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1999 DIGILAW 343 (PAT)

Bihar Extrusion Company Limited v. State of Bihar

1999-04-23

AFTAB ALAM, S.N.JHA

body1999
JUDGMENT S.N.Jha, J. 1. M/s. Bihar Extrusion Company Limited a company incorporated under the Companies Act, seeks writ of mandamus directing the respondents to disburse the balance 25% amount of interest free sales tax loan for the period from January 1986 to March 1987, and for sanction and disbursement of the balance amount of interest free sales tax loan for the remaining period in terms of the Industrial Policy Resolution (IPR) No.1153 dated 20.1.81 and IPR No. 13730 dated 1.9.86, as well as for sanction and disbursement of State Capital Investment subsidy in terms of the aforesaid policy resolutions. 2. Since the claim of the petitioner rests on the two Industrial Policy Resolutions aforesaid, it would be apt to briefly notice the relevant provisions thereof, as hereunder. 3. It appears that for accelerated industrial growth in the State and removing the bottlenecks in the policy of industrialisation the Government of Bihar has taken policy decisions from time to time conferring benefits or concessions of different kinds. In this case we are concerned with the capital investment subsidy and interest free sales tax loan, as indicated above. The capital subsidy scheme as contained in IPR 1153 dated 20.1.81 (hereinafter referred to as 1981 Resolution), provided that as against the existing subsidy scheme, the State Capital subsidy would be uniformally available @ 15% of the fixed Capital Investment (land, workshop, building, plant and machinery) made in the new units commencing production on or after 17.11.80. IPR No.13730 dated 1.9.86 (hereinafter referred to as 1986 Resolution) contained similar provision. For the district of Singhbhum (now East Singhbhum) with which we are concerned in this case, an upper limit of Rs.15 lacs, however was fixed. The scheme was applicable to new industrial units going into production on or after 17.11.80 as in the earlier resolution. 4. The scheme regarding interest free sales tax loan contained in the 1981 Resolution provided that large, medium, small and tiny industries going into production on or after 1.10.79 will have the option either to avail of the total exemption from payment of sales tax on purchase of raw materials or to get a set off of amount paid as sales tax on purchase of raw materials against the amount of sales tax payable on sales of finished products. The facility was available for a period of five years for small industries, seven years for large and medium industries in non-backward districts and ten years in backward districts from the date of commencement of production. (The district of Singhbhum was included in the non-backward category). The scheme further provided that the interest free loan which was so far available on the basis of State Sales tax deposited from 17.11.80 will henceforth also include the amount realised by the State Government under the Central Sales Tax Act. The benefit was available to such industries which went into production before 1.10.79 but had not completed the period of eligibility available to them in the earlier resolution of the State Government and they were to continue to get the same incentive benefits for the remaining period of their eligibility. 5. The 1986 resolution did not bring about any change as regards interest free sales tax loan. While laying down in clause 9. 2 that large, medium, small and tiny industrial units going into production on or after 1.9.86 will get interest free sales tax loans without security equivalent to Bihar Sales Tax paid after set off, if any, including the amount realised by the State Government under the Central Sales Tax Act (for the purpose of computing the amount of 'interest free loan') they were entitled to the concession for the period of five years from the date of commencement of the production. The units which had gone into production before 1.9.86 but had not completed the period of eligibility for such concession available to them under the 1981 resolution, were to continue to get such concession for the remaining period of their eligibility according to the 1981 Resolution. 6. The industrial unit of the petitioner commenced industrial production in the year 1978. The period of eligibility of five years thus, expired in 1983. In terms of both the Resolutions of 1981 and 1986 the unit was entitled to concession only for the remaining part of the period of eligibility. However, it is stated that the unit was expanded in two phases in the years 1980 and 1986 by which the original production capacity of 2000 Metric Tonnes was enhanced by additional 1400 Metric Tonnes and 2500 Metric Tonnes respectively. According to the petitioner, the commercial production of the first expanded unit commenced production on 10.1.86. However, it is stated that the unit was expanded in two phases in the years 1980 and 1986 by which the original production capacity of 2000 Metric Tonnes was enhanced by additional 1400 Metric Tonnes and 2500 Metric Tonnes respectively. According to the petitioner, the commercial production of the first expanded unit commenced production on 10.1.86. According to the petitioner, in terms of the aforesaid resolution of 1981 and 1986 it is entitled to similar concession by way of State Capital Investment subsidy and interest free sales tax loan. 7. At this stage the relevant provisions of the 1981 Resolution with respect to old units expanding/diversifying their activities/production may be noticed as follows: "XVI. INCENTIVES TO OLD UNITS ON THEIR EXPANSION AND DIVERSIFICATION. - State Govt. will give incentive to old units on their expansion and diversification as are admissible to new units provided the following conditions are fulfilled. (i) Industrial units will apply to the Industries Department for registration of their expansion and/or diversification programme. The Director of Industries will be competent authority to register such scheme of the units (ii) In order to be eligible for incentives, the unit will have to invest in the fixed assets (land, factory, building and plant and Machineries) under the expansion/diversification programme, 25% more than the original investment in fixed assets of the project. An additional expenditure excluding 10% on this account will however, suffice FN Capital investment subsidy. (iii) Expansion implies increase in the assessed production capacity of the unit for the items for which it was registered. (iv) Diversification will imply production of a new item for which additional capital investment has been made. (v) Incentive will be admissible only on the additional consumption of power and/or raw material needed consequent upon the expansion or diversification of the unit, for a period of five years from the date of production resulting from such expansion/diversification." The corresponding provision in the 1986 Resolution was as follows : "15. Incentive for Expansion or Diversification.-Incentives will be allowed to units for expansion or diversification. Expansion implies an increase of at least 25 per cent of the unit for the items for which it is registered. Diversification implies production of a new item or items not envisaged in the project report on which loan was sanctioned or not capable of being manufactured by existing machinery. Expansion implies an increase of at least 25 per cent of the unit for the items for which it is registered. Diversification implies production of a new item or items not envisaged in the project report on which loan was sanctioned or not capable of being manufactured by existing machinery. The incentives will be available on the following conditions: (a) The expansion/diversifications programme has been duly registered and approved by the competent authority prescribed by the Government. (b) The facilities relating to sales tax as mentioned in paragraphs 9.1 and 9.2 will be available for a period of 5(five) years from the date of commencement of production after expansion/diversification and shall be limited to the extent of expansion/diversification (c) In respect of incentives relating to power consumption, incentive will be admissible on the additional consumption of power relating to production purposes consequent upon expansion/diversification of the unit. The facility will be available for a period of 5(five) years from the date of commencement of production after expansion/diversification and shall be limited to the extent of expansion/diversification". 8. It would appear that the benefits of capital subsidy in the 1981 Resolution as well as 1986 Resolution were available to such industrial units commencing production on or after 17.11.80. As regards interest free sales tax loan, the same was available to such industrial units commencing production on or after 1.10.79 in the 1981 Resolution and on or after 1.9.85 in the 1986 resolution. The benefit was available for the period of 5 or 10 years (as the case may be) from the date of production in 1981 Resolution and 5 years from the date of production in the 1986 resolution. While fixing the cut-off dates, the Resolutions laid down that such units which had already commenced production earlier would be entitled to the benefits earlier available to them for the unexpired period of eligibility. It is not clear from the pleadings as to what was the eligibility period fixed in the earlier resolution. It is however, reasonable to conclude, in absence of pleadings otherwise, that the period must have expired sometime after the date of the 1981 and 1986 Resolutions. But as noted above, the petitioner claims similar benefits on the basis of two expansions made between 17.11.80 and 31.12.95 and 31.12.85 and 10.1.86 and 31.12.87. It is however, reasonable to conclude, in absence of pleadings otherwise, that the period must have expired sometime after the date of the 1981 and 1986 Resolutions. But as noted above, the petitioner claims similar benefits on the basis of two expansions made between 17.11.80 and 31.12.95 and 31.12.85 and 10.1.86 and 31.12.87. Even if the period of five years is reckoned from 1987, the eligibility period expired in December 1992 for which the benefits provided in the later resolution were to extend from the date of commencement of production in the expanded unit. 9. As regards the capital subsidy, from the counter affidavit filed on behalf of State it appears that after the Bihar State Financial Corporation (BSFC) sanctioned a term loan of Rs. 45 lacs to the petitioner in 1987, the petitioner applied for capital subsidy through the BSFC which forwarded the application on 19.9.87. The State Level Committee (constituted under the Government Resolution) considered the proposal and sanctioned an amount of Rs.2,99,850/- being 15% of the value of actual fixed capital investments of Rs.9.99 lacs, in its meeting held on 29.7.88. The decision of the Committee was communicated on 23.10.88. It is the admitted case of the petitioner that the said amount of Rs.2,99,850 has since been paid to it. According to the petitioner, it is entitled to further capital subsidy of Rs.1,95,000 on the balance amount of capital investment of Rs.12.99 lacs. From the records it appears that a proposal in this regard was sent by the Bihar State Credit Investment Corporation (BISCICO) vide its letter no.720 dated 7.10.90. The State Level Committee considered the proposal in its meetings held on 30.4.91, 14.5.91 and 1.6.91 and rejected the same on the ground the subsidy of Rs. 2,99,850 held already been sanctioned on 29.7.88. It is not understandable as to how and in what circumstances another proposal for grant of capital subsidy was mooted, and through another agency, when the BSFC had already submitted proposal in 1987 which was duly considered by the State Level Committee and disposed of. Capital investments in fixed assets, such as land, building, plant and machinery, ordinarily are one time investments. The second expansion having taken place during 1986-87. It is expected that the petitioner-unit would have mentioned the entire investment under those heads during the aforesaid period and claimed subsidy thereon. Capital investments in fixed assets, such as land, building, plant and machinery, ordinarily are one time investments. The second expansion having taken place during 1986-87. It is expected that the petitioner-unit would have mentioned the entire investment under those heads during the aforesaid period and claimed subsidy thereon. Although a higher amount was claimed, the committee allowed the claim to the extent of Rs.2,99,850, presumably, on being satisfied, after verification, regarding the quantum or value of the investment. The possibility of making an inflated demands, which is a rather common phenomenon, cannot be ruled out. In any case the petitioner did not challenge the decision of the Committee, it rather got submitted a fresh proposal through another agency, namely, BISCICO. In my opinion, having regard to the nature of the relief, subsidy of about 3 lacs having already been granted, which decision was not challenged by the petitioner, it was not entitled to submit a fresh proposal with respect to further investment. Investments in land, building, plant and machinery must have been made prior to 1987 and they must also have been taken into account in the proposal submitted earlier through the BSFC. I, therefore, do not find any merit in the claim of the petitioner for grant of further capital subsidy. 10. The position regarding interest free sales tax loan, however, is not very clear. The claim on this account is recurring in nature. In fact, from the chart which was produced at the time of hearing, giving reference to various annexures, it appears that with respect to the expansion period the petitioner claimed amounts during different parts of the period which were also allowed in part. It has been stated that for the period from January 1986 to March 1986 the petitioner claimed sum of Rs.1,83,200, the whole of which was sanctioned but sum of Rs. 1,37,400 only was disbursed, leaving Rs. 45,800 as outstanding. Similarly, for the period from April 1996 to March 1987 out of the total claim of Rs.2,13,300, the entire of which was sanctioned, sum of Rs.1,59,900 only was disbursed, leaving sum of Rs.53,400 as outstanding. This was so at the time of filing of the writ petition in 1992. It was stated at the time of hearing that the said amounts of Rs.45,800 and Rs.53,400 have since been paid. 11. This was so at the time of filing of the writ petition in 1992. It was stated at the time of hearing that the said amounts of Rs.45,800 and Rs.53,400 have since been paid. 11. According to the petitioner, the claims for the periods from 1.1.88 to 31.3.88 for the sum of Rs.1,99,086, for the period from 1.4.88 to 31.3.89 for the sum of Rs. 2,72,693.93 P. and for the period from 1.4.89 to 31.3.90 for sum of Rs.4,89, 864.95P.(total being Rs.9,71,644.88P) have not been disposed of as yet. It is said that no decision one way or other has been taken. Having regard to the fact that the respondents have paid the entire amount claimed for the periods from January 1986 to March 1987 treating the claims as recurring in nature, it is not understandable as to why no decision has been taken with respect to the subsequent periods referred to above. As mentioned above, parts of the amount sanctioned earlier during the aforesaid period have been paid during the pendency of the case after 1992. The respondents should have taken decision with respect to the claim for the subsequent period from January 1988 to March 1990, referred to above. According to the respondents, the non-payment of rest amount was on account of the fact that the petitioner did not execute the necessary bond. It is not clear as to whether the respondents have accepted the petitioner's claim for subsequent periods or not. If they have accepted the claim and sanctioned the amount but the same has not been disbursed on account of non-execution of necessary bond by the petitioner, of course, the blame would lie with the petitioner. However, since it was stated in course of hearing that payments of the balance amount for the earlier period, referred to above have been made during the pendency of the case, and there is no further explanation by the respondents for the subsequent period either by way of a supplementary counter affidavit or even oral. I am inclined to direct the respondents, particularly, the State Level Committee and the Director of the Industries to consider the claim of the petitioner for grant of interest free sales tax loan for the period from 1.1.88 to 31.3.90. If the petitioner is not entitled to the amount, a reasoned order shall be passed and communicated to it. I am inclined to direct the respondents, particularly, the State Level Committee and the Director of the Industries to consider the claim of the petitioner for grant of interest free sales tax loan for the period from 1.1.88 to 31.3.90. If the petitioner is not entitled to the amount, a reasoned order shall be passed and communicated to it. If the petitioner is held entitled to amount a fresh opportunity shall be given to it to furnish bonds etc. and subject to compliance by the petitioner, the amount shall be paid. Decision in this regard should be taken as early as possible and preferably within a period of four months of receipt of a copy of this order. 12. This writ petition is accordingly allowed in part to the extent and in the manner stated above. There will be no order as to cost. I agree.