Sri Sukhamoy Paul vs The State Of Tripura
2021 Latest Caselaw 568 Tri

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                        HIGH COURT OF TRIPURA
                              AGARTALA
                             W.A. No.17/2018

Sri Sukhamoy Paul, Son of Late Sudhangshu Ranjan Paul, Sole Proprietor of
M/s Paul Enterprise, Near Railway Station, Kumarghat, resident of Station
Road, Tarapur, Silchar-788003, District-Cachar, Assam.
                                                        ----Appellant(s)
                                     Versus

1. The State of Tripura, to be represented by the Secretary to the
Government of Tripura, Department of Industries & Commerce, Agartala.
2. The Director of Industries & Commerce, Government of Tripura, Pandit
Nehru Complex, Kunjaban, Agartala.
3. The General Manager, District Industries Centre, Kailashahar, North
Tripura.
4. The Union of India, to be represented by the Secretary, Ministry of
Commerce & Industry, Department of Industrial Policy & Promotion,
Nirman Bhavan, New Delhi-110001.
                                                    -----Respondent(s)

For Appellant(s)                  : Mr. Somik Deb, Sr. Advocate,
                                    Mr. Kousik Roy, Advocate.
For Respondent(s)                 : Mr. Mangal Debbarma, Addl. G.A.,
                                    Mr. Bidyut Majumder, Asstt. S.G.

       HON'BLE THE CHIEF JUSTICE MR. AKIL KURESHI
        HON'BLE MR. JUSTICE S.G. CHATTOPADHYAY

      Date of hearing                   : 04th May, 2021.
      Date of judgment                  : 17th May, 2021.

      Whether fit for reporting         : NO.





                          JUDGMENT & ORDER

(Akil Kureshi, C.J.)

This appeal is filed by the original petitioner to challenge the

judgment of the learned Single Judge dated 30.06.2017 passed in WP(C)

No.78 of 2010.

2. Brief facts are as under:

The appellant original petitioner was running a business in the

name and style of M/S Paul Enterprise at Kumarghat, North Tripura and was

engaged in stone crushing. The unit was registered as small scale industry by

the Director of Industries. The unit commenced its production on

16.09.2002. A certificate to this effect was issued by the District Industries

Centre, Kailashahar, North Tripura on 21.02.2003. This certificate indicates

that the unit had installed capacity of 19915 cubic metres and the date of

commencement of production was 16.09.2002.

3. The Government of India, Ministry of Industries had framed a

Transport Subsidy Scheme under a notification dated 23.07.1971

(hereinafter to be referred to as the Scheme of 1971) which envisaged

limited transport subsidy for the cost of transportation of raw materials and

finished goods to manufacturing industrial units in the category of small

scale industries which are located in certain specified areas including the

North Eastern Region comprising of several north eastern states such as,

Assam, Meghalaya, Nagaland, Manipur, Tripura and Union Territories of

Arunachal Pradesh and Mizoram. Such transport subsidy would be available

for initial period of 10 years from the date of commencement of production.

By a subsequent notification dated 28.07.1993 this period of eligibility of

subsidy was reduced to 5 years.

4. Though in the petition the petitioner has referred to several

other subsidies declared by the Central Government such as, capital

investment subsidy, interest subsidy etc. which the petitioner was entitled to

but was not granted, before us learned counsel for the petitioner had argued

only with respect to non-granting of the transport subsidy. We have,

therefore, focused only on this aspect of the matter.

5. Case of the petitioner is that its unit fulfilled all the

requirements of grant of transport subsidy and for which all the documents

were supplied to the department despite which such subsidy was not granted

and on account of which the petitioner was unable to repay its dues to the

secured creditors and faced bankruptcy. The petitioner had, therefore,

claimed the benefit of transport subsidy at prescribed rates with interest.

6. The petitioner has produced a letter dated 07.12.2006 written

by the General Manager, District Industries Centre, Kailashahar to the

Director of Industries and Commerce, Government of Tripura in which it is

stated that during his visit at the site it was found that the unit was in

running condition. On a subsequent visit he had verified all related

documents for transport subsidy and found them all correct. He has also

stated that the unit used to bring raw materials from the nearby State Assam

for the unit up to March, 2006. However, at present the unit does not bring

raw materials and it does job work only.

7. The petitioner made several claims for transport subsidy.

However, these benefits were not granted. The petitioner thereupon filed the

writ petition.

8. The respondents appeared and filed replies in which the stand

taken was that the petitioner started functioning without electricity (with

D.G. set) and never submitted any document or permission from Pollution

Control Board. He thus started the unit without electricity by suppression of

facts. After starting the manufacturing activity the petitioner shifted to job

work and, therefore, also was not entitled to the transport subsidy. It was

contended that since the unit did not undertake any production activity on its

own, it lost its industrial character as manufacturing unit and was, therefore,

not eligible for transport subsidy since under the scheme definition of

„industrial unit‟ means an industrial unit where manufacturing programme is

carried on. It is contended that in order to avail the subsidy the unit should

not discontinue its production within 5 years from the date of

commencement of financial production. Since the unit had shifted from

manufacturing activity to job work activity this condition was not fulfilled.

For this purpose, a reference is made to the letter dated 07.12.2006 from the

General Manager, District Industrial Centre, Kailashahar to the Director of

Industries and Commerce which we have noted earlier.

9. The learned Single Judge by the impugned judgment

dismissed the petition on the ground that the subsidy scheme envisaged

transport subsidy on movement of raw materials only when it is brought

from the States outside the North Eastern Region and in the present case the

materials for stone crushing activity were extracted from within the State of

Tripura itself. Relevant portion of the judgment reads as under:

"8. Simply put, the Liberalized Transport Subsidy Scheme extracted above stipulates that transport subsidy @ 90% would become admissible on the movement of "Raw materials" from one State to another within the North Eastern Region and that the Transport Subsidy would, however, not be admissible for movement of „finished goods‟ even within the States of North Eastern Region.

This plainly makes it clear that only the movements by train or road of those raw materials which are brought into the State of Tripura from the selected areas or otherwise are entitled to avail of the benefits under the Scheme.

However, in the case of movement of "finished goods"

within the North Eastern Region, the liberalized Scheme is not applicable. In other words, the transportation costs of raw materials which are available in the State of Tripura and which are not brought into the State of Tripura are not entitled to the benefit of the transport subsidy under the Scheme.

9. Coming now to the facts of the instant case, it is not the case of the petitioner that the raw materials for the stone crushing activity, assuming without admitting that this forms a part of manufacturing activity, were brought into the State of Tripura from the non-selected areas or even from the North Eastern Region; the raw materials for the stone crushing activity i.e. boulder stones, etc. were apparently extracted from within the State of Tripura itself. In other words, no transportation of such raw materials from non-selected areas or selected areas ever took place; this is never the case of the petitioner either. That being the indisputable fact, irrespective of whether the boulder stones used by the petitioner for the stone crushing activity are raw materials or not, or whether the stone crushing activity of its unit is a manufacturing activity or not, the condition precedent for availing of the benefits of transport subsidy, namely, the raw materials used in the stone crushing activity must be brought into the State of Tripura from

selected areas or otherwise, is not satisfied by the petitioner. Once it is held that there is no evidence to show that the raw materials used for the stone crushing activity of the unit of the petitioner were not brought into the State of Tripura, the petitioner cannot be held entitled to the benefits of Transport Subsidy Scheme. The respondent authorities have rightly rejected its application. No other issue survives for consideration."

10. Having heard learned counsel for the parties and having

perused documents on record, the objections raised against releasing

transport subsidy in favour of the petitioner from different sources are as

under:

(i)(a) The petitioner had started manufacturing activity without

installation of electricity with the aid of generator and without obtaining

clearance from Pollution Control Board;

(b) That the petitioner was initially engaged in

manufacturing activity directly, however, subsequently the petitioner started

undertaking only job work. The subsidy scheme would not cover a job work

(both these objections have been raised by the respondents in the affidavit

and argued before us);

(ii) The movement of the raw material as well as the goods

was within the State alone and, therefore, the transport subsidy was not

available as per the scheme (this objection is recorded in the impugned

judgment of the learned Single Judge);

(iii) The petitioner was not engaged in manufacturing activity

at all. Mere crushing of the boulders did not amount to manufacturing (this

argument was advanced by the counsel for the Union of India).

11. We shall have to judge whether any of these objections are

valid. In order to assist us, learned senior counsel Mr. Somik Deb for the

appellant had submitted that the subsidy scheme did not envisage that the

same is not available to a job worker or that the clearance of Pollution

Control Board is necessary to claim the subsidy. In fact, such objection is an

afterthought since the industrial department itself had certified that the unit

was duly established and had commenced its manufacturing activity. He

further submitted that the objection that unit was not engaged in

manufacturing activity is also an afterthought. No such objection is ever

raised by any of the respondents in their correspondence or even in their

affidavit-in-reply filed in response to the petition. He lastly contended that

the objection raised by the learned Single Judge is not borne out from any

material on record. There is nothing on the record to suggest that the raw

material was procured by the petitioner from within the State. In fact, based

on the letter dated 07.12.2006 written by the General Manager of District

Industrial Centre it is clear that the petitioner was bringing such raw material

from the State of Assam.

12. In order to decide these issues we may take note of the relevant

terms of the subsidy scheme of 1971. Paragraph 4 of the said scheme is a

definition clause. Clause (a) of paragraph-4 defines an industrial unit as to

mean an industrial unit where manufacturing programme is carried on. A

new industrial unit is defined as to mean an industrial unit which has set up

its manufacturing capacity and comes into production on or after the date of

commencement of the scheme. It may be noted that the scheme was brought

into effect from 15.07.1971. The term "selected area" would mean several

regions and States specified therein including the North Eastern region

comprising of the State of Assam, Meghalaya, Manipur, Nagaland and

Tripura and Union Territories of Arunachal Pradesh and Mizoram.

Paragraph-6 of the scheme envisages grant of transport subsidy to the

industrial unit located in the selected areas in respect of raw materials which

are brought into and finished goods which are taken out of such areas.

However, industrial units will not be eligible for transport subsidy for

internal movement of raw materials and finished goods within such areas.

The relevant portion of this paragraph reads as under:

"6. Details of the scheme:

(i) A transport subsidy will be given to the industrial units located in the selected areas in respect of raw materials which are bought into and finished goods which are taken out of such areas.

(ii) Industrial units will not be eligible for the transport subsidy for internal movement of raw materials and finished goods within the State of Jammu & Kashmir, the North-Eastern region, the state of Himachal Pradesh, the hilly areas of Uttar Pradesh, the Union Territories of Andaman and Nicobar Islands and Lakshadweep and the State of Sikkim.

(iv) In the case of North-Eastern Region comprising the States of Assam, Meghalaya, Nagaland, Manipur, Tripura and the Union Territories of Arunachal Pradesh and Mizoram, the transport subsidy will be given on the transport costs between Siliguri and the location of the industrial unit in those States/Union Territories. While calculating the transport costs of raw materials the cost of movement by rail from Siliguri to the railway station nearest to the location of the industrial unit thereafter the cost of movement by road to the location of the industrial unit will be taken into account. Similarly while calculating the transport costs of finished goods the cost of movement by road from the location of industrial unit to the nearest railway station and thereafter the cost of movement by rail to Siliguri will be taken into account.

In the case of North-Eastern Region, for raw materials moving entirely by road or other mode of transport, the transport cost will be limited to the amount which the industrial unit might have paid had the raw materials moved

from Siliguri by rail up to the railway station nearest to the location of the industrial unit and thereafter by road. Similarly in the case of movement of finished goods moving entirely by road or other mode of transport in the North-Eastern region, the transport costs will be limited to the amount which the industrial unit might have paid, had the finished goods moved from the location of the industrial units to the nearest railway station by road and thereafter by rail to Siliguri."

13. We do not find the objections as raised by the respondents to

oppose the petitioner‟s claim on transport subsidy are valid. To begin with,

the objection that the petitioner‟s activity did not amount to manufacturing

activity has not been raised by the respondents in official correspondence. In

any case, it does not require much effort to turn down such an objection. The

admitted fact is that the petitioner is engaged in crushing big boulders into

small chips of stone used for construction activity. Thus, an entirely new

article through the mechanical process which the petitioner subjects the raw

material to comes into existence. Further, the objection that having started as

a manufacturing unit the petitioner later on was engaged in the activity as a

job worker also would not make the petitioner ineligible for transport

subsidy. It is the principal agency for whom the petitioner may be carrying

out the job work, would bear the cost of transportation and when such an

entity claims the transport subsidy, the question of its eligibility may be

examined. However, the petitioner has claimed transport subsidy during the

period which, it had undertaken the transportation of raw materials for its

manufacturing activity. The eligibility period for claiming subsidy may be 5

years, the scheme nowhere provides that only if a new industrial unit

continues such manufacturing activity for a period of 5 years that it can

claim the transport subsidy. Therefore, even if, as pointed out by the

respondents, the petitioner at some later point of time after commencing its

production got engaged into the same activity as a job worker, this would

not amount to breach of any of the eligibility conditions of the scheme.

14. Now, coming to the objection raised by the learned Single

Judge in the impugned judgment, we find that there is a possibility of some

factual error since the learned Judge has recorded that the subsidy scheme

does not envisage a case where the procurement of the raw material is from

within the State itself and in the present case, the petitioner had according to

the learned Single Judge procured such raw material from within the State

only. With the first part of this proposition, we have no dispute, however,

with respect to the later observation that the petitioner had procured the raw

material only from within the State, we do not find any basis. The

respondents have not raised any such objection. Though the petitioner who

had made subsidy claims which were supported by the certificates of the

Chartered Accountant certifying the movement of goods, has not produced

such supporting documents, from the letter dated 07.12.2006 from the

General Manager of District Industrial Centre, it does emerge that the

petitioner used to bring raw materials from the State of Assam up to March,

2006. This objection of the learned Single Judge, therefore, appears to be

factually incorrect.

15. However, this is not the end of the matter. Even going by the

petitioner‟s claim that the boulders in the form of raw materials were

procured from the neighbouring State of Assam, we do not find that the

subsidy scheme covers such a situation. We have reproduced the relevant

portion of the scheme. The term "selected area" is defined as to include

several States and regions including the North Eastern region comprising of

the States of Assam, Meghalaya, Manipur, Nagaland and Tripura and the

Union Territories of Arunachal Pradesh and Mizoram. Thus, these States

and specified Union Territories formed a common block which was

described as a North Eastern region. Clause (i) of paragraph-6 of the

scheme, as noted, envisages grant of transport subsidy to the industrial unit

located in selected areas in respect of the materials which are brought into

and finished products which are taken out of such areas. Clause (ii) of

paragraph-6 is an exclusion clause providing that the industrial units will not

be eligible for transport subsidy for internal movement of raw materials and

finished goods within the State of Jammu & Kashmir, the North Eastern

region, the State of Himachal Pradesh etc. Combined reading of clauses (i)

and (ii) of paragraph-6 of the scheme and bearing in mind the fact that the

North Eastern region in the entire scheme is referred to as one compact

block, would show that the transport subsidy for movement of goods and

finished products would be available as long as such movement either

originates (in case of procurement of raw material) or is transported to (in

case of finished goods) outside the North Eastern region. As long as such

movement either of raw material or finished goods is within the region no

transport subsidy would be available. Significantly, when it comes to

quantification of transport subsidy in case of North Eastern region, it would

be equivalent to the cost of transport between Siliguri and the location of the

industrial unit in the said region calculating the transport cost of raw

material the cost of movement by rail from Siliguri to the railway station

nearest to the location of the industrial unit and thereafter the cost of

movement by road to the location of the industrial unit. Same formula will

be provided for calculating the transport cost of finished goods. For the raw

materials moving entirely by road or other mode of transport the transport

cost will be limited to the amount which the industrial unit might have paid

had the raw materials moved from Siliguri by rail up to the railway station

nearest to the location of the industrial unit and thereafter by road. This is

one more indication that the subsidy scheme envisages grant of transport

subsidy only where there is movement of raw materials or finished goods

from outside the North Eastern region or from the North Eastern region to

the rest of the country respectively. Transport subsidy would not be

available for movement of raw materials as also finished goods as long as

the movement thereof is confined between two locations both of which are

situated in the North Eastern region. In the present case, even going by the

case of the petitioner the raw material was procured from Assam which

forms part of the North Eastern region for the purpose of the said scheme.

16. Appeal is, therefore, dismissed, however, for reasons somewhat

different from those recorded by the learned Single Judge.

Pending application(s), if any, also stands disposed of.

  (S.G. CHATTOPADHYAY), J                       (AKIL KURESHI), CJ




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