificate of Entitlement in terms with the Scheme of 2005 or
for that matter grant the benefits under the Scheme of 2005. He submitted that the
Appellate Authority had duly taken note of the same in its detailed and reasoned order
dated 17.06.2014 and had directed issuance of the Certificate of Entitlement to the
petitioner. The learned Senior Counsel further submitted that the petitioner had duly
applied for the grant of the Certificate of Entitlement which for unlawful reasons was
withheld by the respondent authorities. Be that as it may, it was also submitted that
granting of the tax remission by the Respondent Authorities in terms with the impugned
order dated 11.08.2015 in respect to soda water, pet bottles and pet jars would also
clearly show that non-granting of the Certificate of Entitlement was not the issue. The
dispute herein is not granting of tax remission on sale of packaged drinking water. The
learned senior counsel, therefore, placed reliance upon Paragraph Nos.22 & 23 of the
judgment in the case of Vadilal Chemicals Ltd. (supra).
24. The learned Senior Counsel further submitted that both the Respondent
Authorities, i.e. the Industries Department as well as the Taxation Department of the
Government of Assam after due application of mind had held that the conversion of raw
water into packaged drinking water would come within the ambit of manufacture and on
the basis thereof, had issued the Certificate of Eligibility and the Authorization
Page No.# 19/41
Certificate. The application filed by the petitioner on 21.09.2005 for grant of the
Certificate of Entitlement was never refused. On the basis of the circular issued by the
Commissioner of Taxes on 30.09.2018 holding that the conversion of raw water to
packaged drinking water would not come within the ambit of 'manufacture' which have
been upheld by this Court in the case of NE Packaged Drinking Water Manufacturer's
Association and Others (supra), the respondent authorities have now changed their opinion
as regard the entitlement of the petitioner. This change of opinion was never there during
the period when the petitioner was actually entitled for the tax remission. It was only
after the circular issued on 30.09.2008 was issued and the judgment pronounced on
09.01.2013. Therefore, this change of opinion cannot deprive the petitioner of the
benefit of tax remission in respect to sale of packaged drinking water. In that regard, the
learned senior counsel referred to the judgment of the learned Division Bench of this
Court in the cases of Sunil Kr. Taparia vs. the State of Assam , reported in (2013) 1 GLR 14 and
Shree Industrial Enterprise vs. the State of Assam and Others , reported in (2014) 2 GLR 591.
25. The learned Senior Counsel further submitted that the petitioner herein on the basis
of the Industrial Policy Resolutions had changed and altered its position and therefore on
the basis of the principle of promissory estoppel, the respondent cannot be allowed to
deprive the petitioner of the benefits of the Industrial Policy Resolutions, 1997 and the
Schemes therefore have to read in terms with the Industrial Policy Resolution, 1997. In
that regard the learned senior counsel for the petitioner referred to the judgment of the
Supreme Court in the case of Shrijee Corporation and Another vs. Union of India , reported in
(1997) 3 SCC 398 as well as the judgment rendered in the case of the State of Punjab vs. M/s
Nestle India Ltd. and Another, reported in (2004) 6 SCC 465.
26. Per contra, Mr. A. Kalita, the learned Standing Counsel appearing on behalf of the
Industries Department, Government of Assam submitted that conversion of raw water
into packaged drinking water under no circumstances can be said to be manufacture of
finished products. Referring to Clause 3 (3) of the Scheme of 1997, the learned Standing
Page No.# 20/41
Counsel submitted that for the purpose of calculation of tax exemption under the said
Clause, sales tax exemption would be given on purchase of raw materials and sale of
finished products manufactured by the unit. The learned Standing Counsel, therefore,
submitted that there has to be manufacture of finished goods for the purpose of granting
the benefit of the exemption. The learned Standing Counsel submitted that there is
nothing new which had come into existence on the basis of packaging the raw water
after purification and as such the same would not come within the ambit of manufacture
of finished products. The learned Standing Counsel further submitted that the word
'manufacture' appearing in Section 2 (22) of the Act of 1993 though is of wide
amplitude but, then also for the purpose of coming within the ambit of the term
'manufacture', it has to bring into existence a new product by way of a process. The
learned Standing Counsel referred to the judgment of the Division Bench of this Court in
the case of Deepak Kumar Poddar vs. the State of Assam and Others , reported in (2010) 6 GLR
835 wherein Section 2 (22) of the Act of 1993 was taken into consideration and observed
that filtration of raw mustard oil into mustard oil cannot be understood to come within
the ambit of 'manufacture' in terms of Section 2 (22) of the Act of 1993. The learned
Standing Counsel appearing on behalf of the Industries Department, Government of
Assam therefore submitted that in the instant case mere filtration of the water cannot be
said to be a manufacture even in terms with the wide definition of 'manufacture'
employed in Section 2 (22) of the Act of 1993. The learned Standing Counsel submitted
that on a wrong notion, the authorities had granted the Eligibility Certificate which
ought not to have been granted but for the fault of certain officials, the State cannot be
deprived of its revenue.
27. The learned Standing Counsel further submitted that the term 'manufacture' in
Section 2 (30) of the Act of 2003 categorically mandates that any activity that brings out
a change in an article or articles as a result of some process, treatment, labour and results
in transformation into a new and different article so understood in commercial parlance
Page No.# 21/41
having a distinct name, character, use, but does not include such activity of manufacture
as may be prescribed. The learned Standing Counsel, therefore submitted that the
definition of 'manufacture' in terms of Section 2 (30) of the Act of 2003 is narrower and
under such circumstances, even assuming that filtration of raw water into packed
drinking water could have been brought within the ambit of 'manufacture' in terms with
Section 2(22) of the Act of 1993, the same would not be 'manufacture' in terms with
Section 2 (30) of the Act of 2003. He submitted that in the year 2008, the Commissioner
of Taxes had issued a circular stating that conversion of raw water into packed drinking
water would not come within the ambit of 'manufacture'. The representative union of
which the petitioner was one of the members had approached this Court and challenged
the said circular. This Court vide a judgment dated 09.01.2013 in the case of NE
Packaged Drinking Water Manufacturer's Association and Others (supra) had observed that the
processing of raw water into drinking water would not come within the ambit of
manufacture. He further submitted that the issue so raised as regards the Eligibility
Certificate having been issued, was also duly dealt with by the Division Bench in the
said judgment and the same was negated. He submitted that as the petitioner herein was
one of the members of the said Association, the said judgment had concluded all the
contentions raised in the present proceedings and the same applies as a res-judicata not
to speak of being binding as a precedent upon this Court. The learned Standing Counsel,
therefore, referred again to the judgment of the Division Bench of this Court in the case
of NE Packaged Drinking Water Manufacturer's Association and Others (supra).
28. The learned Standing Counsel further submitted that this is not a case of a change
of opinion as has been submitted by the learned senior counsel for the petitioner. The
present case pertains to some actions on the part of some authorities who had committed
a mistake in issuing the Eligibility Certificate in respect to packaged drinking water as a
finished product which ought not to have been done as the same did not amount to
'manufacture'. The issuance of the Eligibility Certificate in so far as the packaged
Page No.# 22/41
drinking water was contrary to Clause 3 (3) of the Scheme of 1997 as well as also the
Industrial Policy Resolutions of 1997 wherein it is only for the purpose of
manufacturing and commencement of commercial production, the incentive under the
Industrial Policy Resolutions, 1997 could have been granted.
29. The learned counsel also placed before this Court the judgment of the Supreme
Court in the case of Dr. Ashok Kumar Maheswari vs. State of U.P. and Another, reported in
(1998) 2 SCC 502 to make the point that the principle of promissory estoppel cannot be
invoked to enforce a promise contrary to law. The learned counsel submitted that even
assuming for argument sake there was a promise made on the basis of the Industrial
Policy Resolution, 1997 then also granting of exemption post 01.05.2005 would be
contrary to law in as much as the definition of 'manufacture' as contained in Section 2
(30) of the Act of 2003 categorically mandates that there is a requirement that the
article(s) had/have to result in transformation into a new and different articles so
understood in common parlance. The learned counsel therefore referred to paragraph
No.22 of the said judgment in the case of Dr. Ashok Kumar Maheswari (supra).
30. The learned counsel for the Industries Department also placed reliance upon the
judgment of the Supreme Court in the case of State of U. P. and Others vs. Harish Chandra
and Others, reported in (1996) 9 SCC 309 and submitted that a writ of mandamus cannot be
issued either to refrain from enforcing the law or to act contrary to the law. Referring to
the said judgment, the learned counsel submitted that w.e.f. 01.02.2005, the petitioner
Company cannot be said to have manufactured packaged drinking water from raw water
in view of the definition contained in Section 2 (30) of the Act of 2003 and if any
direction is issued to grant benefit to the petitioner for the period post 01.05.2005, it
would be contrary to law, and as such, no writ in the nature of mandamus ought to be
issued in the facts of the instant case.
31. I have also heard Mr. B. Choudhury, the learned counsel appearing on behalf of the
Finance and Taxation Department of the State of Assam who submitted that the
Page No.# 23/41
petitioner as of now does not have a certificate of entitlement and without a certificate of
entitlement, the assessing Authority cannot grant the tax remission as sought for. Mr. B.
Choudhury, the learned counsel further submitted that a perusal of Section 109 (4) of the
Act of 2003 would categorically show that the Scheme to be formulated in terms with
the Section 109(4) of the Act of 2003 has to be in conformity with the provisions of the
Act of 2003. Mr. B. Choudhury, the learned counsel, therefore, submitted that for the
Scheme to come within the ambit of the Act of 2003, it has to also be in conformity with
Section 2 (30) of the Act of 2003 which categorically mandates that the manufacture
would be an activity which results in transformation into a new and different article so
understood in commercial parlance having a distinct name/character and use. He further
submitted from the very pleadings in the writ petitions, the petitioner duly admits that
the industrial activity of conversion of raw water into drinking water would not come
within the ambit of Section 2 (30), and therefore, the petitioner herein cannot claim the
benefit under the Scheme of 2005.
32. Mr. B. Choudhury, the learned counsel further referring to the Scheme of 2005 and
submitted that it is categorically mandated in its preamble itself that the entitlement to
remission of tax is only to those units in conformity with the provision of the Act of
2003 meaning thereby it has to confirm Section 2 (30) of the Act of 2003. Further
referring to Clause 3 (1) of the Scheme of 2005, Mr. B. Choudhury, the learned counsel
submitted that for the purpose of entitlement under the Scheme of 2005, the eligible unit
registered under the Act of 2003 would be entitled to tax remission on those goods
which are manufactured in Assam, i.e. 'manufacture' within the ambit of Section 2 (30)
of the Act of 2003. He, therefore, submitted that the question of the petitioner being
entitled to tax remission in respect of packaged drinking water do not arise.
33. Mr. B. Choudhury, the learned counsel further distinguished the judgment in the
case of Vadilal Chemicals Ltd. (supra) and submitted that the said judgment cannot be
made applicable to the facts of the instant case taking into account that in the said
Page No.# 24/41
judgment, the Supreme Court was not taking into consideration the change of law as has
been in the instant case in as much w.e.f. 01.05.2005, the Act of 2003 has come into
operation and the definition of 'manufacture' had also changed. Further, the learned
counsel referred to the judgment of the Supreme Court in the case of Hero Motorcorp
Limited vs. Union of India and Others , reported in (2023) 1 SCC 386 and submitted that the
question of promissory estoppels cannot be made applicable to the facts of the instant
case taking into account that there cannot be any estoppel against the statute. In the
instant case, in view of the change in the definition of 'manufacture' which the petitioner
also admit would not encompass the conversion of raw water into packaged drinking
water within the ambit of Section 2 (30) of the Act of 2003, the petitioner herein
therefore would not be entitled to the benefit of tax remission by application of the
doctrine of promissory estoppel.
34. Upon hearing the learned counsel for the parties and after perusal of the materials
on record, this Court is of the opinion that the following point for determination arises
for consideration:
Whether the petitioner's industrial unit who was availing tax exemption on
packed drinking water on the basis of the Industrial Policy Resolutions, 1997 and
being holder of the Eligibility Certificate would be entitled to enjoy tax remission
for the unexpired period of eligibility and unutilized amount under Section 109
(4) of the Act of 2003 read with the Scheme of 2005 even though the industrial
activity of packed drinking water does not amount to manufacture in terms with
Section 2 (30) of the Act of 2003?
35. This Court had in the foregoing paragraph of the instant judgment duly dealt with
the Industrial Policy Resolutions, 1997 under the Assam Industries (Sales Tax
Concessions) Scheme, 1997 (Scheme of 1997), Section 109 (4) of the Act of 2003 as
well as the Assam Industries (Tax Remission) Scheme, 2005 (Scheme of 2005). This
Court has also duly taken note of Section 2 (22) of the Act of 1993 vis-à-vis Section 2
Page No.# 25/41
(30) of the Act of 2003 which defines the term 'manufacture'.
36. The learned Division Bench of this Court in the case of Deepak Kumar Poddar
(supra) had the occasion to deal with Section 2 (22) of the Act of 1993 and observed that
the word 'manufacture' which has been defined in Section 2 (22) of the Act of 1993 was
in very wide terms. It was observed that the said definition read in juxtaposition with the
dictionary meaning of the word 'manufacture' would indicate that what is beyond the
normally understood meaning of 'manufacture' has been included in the definition
contained in Section 2(22) of the Act of 1993. It was observed that the definition of
'manufacture' under Section 2 (22) of the Act of 1993 comprehends within its sweep an
article which could be a result of production process or the making, extracting, altering,
ornamenting, blending, finishing, processing, treating or adapting of goods. It was
observed that the deployment of any of the means included in the definition may give
rise to a new commodity distinguishable from the input used. In paragraph No.16 of the
said judgment, the Division Bench had opined that the true purport and meaning of the
wide definition of 'manufacture' as contained in the Act of 1993 would require the final
product to be noticeably different from the basic input though both, i.e., the input and
the final product may have some similar features. It was further opined that the
production of a new commodity or a distinctly different commodity having a separate
identity is the requirement of the dictionary meaning of the word 'manufacture' which
can have no application in the teeth of the legislative exercise resulting in the enactment
of Section 2(22) of the Act of 1993. It was observed that the word 'production' has not
been defined in the Act of 1993 for which the Court would have to understand the
meaning of the said word by reference to its everyday/common use and by its dictionary
meaning. It is very significant to note that the learned Division Bench of this Court came
to a finding that filtration of raw mustard oil into mustard oil would not come within the
definition of 'manufacture' in terms with Section 2 (22) of the Act of 1993. This Court
finds it relevant to quote paragraph Nos.15 & 16 of the judgment in the case of Deepak
Page No.# 26/41
Kumar Poddar (supra) herein under:-
"15. There can be no manner of doubt that the word "manufacture" has been defined in
Section 2(22) of the Act in very wide terms. The said definition read in juxtaposition with the
dictionary meaning of the word would indicate that what is beyond the normally understood
meaning of "manufacture" has been included in the definition contained in Section 2(22) of the
Act. Ordinarily and according to the dictionary meaning, a raw material or an input on which
further human effort is expended will give rise to a process of manufacture if by that process a
distinct or different commodity comes into existence. However, it is always open to the
Legislature to prefer to ignore the literal/dictionary meaning of the word and introduce a
deeming provision by which the word can have a wider meaning. The definition of
"manufacture" in Section 2(22) of the Act comprehends within its sweep an article which could
be the result of a production process or the making, extracting, altering, ornamenting, blending,
finishing, processing, treating or adapting of goods. The deployment of any of the means
included in the definition may give rise to a new commodity distinguishable from the input used.
It may also bring about another article which, though not an entirely different commodity, may
have some new features but at the same time retaining some features of the original input. The
decisions of the apex court relied upon by the learned Counsel for the parties to which a
detailed reference has been made earlier indicate that while interpreting the pari materia
definition of the word "manufacture" as contained in the Assam Act, the unanimity of the views
seems to be that though no new article need to come into existence to attract the wider
definition of "manufacture", some changes in the end-product in comparison to the basic input
must emerge. The extent of such change may vary from case to case. The decision of the apex
court in Ashirwad Ispat Udyog and Others Vs. State Level Committee and
Others, and Sonebhadra Fuels Vs. Commissioner, Trade Tax, U.P., Lucknow, in the ultimate
analysis, does not lay down any proposition of law fundamentally different from what has been
laid down in State of Maharashtra Vs. M/s. Shiv Datt and Sons, etc., and M/s. B.P. Oil Mills
Ltd. Vs. Sales Tax Tribunal and Others, , inasmuch as, the end-product considered in Ashirwad
Ispat Udyog and Others Vs. State Level Committee and Others, and Sonebhadra Fuels Vs.
Commissioner, Trade Tax, U.P., Lucknow, had undergone some changes compared to the basic
material from which the end-product had emerged. The decision in State of Maharashtra Vs.
Mahalaxmi Stores, which insists on emergence of a new commercial commodity so as to attract
the same definition as contained in the Assam Act (the apex court was considering the
Page No.# 27/41
definition of "manufacture" in the Bombay Sales Tax Act, 1959 which is same as in the Assam
Act) though, can be understood as striking a somewhat discordant note, can be explained as a
decision earlier in point of time to the one rendered in Sonebhadra Fuels Vs. Commissioner,
Trade Tax, U.P., Lucknow, and also of a Bench numerically smaller than the one which had
rendered the decision in State of Maharashtra Vs. M/s. Shiv Datt and Sons, etc., and M/s. B.P.
Oil Mills Ltd. Vs. Sales Tax Tribunal and Others, The decision of the apex court in Punjab
Aromatics Vs. State of Kerala, may not strictly apply to the present case as in the said case u/s
5A of the Kerala General Sales Tax Act, 1963 which was under consideration, the liability to
tax was contingent on consumption of the inputs in the manufacture of other goods for sale or
otherwise. It is in the above context that the test of "irreversibility" of the end-product was
applied by the apex court.
16. From the above discussions it would be clear that the true purport and meaning of the
wide definition of "manufacture" as contained in the Assam Act is that the expression
"manufacture" with all its connotations under the definition would require the final product to
be noticeably different from the basic input though both, i.e., the input and the final product
may have some similar features. Production of a new commodity or a distinctly different
commodity having a separate identity is the requirement of the dictionary meaning of the word
"manufacture" which can have no application in the teeth of the exercise of legislative exercise
resulting in the enactment of Section 2(22) of the Act. The aforesaid ratio of the law, if applied
to the facts of the present case, cannot bring the activity carried out in the petitioner's unit
within the meaning of the definition of "manufacture" contained in Section 2(22) of the Act. The
end-product "mustard oil", is fundamentally the same as the raw material/input used, i.e., raw
mustard oil, inasmuch as, it is only the impurities in the raw mustard oil which is removed by a
process of filtration."
37. It is further relevant to take note of that the learned Division Bench of this Court in
Deepak Kumar Poddar (supra) had also dealt with Section 9 (4) of the Act of 1993 on the
basis of which the Scheme of 1997 was framed. It was observed that Section 9 (4) of the
Act of 1993 was in two parts. The first part indentifies the industries entitled to grant of
relief by way of exemption and the second part deals with the goods in respect of which
the benefit of exemption would be applicable. While identifying the industries in the
first part it was mandated that those industries which are producing goods to be entitled
Page No.# 28/41
to grant of relief under Section 9(4) of the Act of 1993, whereas the second part states
that exemption will be both on raw materials and manufactured goods. It was observed
that emphasis in Section 9(4), therefore, is on production of goods in an industry. The
Division Bench further observed that the work 'production' has not been defined in the
Act of 1993 for which it would be required for the Court to understand the meaning of
the said word 'production' by reference to its everyday/common use and by its
dictionary meaning. It was categorically observed that while manufacture can be
characterized as production, every production need not amount to manufacture. As per
the learned Division Bench of this Court, the word, 'production' or 'produce' when used
in juxtaposition with the word 'manufacture', it takes in bringing into existence new
goods by a process which may or may not amount to manufacture. It also takes in all the
byproducts, intermediate products and the residues which emerge in the course of
manufacture of goods. Paragraphs No.17 and 18 of the said judgment in Deepak Kumar
Poddar (supra) being relevant are quoted herein under:-
"17. The above discussion will, however, not conclude the matter. Section 9(4) of the Assam
Act contemplates "grant of relief to any class of industries..............................producing
such goods as may be specified therein...........................by way of full or partial exemption
of any tax on the raw materials or other inputs...........................or on the manufactured
goods sold..........................."
A careful scrutiny of the provisions of Section 9(4) of the Assam Act would indicate
that the said section is in two parts. By the first part the identity of the industries entitled to
grant of relief by way of exemption is contemplated and the second part deals with the goods in
respect of which the benefit of exemption will be applicable. The first part clearly identifies
industries "producing goods" to be entitled to grant of relief under section 9(4) of the Act
whereas the second part states that exemption will be both on raw materials and manufactured
goods. The emphasis in section 9(4), therefore, is on production of goods in an industry. The
above view also would be consistent with the purpose for which exemptions from payment of
revenue are normally granted, i.e, to encourage industries with a view to greater productivity
and employment. If section 9(4) of the Act is understood in the above manner, it would appear
Page No.# 29/41
that only one specie of manufactured goods, i.e, those "produced" has been contemplated for
grant of exemption under section 9(4). The learned Single Judge, therefore, was right in laying
emphasis on the words "producing such goods", as appearing in section 9(4) of the Act and in
examining the claim of the appellant/writ petitioner from the said perspective.
18. The word "production" has not been defined in the Assam Act. The court will, therefore,
have to understand the meaning of the said word by reference to its everyday/common use and
by its dictionary meaning. There can be no dispute that production denotes bringing something
into life or existence by human effort. Such human effort, naturally, has to be on something
already existing, though it is not impossible to visualize production of goods also from non-
existent goods, i.e, mining of minerals. If something already exists what would come to life or
existence, therefore, logically, has to be something different, i.e, something new. The position
has been succinctly explained by the Apex Court in CIT v. N.C Budharaja and Co., (1993) 204
ITR 412 by observing that "The word 'production' has a wider connotation than the word
'manufacture'. While every manufacture can be characterized as production, every production
need not amount to manufacture. The word 'production' or 'produce' when used in
juxtaposition with the word 'manufacture' takes in bringing into existence new goods by a
process which may or may not amount to manufacture. It also takes in all the byproducts,
intermediate products and reside rodeos which emerge in the course of manufacture of goods."
Filtration of raw mustard oil into mustard oil undertaken by the petitioner, therefore, cannot be
understood to amount to production of goods in view of the above."
38. This Court at the cost of repetition would again observe that the learned Division
Bench of this Court in the case of Deepak Kumar Poddar (supra) had observed that
filtration of raw mustard oil by removing the impurities would not come within the
ambit of manufacture. This aspect assumes importance taking into account that this
Court is dealing with filtration of the underground raw water into packaged drinking
water.
39. The records of the instant proceedings reveals that the Eligibility Certificate was
issued by the Industries Department of the Government of Assam treating packaged
drinking water as a finished product and a Certificate of Authorization was also given by
the authorities under the Scheme of 1997 showing amongst others packaged drinking
Page No.# 30/41
water as a finished product. It is relevant at this stage to take note of the submission of
Mr. A. Kalita, the learned counsel appearing on behalf of the Industries Department who
submitted that a mistake was committed by the authorities by including the packaged
drinking water as a finished product in the Eligibility Certificate. The said submission in
the opinion of this Court seems to be tenable taking into account the judgment of the
Division Bench of this Court in the case of Deepak Kumar Poddar (supra). Be that as it
may, a question do arise as to whether the Industries Department of the Government of
Assam and more particularly the Implementing Agency could have decided what
goods/articles would come within the ambit of 'manufacture' in as much as the term
'manufacture, is not defined in the Industrial Policy Resolution, 1997. More so, when
Clause 5.4 of the Industrial Policy, 1997 only stipulates granting sales tax exemption on
sale of finished products and purchase of raw materials and interestingly, the Scheme of
1997 and the Scheme of 2005 are Schemes framed under Section 9 (4) of the Act of
1993 and Section 109 (4) of the Act of 2003 which specifically mention granting
exemption about manufactured finished products within the State of Assam. The
definition of 'manufacture' is found only in the Act of 1993 or the Act of 2003. This
aspect of the matter would be dealt with a little later while dealing with the judgment of
the Supreme Court in the case of Vadilal Chemicals Ltd. (supra).
40. Section 109 (4) of the Act of 2003 has already been quoted herein above and a
reading of the said provision makes it clear that in respect to registered units who have
been enjoying benefits of sales tax concession under the Scheme of 1997 and other such
Schemes immediately prior to 01.05.2005 and would have continued to be eligible for
any period which is to end after 01.05.2005, if the Act of 2003 would not have come into
force, a power was conferred upon the Government to formulate an appropriate Scheme
in conformity with the provisions of the Act of 2003 to substitute the said Scheme of
1997 or any other scheme for the period commencing on or after 01.05.2005. The words
"inconformity with the provisions of this Act" have vital significance in as much as the
Page No.# 31/41
Scheme which is to be formulated has to be in accordance with the Act of 2003. At this
stage, it is reiterated that Clause 3 (1) of the Scheme of 2005 only grants the benefit of
tax remission on goods manufactures by an eligible unit. Therefore, the same has to be
decided taking into account the definition of Section 2 (30) of the Act of 2003 which
defines 'manufacture'. For the purpose of convenience, this Court finds it relevant to
quote Section 2 (30) of the Act of 2003 as herein under:-
(30) "manufacture" means any activity that brings out a change in an article or articles as a
result of some process, treatment, labour and results in transformations into a new and different
article so understood in commercial parlance having a distinct name, character use, but does
not include such activity of manufacture as may be prescribed;"
41. From a perusal of the above quoted Section, the term 'manufacture' means any
activity that brings out a change in an article or articles as a result of some process,
treatment, labour and results in transformation into a new and different article so
understood in common parlance having a distinct name, character use, but does not
include such activity of manufacture as may be prescribed. The learned Division Bench
of this Court in the case of NE Packaged Drinking Water Manufacturer's Association and
Others (supra) has specifically dealt with this particular issue as to whether processing of
raw water into drinking water amounts to manufacture within the meaning of Section 2
(30) of the Act of 2003. It was observed that though raw water is subjected to a process
of purification, it continues to be water and its character and use remains the same
though the quality has improved. It was therefore held that there was no new and distinct
commercial commodity that has emerged on account of the process undertaken. The
learned Division Bench of this Court further in the said case, i.e. NE Packaged Drinking
Water Manufacturer's Association and Others (supra) agreed with the similar findings arrived
at by the Kerala High Court in the case of Tejan Deverses vs. State of Kerala, reported in
2003 (1) 131 STC 538 wherein also it was held that the activity of treatment of ground
water as raw material and the resultant product of mineral water/packaged drinking
water would not come within the ambit of manufacture. Paragraph Nos.10, 11, 15 & 16
Page No.# 32/41
of the judgment of the Division Bench in the case of NE Packaged Drinking Water
Manufacturer's Association and Others (supra) are quoted herein under:-
"10. Coming to the present case, it is seen that though the raw water is subjected to the
process of purification, it continues to be water. Its character and use remains the same though
quality has been improved. It cannot, thus, be held that a new and distinct commercial
commodity has emerged on account of the process undertaken.
11. The matter was considered by the Kerala High Court in the light of judgment of the
Hon'ble Supreme Court in Tungabhandra Industries Ltd.'s case, (1960) 11 STC 827 as follows :
".......Ground water which is taken and used by the appellants as raw material for heir
finished product, viz. mineral water/packaged drinking water can be used for all
purposes for which the so called mineral water is used. Similarly the so called mineral
water can be used for all the purposes for which the ground water can be used. What is
done by the appellants is to employ various processes described by them to bring the
commodity more acceptable to a section of people for drinking purposes. According to
us, notwithstanding the various processes employed by the appellants in converting the
ground water it continues its identity as water, its character and use also remain the
same though the quality of the said water has been raised to a certain level which is
more acceptable to a section of people. Applying the principles laid down by the
Supreme Court in the various decisions discussed above, and in the light of the
definition of the word manufacture used in the notification mineral water/packaged
drinking water produced by the appellants in their units has to be treated as
substantially the same as ground water. In other words it cannot be said that a new and
distinct commercial commodity has emerged by the employment of various processes
described by them on the ground water. In these circumstances, going by the meaning of
the word manufacture as noted in the various decisions of the Supreme Court and other
courts and by the definition of the same used in the notification the raw material, viz.,
the ground water even after the various processes undertaken by them ha s continued to
be water with the same characteristic or use. The decision of the Constitution Bench of
the Supreme Court in Tungabhandra Industries Ltd.'s case (1960) 11 STC 827 and the
decision of the Bombay High Court in Oil Processors Private Limited case, (1998) 108
Page No.# 33/41
STC 44 mentioned above squarely apply.
We are in respectful agreement with the above observations.
15. As regards judgments relied upon on behalf of the petitioner, it is not disputed that the
parameters for determining which process amounts to manufacture are well-known, namely,
when change or series of changes brought about by application of various processes take the
commodity to the point where commercially it can no longer be known as original but instead
known as distinct and new article. Application of this principle to individual fact situations may
vary having regard to the nature of goods and the processes involved. The judgments relied
upon on behalf of the petitioner are not in relation to the process of purifying raw water into
drinking water. The same are on different fact situations. Every process which may bring about
some change cannot be treated to be manufacturing. The identity of the original commodity
must be lost and instead a new identity must merge. This distinguished the judgments relied
upon by the petitioner. Moreover, judgments relied upon by the Revenue are directly and close
to the issue in the context of goods involved. We, thus, upheld the stand of the Revenue.
16. As regards the submission that eligibility certificate once granted cannot be cancelled on
a mere change of opinion, the applicability of such principle has yet to be gone into. Whether it
is a case of mere change of opinion on a debatable issue or a case of mis-statement or error of
application of binding law has to be gone into by the concerned authority. If it is held that it
was not a case of mere change of opinion on a debatable issue but the case of wrong grant of
eligibility certificate either on account of mis-statement or on account of ignoring the settled
law, the appropriate authority may take a decision accordingly in accordance with law."
42. Therefore, from the above it is well settled that the industrial activity of
purification of raw water into packaged drinking water would not come within the ambit
of manufacture as defined under Section 2 (30) of the Act of 2003. Under such
circumstances and in the light of the above declaration by the Division Bench of this
Court, the question therefore arises as to whether the petitioner would be entitled to
enjoy the benefit of the Scheme of 2005, that too when the activity would not come
within the ambit of 'manufacture'. In the foregoing paragraphs of the instant judgment,
this Court had duly taken note of the said Scheme of 2005. The Preamble to the said
Scheme categorically mentions that the said Scheme has been framed for continuing the
Page No.# 34/41
conferment of benefits enjoyed by eligible industrial units under the Scheme of 1997 by
way of remission of tax to those units "in conformity with the provision of the Act" meaning
thereby the enjoyment by way of remission of tax would be available if it is in
conformity with the Act of 2003. Clause 3 of the Scheme of 2005 stipulates when an
eligible industrial unit would be entitled to tax remission. Clause 3 (1) of the Scheme of
2005 categorically mandates that benefit of tax remission would be granted to an eligible
unit which is registered under the Act of 2003 who manufactures any goods in Assam and
in that circumstances 99% tax payable of such unit according to its return in respect of
such goods manufactured in such unit shall be eligible for remission or continue to be
eligible for remission until the amount of such tax payable exceeds the unavailed
quantum of monetary ceiling or the extended unexpired period of eligibility whichever is
earlier. Therefore, the emphasis for the purpose of enjoyment of the benefit of tax
remission would be those eligible units manufacturing any goods in the State of Assam
and this manufacturing has to read in terms with Section 2 (30) of the Act of 2003. It is
being well settled now that the activity of purification of raw water into packaged
drinking water would not come within the ambit of the term 'manufacture' in terms with
Section 2 (30) of the Act of 2003, it is the opinion of this Court, the petitioner herein
would not be entitled to the benefit of the Scheme of 2005 in respect to the activity of
conversion of raw water into packaged drinking water. It is also relevant herein to
mention that the Scheme of 2005 or for that matter Clause 3 (1) of the said Scheme has
not put to challenge. Therefore, unless there is a challenge to the Clause 3(1) of the
Scheme of 2005 which grants tax remission only on goods manufactured by the
industrial eligible unit, the question of the petitioner Company being entitled to the
benefit of the tax remission for the period w.e.f. 01.05.2005 does not arise.
43. The learned senior counsel for the petitioner submitted on the application of the
principles of promissory estoppel. In the opinion of this Court, the said principles cannot
be applied till Clause 3 (1) of the Scheme of 2005 stands in as much as already held
Page No.# 35/41
hereinabove, Clause 3 (1) of the Scheme of 2005 has to be read along with Section 2
(30) of the Act of 2003 and if so read, then any application of the principles of
promissory estoppel would amount to applying the said principle against the Statute or
the legislative mandate which is clearly not permissible in view of the well settled
principles. At this stage, this Court also finds it relevant to take note of paragraph No.22
of the judgment of the Supreme Court in the case of Dr. Ashok Kumar Maheswari (supra)
which is quoted herein under:-
"22. Whether a promissory estoppel, which is based on a "promise" contrary to law can be
invoked has already been considered by this Court as also in Shabi Construction Co. vs. City &
Industrial Development Corpn wherein it is laid down that the Rule of "promissory estoppel"
cannot be invoked for the enforcement of a "promise" or a "declaration" which is contrary to
law or outside the authority or power of the Government or the person making that promise."
From the above proposition of law and applying the same to the present case, it
would transpire that even if there is any promise made on the basis of the Industrial
Policy Resolution, 1997, the said promise has to be in conformity with law and in the
present case, the Act of 2003.
44. In the background of the above analysis, let this Court take note of the submission
of the learned senior counsel for the petitioner on the basis of the judgment in the case of
Vadilal Chemicals Ltd. (supra), and more particularly to the paragraph Nos.22 & 23 of the
said judgment. The said paragraphs are quoted herein under:-
"22. Furthermore, under the incentive scheme in question, there was only one method of
verifying the eligibility for the various incentives granted including sales tax exemption. The
procedure was for the matter to be scrutinized and recommended by the State Level Committee
and District Level Committee and the certification by the Department of Industries &
Commerce by issuing an Eligibility Certificate. There was no other method prescribed under
the scheme for determining an industrial unit's eligibility for the benefits granted. The
Department of Industries & Commerce having exercised its mind, and having granted the final
eligibility certificate (which was valid at all material times), the Commercial Taxes Department
Page No.# 36/41
could not go beyond the same. More so when the Commissioner, Sales Tax had accepted the
Eligibility Certificate issued to the appellant and had separately notified the appellants
eligibility for exemption under the 1993 G.O. In these circumstances the DCCT certainly could
not assume that the exemption was wrongly granted nor did he have the jurisdiction
under Section 20 of the State Act to go behind the eligibility certificate and embark upon a fresh
enquiry with regard to the appellant's eligibility for the grant of the benefits. The counter
affidavit filed by the respondents-sales tax authorities is telling. It is said that the Sales Tax
Department had decided to cancel the eligibility certificates for sales tax incentives. As we have
said the eligibility certificates were issued by the Department of Industries and Commerce and
could not be cancelled by the Sales Tax Authorities.
23. There is another reason why the action of the DCCT cannot be upheld. The primary facts
relating to the processes undertaken by the appellant at its unit were known to the Department
of Industries and Commerce and the DCCT. The only question was what was the proper
conclusion to be drawn from these. The Department of Industries and Commerce which was
responsible for the issuance of the 1993 G.O. accepted the appellant as an eligible industry for
the benefits. Apart from the fact that it can be assumed that the Department of Industries was in
the best position to construe its own order, we can also assume that in framing the scheme and
granting eligibility to the appellant all the departments of the State Government involved in the
process had been duly consulted. The State, which is represented by the Departments, can only
speak with one voice. Having regard to the language of the 1993 G.O. it was the view expressed
by the Department of Industries which must be taken to be that voice."
45. From a perusal of the above quoted paragraphs, it would reveal that the Supreme
Court had opinioned that under the incentive scheme in question, there was only one
method of verifying the eligibility for the various incentives granted including sales tax
exemption. It was opined that the procedure was for the matter to be scrutinized and
recommended by the State Level Committee and District Level Committee and the
certification by the Department of Industries & Commerce by issuing an Eligibility
Certificate and there was no other method prescribed under the scheme for determining
an industrial unit's eligibility for the benefits granted. It was opined that the Department
of Industries & Commerce having exercised its mind and having granted the final
Page No.# 37/41
eligibility certificate (which was valid at all material times), the Commercial Taxes
Department could not go beyond the same. It was held by the Supreme Court that when
the Commissioner, Sales Tax had accepted the Eligibility Certificate issued to the
Appellant therein and had separately notified the Appellant's eligibility for exemption
under the 1993 Government Order, the DCCT certainly could not assume that the
exemption was wrongly granted nor did he have the jurisdiction under Section 20 of the
State Act to go behind the eligibility certificate and embark upon a fresh enquiry with
regard to the Appellant's eligibility for the grant of the benefits. It was further observed
that the State which is represented by the Departments, can only speak with one voice.
46. The said judgment rendered by the Supreme Court in the case of Vadilal Chemicals
Ltd. (supra) in the opinion of this Court is clearly distinguishable from the facts of the
instant case taking into account that in the State Sales Tax Act which was dealt with by
the Supreme Court, there was no provision relating to 'manufacture'. The concept of
'manufacture' only found place in the 1993 Government Order issued by the Department
of Commerce and Industries. This aspect of the matter can be seen from paragraph
No.20 of the said judgment in the case of Vadilal Chemicals Ltd. (supra) and the same is
quoted herein below:-
"20. In this case the State Sales Tax Act contains no provision relating to 'manufacture'. The
concept only finds place in the 1993 G.O. issued by the Department of Commerce and
Industries. It appears from the context of the other provisions of the 1993 G.O. that the word
'manufacture' had been used to exclude dealers who merely purchased the goods and resold the
same on retail price. What the State Government wanted was investment and industrial activity.
It is in this background that the 1993 G.O. must be interpreted. [See: Commissioner of Sales
Tax. Vs. Industrial Coal Enterprises (1992) 2 SCC 607). The Department of Commerce and
Industries had by its letters dated 3rd June 1995 and 20th August 1996 clarified the issue. The
exemption was granted in terms of the 1993 G.O. the thrust of which was to increase the
industrial development in the State. The Commissioner, Commercial Tax had also in no
uncertain terms accepted the interpretation put by the Industries Department on the 1993 G.O.
and written to the DCCT to permit sales tax exemption to the appellant in accordance with the
Page No.# 38/41
1993 G.O. for a period of five years upto a limit of Rs.35 lakhs."
47. The facts in the case of Vadilal Chemicals Ltd. (supra) would show that the
Government of Andhra Pradesh, in its Industries and Commerce Department to
effectuate the liberalized State Inventive Scheme for setting up new industries as
introduced in the year 1989 issued a Government Order in the year 1993 (1993 GO). In
the said 1993 GO, apart from investment subsidy, rebate on electricity charges, there
was deferment/tax holiday on sales tax for specified periods on products manufactures in
the new industrial units. Medium and large scale industries were granted tax deferment
whereas tiny and small scale industries were granted tax holiday. The Appellant in that
case before the Supreme Court was a small scale industry and as per 1993 GO, similar
industries were granted 5 years sales tax holiday subject to a ceiling of 100% fixed
capital costs or Rs.35 lakhs whichever was less during the entire holiday period. The
procedure for availing the benefits under the 1993 GO envisaged setting up of State
Level and District Level Committees. In the District Level Committees, it included the
Deputy Commissioner of Commercial Taxes. It is further seen from the said judgment
that the Appellant therein duly applied for the Eligibility Certificate from the Industries
Department which was rejected initially but subsequently the conditional and the final
Eligibility Certificate was granted. The final Eligibility Certificate upon being granted
was forwarded to the Commissioner of Commercial Taxes who in turn wrote to the
Deputy Commissioner, Commercial Taxes, Hyderabad requesting him to permit sales
tax exemption in terms with the 1993 GO for a period of 5 years from 1994 to 1999 upto
a limit of Rs.35 lakhs.
48. It is also seen from the said judgment that there was no other notification issued by
the Sales Tax Department. Be that as it may, revision proceedings were initiated on the
ground that as there was no manufacture, the Appellant was not entitled to the benefit of
tax holiday. It was under such circumstances, the initiation of the revision proceedings
by issuance of the show cause notice was put to challenge by way of a writ proceedings.
Page No.# 39/41
During the writ proceedings, the revision proceedings was decided against the Appellant
and there was issuance of Demand Notice. The writ petition was dismissed which led to
the filing of the proceedings under Article 136 of the Constitution of India before the
Supreme Court. Paragraph Nos.20, 22 & 23 quoted herein above, were the observations
and opinion rendered by the Supreme Court on the basis of the above factual matrix.
49. The facts in the instant case is however completely different. At the cost of
prolixity, this Court reiterates that though the Industrial Policy of 1997 was declared by
the State of Assam thereby declaring various incentives including sales tax exemption on
purchase of raw materials and sale of finished products but the Industries Department of
the Government of Assam did not issue any notification granting the said incentives. The
State of Assam exercised powers under Section 9 (4) of the Act of 1993 and formulated
the Scheme of 1997. It is pertinent to mention that Section 9 (4) of the Act of 1993, as
already observed in the preceding segments of the instant judgment categorically
mandates conferring power on the State Government to grant exemption to those
industries upon production of such goods to the extent of purchase of raw materials or
other inputs within the State or on sale of manufactured goods sold by such industrial
unit within the State or in course of inter State trade or commerce. It is also pertinent to
mention that Clause 3 (3) of the Scheme of 1997 clearly mandated sales tax exemption
on purchase of raw materials and sales of finished goods manufactured by the unit.
Further to that, it is also seen from the Scheme of 1997, that merely upon issuance of the
Eligibility Certificate, an industrial unit would not be entitled to the benefit of the sales
tax exemption. There is a requirement of issuance of a Certificate of Authorization in
terms with Clause 7 of the Scheme of 1997 and the Certificate of Authorization is to be
issued by the Assessing Officer which has to be renewed every financial year. The above
aspects also shows that in view of the State of Assam issuing the Scheme of 1997 under
the provision of the Act of 1993 and the use of the words 'manufactured goods" in
Section 9 (4) of the Act of 1993 and 'finished goods manufactured' in Clause 3 (3) of the
Page No.# 40/41
Scheme of 1997, the terms 'manufacture' in terms with Section 2 (22) of the Act of 1993
has therefore to be applied. These clearly distinguish the present facts with the facts in
the judgment in the case of Vadilal Chemicals Ltd. (supra), more so when in Vadilal
Chemicals Ltd. (supra), the final Eligibility Certificate was to be issued by the Authority
prescribed in 1993 GO and there was no further necessity for the Sales Tax Department
to do anything except to grant the exemption unlike in the present case. Further to that,
in the instant case, the Scheme of 2005 was formulated on the basis of Section 109 (4) of
the Act of 2003 and in the said Scheme of 2005, it was clearly mentioned that only
eligible units manufacturing goods, which would be manufacturing in terms of Section 2
(30) of the Act of 2003, would be entitled to tax remission. Therefore, merely because an
Eligible Certificate was issued to the petitioner, it would not entitle the petitioner to the
sales tax exemption or sales tax remission on the basis of the Scheme of 1997 or the
Scheme of 2005 unless and until the finished goods were manufactured within the
meaning of 'manufacture' employed in the Act of 1993 or the Act of 2003 as the case
may be. This Court further finds it very pertinent to take note of the judgment of the
Constitution Bench of the Supreme Court in the case of Commissioner of Customs vs. Dilip
Kumar and Co. and Others, reported in (2018) 6 GSTR-OL 46 wherein at paragraph No.52, the
Supreme Court observed how an exemption notification is required to be interpreted.
Paragraph No.52 of the said judgment is quoted herein below:-
"52. To sum up, we answer the reference holding as under:
(1) Exemption notifications should be interpreted strictly; the burden of proving
applicability would be on the assessee to show that his case comes within the
parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict
interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee
and it must be interpreted in favour of the Revenue.
(3) The ratio in Sun Export's case is not correct and all the decisions which took similar
view as in Sun Export's case stand overruled."
Page No.# 41/41
50. In view of the above observations and findings, this Court is therefore of the
opinion that the Additional Commissioner of Taxes was justified in passing the order
dated 11.08.2015 for the assessment year 2005-06 by setting aside the Appellate order
dated 17.06.2014 passed by the respondent No.5 for which no question of interference
arises.
51. This Court further is of the opinion that the common order passed by the
Additional Commissioner of Taxes dated 11.08.2015 in respect to the assessment years
2006-07; 2007-08; 2008-09; 2009-2010 and 2010-2011 is in accordance with law for
which no interference is called for.
52. Accordingly, this Court therefore having found no merit in both the writ petition,
dismisses the same.
53. Interim order(s), if any, stands vacated.
54. Pending Application, stands disposed in terms with the instant judgment.
JUDGE
Comparing Assistant
