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2003 DIGILAW 925 (JHR)

Tata Cummins Ltd. v. State Of Jharkhand

2003-07-31

P.K.BALASUBRAMANYAN, R.K.MERATHIA

body2003
JUDGMENT P.K. Balasubramanyan, C.J 1. The question arising for a decision in this writ petition is whether the Tata Cummins Ltd., petitioner No. 1 herein, is entitled to the benefit of the notifications issued by the Government of Bihar on 22.12.1995 as SO Nos. 478 and 479. While petitioner No. 1 claims that it is entitled to the benefit of those notifications, the State of Jharkhand contends that it is not entitled to that benefit. BRIEF HISTORY: 2. A substantial extent of land was held by the Tata Iron & Steel Company Limited (herein after referred to as TISCO) under the State of Bihar on lease. As of now, the lease has expired and negotiations are on between TISCO and the State of Jharkhand. A portion of that extent was sub-leased by TISCO to the Tata Engineering & Locomotive Company Limited (TELCO) for a period of 99 years. Subject to various disputes that had cropped up consequent upon the expiry of the lease in favour of TISCO, the position is that the said extent of land is held by TELCO on the basis of that sub-lease and in terms of Section 7-E of the Bihar Land Reforms Act. 3. On 8.7.1993, a joint enterprise agreement was entered into by TELCO and the Cummins Engine Company INC (USA). They agreed to form a jointly owned venture in India for the purposes described in that agreement. The share capital to be invested by TELCO and the Cummins Company was to be in the ratio of 50:50 and the parties were to hold 50 per cent of the shares each in the joint venture. The profits were to be distributed as dividends on shares of stocks held by the respective parties. The Board of Directors of the joint Company to be formed was to consist of 8 members initially, each party having a right to appoint an equal number of persons as its representatives in the Board. The enterprise was not to be liable for any of the obligations of TELCO or of Cummins Engine Company INC. TELCO was to make available to the joint enterprise, office premises, the site (if a location owned by TELCO is selected), buildings, workers residences and all facilities necessary to carry on the business prior to the time when the enterprise acquires other suitable office premises, site etc. TELCO was to make available to the joint enterprise, office premises, the site (if a location owned by TELCO is selected), buildings, workers residences and all facilities necessary to carry on the business prior to the time when the enterprise acquires other suitable office premises, site etc. TELCO was to make available the properties described above to the joint enterprise in accordance with the terms of the leases to be executed by the dates specified in those documents. 4. This joint venture agreement led to the incorporation of the Tata Cummins Limited under the Indian Companies Act, 1956. On 25.3.1995, an agreement was entered into between Tata Cummins Limited and Tata Engineering & Locomotive Company Limited (TELCO). As per that agreement, it was acknowledged by TELCO that as one of the promoters of Tata Cummins Ltd., it has allotted, subject to the terms and conditions of the lease to be executed by mutual consent, an extent of 37.19 acres of land in TELCO Township, Jamshedpur and Tata Cummins was constructing a factory and other buildings therein. By that agreement, TELCO recognized the title and the ownership of Tata Cummins Limited over the factory and the buildings that were being constructed at the site. The agreement also provided that the agreement was to be deemed to be effective from 1.4.1994. It is the case of TELCO and the Tata Cummins Limited that a formal lease deed had not been executed or could not be executed, in view of the cropping of disputes between the State and TISCO regarding the renewal of the original lease in favour of TISCO. It is the case of TELCO and the Tata Cummins Limited that buildings have been constructed by Tata Cummins Ltd. In the extent of 37.19 acres made available to it by TELCO and that an industry has been started therein at an investment of above rupees 300 crores. BACK GROUND OF THE DISPUTE : 5. In the year 1993, the Government of Bihar had announced as Industrial Policy with a view to attract investments and setting up of industries in the State. According to Tata Cummins Limited and TELCO, it was in the background of that Industrial Policy that a joint venture was envisaged and established in the name of Tata Cummins Limited. In the year 1995, that Industrial Policy was modified to some extent. According to Tata Cummins Limited and TELCO, it was in the background of that Industrial Policy that a joint venture was envisaged and established in the name of Tata Cummins Limited. In the year 1995, that Industrial Policy was modified to some extent. That Industrial Policy, 1995, was to be enforced with effect from 1.9.1995. In its introduction, the policy set out the aims, and objectives of the policy as to create an environment for optimum utilization of the State resources, to provide quality infrastructure for accelerated industrialization, to attract investments to generate economic activities, reviving potentially viable and closed industries to boost exports of goods in production of which the State enjoys comparative advantages and to simplify procedures to expedite and impart transparency in decision making. As part of the incentives, the policy envisaged transparency indecision making. As part of the incentives, the policy envisaged allotment of land/shed in growth centres to entrepreneurs for setting up industrial units on lease for 99 years with option for renewal. It also envisaged (which is more relevant in our present context) certain Sales Tax incentives Clause 16 stated that Sales Tax benefit play an important role in attracting and directing investment and in sustaining industrial development in a State. In that background, new units were allowed the facility of either set off or exemption at their choice, of Sales tax on purchase of raw materials and the period was to be limited as envisaged in Clause 16(1) of the policy. By Clause 16.2 the benefit of exemption/set off on Sales tax on sale of finished goods was allowed with option to the new units either to choose deferment of payment of sales tax or exemption of Sales tax for the period referred to therein. This policy regarding the Sales Tax incentive was sought to be carried forward by two notifications, S.O. Nos. 478 and 479 both dated 22.12.1995. For claiming the benefit of exemption according to the notification No. 478, it was necessary as per Clause 6 that the industrial unit should be installed in such a building which is in the exclusive ownership of the proprietor of the enterprise, or in the ownership of any of its partners or the holding company. For claiming the benefit of exemption according to the notification No. 478, it was necessary as per Clause 6 that the industrial unit should be installed in such a building which is in the exclusive ownership of the proprietor of the enterprise, or in the ownership of any of its partners or the holding company. If the factory of the unit was installed on the land or building taken on lease, the exemption was to be available only when such land/building, or both, had been acquired by way of a registered lease for a period of minimum fifteen years or more. The lease was to be in favour of the proprietor of the unit, or any partner of the firm or in favour of the holding company. Clause 8 of SO No. 479 was also more or less, on the same terms, except that the ownership of the building could be of any partner or promoter or the holding company (promoter was an addition). According to Tata Cummins Ltd. it had taken a lease of the land from TELCO, its partner in the joint venture, though a formal lease had not been executed. But TELCO had a registered lease for a term of 99 years from TISCO which itself had a valid lease under the Government at the time the lease was granted by it in favour of TELCO. Since the land was held by TELCO. which held 50% interest in Tata Cummins Ltd. under a registered lease deed, the unit was eligible for the benefit. Its more important claim was that in any event, Tata Cummins Limited was the exclusive owner of the building and the factory set up by it and under the first part of the notification, the exclusive ownership of the building being with Tata Cummins Limited, it was entitled to the benefit of exemption regarding Sales Tax envisaged by Clauses 16.1 and 16.2 of the Policy. EVENTS LEADING UP TO THIS WRIT PETITION : 6. Accordingly, Tata Cummins Limited applied to the Deputy Commissioner of Commercial Taxes claiming the benefit of Sales tax exemption under SO Nos. 478 and 479 dated 12.12.1995. EVENTS LEADING UP TO THIS WRIT PETITION : 6. Accordingly, Tata Cummins Limited applied to the Deputy Commissioner of Commercial Taxes claiming the benefit of Sales tax exemption under SO Nos. 478 and 479 dated 12.12.1995. On 2.12.1998, the Deputy Commissioner of Commercial Taxes rejected the claim of Tata Cummins on the ground that no title to the lease could vest with Tata Cummins Limited until and unless the original lease in favour of TISCO was renewed and, therefore, it was clear that there was no valid lease in favour of Tata Cummins Limited and consequently, Tata Cummins Limited could not claim the benefit under the notifications No. 478 and 479 dated 22.12.1995. Tata Cummins Limited challenged the decision of the Deputy Commissioner in CWJC No. 2689 of 2000. The Division Bench noticed that the claim of Tata Cummins Limited was rejected on the ground-that it had no right, title or interest over the land where the industry was st up inasmuch as it was not transferred to it by way of a valid lease. After considering the argument of Tata Cummins Limited and after adverting to Clause 7.1 and 7.2 of the Industrial Policy, 1995, the Division Bench held that Tata Cummins Limited not having a valid lease obtained either from the State Government or from the sub-lessee, TELCO, it could not claim the benefit of the exemption under the relevant notifications. Thus, the order of the Deputy Commissioner of Commercial Taxes was upheld. Tata Cummins Limited challenged the decision of the Division Bench in the Supreme Court of India by way of petitions for Special Leave to Appeal (Civil) Nos. 20375 and 20376 of 2000. 7. It appears that meanwhile, the Joint Commissioner of Commercial Taxes (Administration) had passed an order on 11.7.2000 to the effect that since the order passed by the Deputy Commissioner of Commercial Taxes was without the approval of the Joint Commissioner which is a condition precedent under SO Nos. 478 and 479, he was passing an order to call for the records of the case to examine the question of exemption afresh after issuing notices to the Deputy Commissioner and the Tata Cummins Limited. Thus, when the Supreme Court took up the petitions for Special Leave to Appeal for a final decision, this proceeding initiated by the Joint Commissioner of Commercial Taxes (Administration) was brought to its notice. Thus, when the Supreme Court took up the petitions for Special Leave to Appeal for a final decision, this proceeding initiated by the Joint Commissioner of Commercial Taxes (Administration) was brought to its notice. By order dated 26.3.2003 in Civil Appeal Nos. 2394-2395 of 2001, the Supreme Court noticed that Tata Cummins Limited had two contentions. It may be better to extract what has been noticed by the Supreme Court in its order : "It is the contention of the appellants that in the Scheme the first condition in Clause 6 of S.O. No.478 is to be read separately from the second condition in the second sentence of Clause 6. The first condition of Clause 6 of SO No. 478 is an independent and distinct condition from the rest of the said Clause 6 and if it is fulfilled the proprietor/ entrepreneur is entitled to an exemption without being required to fulfil any other condition in Clause 6, that is to say, if the building of an industrial unit is in exclusive ownership of the proprietor/entrepreneur, such proprietor/entrepreneur shall be entitled to avail of the exemption. Similar is the interpretation with regard to Clause 8 of SO 479 dated 22.12.1995. It is the contention of the appellants that they fulfil first condition and are, therefore, entitled to the exemption. It is also the contention of the appellants that they fulfil the second condition also if it is required to be fulfilled viz., the factory building is constructed on land which is held by its joint venture partner (viz TELCO) under a registered lease of more than 15 years. This contention is not accepted by the learned Additional Solicitor General. He submits that the above contentions based on interpretation of Clause (6) of the Scheme were not raised before the High Court, the High Court has, therefore, rightly not dealt with the same. It appears that when the denial of exemption was challenged before the High Court, the aforesatd contentions in terms were not raised." 8. The Supreme Court in the context of the order of the Joint Commissioner dated 11.7.2000, directed that the Joint Commissioner of Commercial Taxes (Administration) should decide the matter after giving an opportunity to Tata Cummins Limited to make a representation and file documents and after a hearing. The Supreme Court in the context of the order of the Joint Commissioner dated 11.7.2000, directed that the Joint Commissioner of Commercial Taxes (Administration) should decide the matter after giving an opportunity to Tata Cummins Limited to make a representation and file documents and after a hearing. The Joint Commissioner was directed to decide the matter without being influenced by the prior decision of the High Court that was challenged in appeal. The Joint Commissioner of Commercial Taxes, pursuant to the above direction, passed an order dated 24.5.2003 afresh. In that order, after noticing the arguments, the Joint Commissione recorded that the following facts emerged : (i) The land on which the factory premises has been constructed, by Tata Cummins Limited is the sub-leased land of TELCO taken on lease from TISCO; (ii) TELCO has allotted part of its leased land to Tata Cummins Limited; (iii) As per the sub-lease agreement between T1SCO and TELCO, TELCO had no right to allot part of the land to any other company; (iv) Tata Cummins Limited had requested TISCO to execute a lease agreement but the lease agreement had not been executed. 9. He then recorded the conclusion that the Tata Cummins Limited had neither legal title nor ownership over the land on which the industry was established. Nor was it in a position to produce a registered lease deed for a term of fifteen years or more for getting the benefit of exemption under the notifications SO Nos. 478 and 479. The conditions laid down in those notifications had not been complied with. 10. We may notice that though he referred to the arguments of Tata Cummins Limited that It was the exclusive owner of the building and the factory put up for the industry and the argument of counsel for the Department that that portion of the notification regarding the ownership of the building applied only to buildings already in existence on the date of the notification, and not to buildings subsequently constructed, did not give any specific answer to the argument or claim based on the ownership of the building, one of the arguments specifically noticed by the Supreme Court in its order of remand. The rejection of the claim of the Tata Cummins Limited by the Joint Commissioner of Commercial Taxes has led to the filing of the present writ petition. THE PRELIMINARY OBJECTION: 11. The rejection of the claim of the Tata Cummins Limited by the Joint Commissioner of Commercial Taxes has led to the filing of the present writ petition. THE PRELIMINARY OBJECTION: 11. The learned Advocate General appearing on behalf of the respondents submitted that the petitioners have an alternative remedy by way of revision under Section 46 of the Bihar Finance Act and in view of the existence of such an alternative remedy, it was not necessary or proper for this Court to exercise its jurisdiction under Article 226 of the Constitution of India. He also submitted that questions of fact were involved in deciding whether Tata Cummins Limited was entitled to the benefit of the aforesaid two notifications and in such a situation, it would be inappropriate for this Court to exercise its jurisdiction. On examining Section 46 of the Act with particular reference to Sub-section (4) thereof relied on by the learned Advocate General, we find that it is really a suo motu power on the Commissioner on his own motion to call for and examine the records in a proceeding in which an order has been passed by any other authority under the Act for the purpose of satisfying himself as to the legality or propriety of that order. No doubt, it has been held that even though the power of revision purports to be a suo motu. power, in an appropriate case, an as-sessee can make a motion invoking that power and the Commissioner would be entitled to exercise his revisional jurisdiction at the request of such an assessee. It is not as if Tata Cummins Limited has a right of revision by way of a statutory remedy under the Act, though, as we have noticed above. It may be able to request the Commissioner to exercise the revisional jurisdiction. In the absence of a right of revision conferred on Tata Cummins Limited, we are of the view that we cannot decline jurisdiction solely on the ground that the writ petitioners have an efficacious alternative remedy. The decision in Titaghur Paper Mills Co. Ltd. v. State of Orissa. AIR 1983 SC 603 , relied on by the learned Advocate General is distinguishable. The decision in Titaghur Paper Mills Co. Ltd. v. State of Orissa. AIR 1983 SC 603 , relied on by the learned Advocate General is distinguishable. That was a case where the writ petitioner had an efficacious alternate remedy by way of an appeal and a Second Appeal under the Sales Tax Act and it was in that context that the Supreme Court held that the jurisdiction under Article 226 of the Constitution of India was not liable to be invoked. The decision in Bombay Ammonia Pvt. Ltd. v. State of Tamil Nadu, 37 STC 517, is only authority for the proposition that even if the power is couched in a language indicating the conferment of power to be exercised suo motu, the same could be exercised by that Authority even at the instance of an assessee. The period of exemption provided by the notification as claimed by Tata Cummins Limited commenced from 1.1.1996 and it would come to an end on 31.12.2003, about six months away. It appears to us that it will be necessary to bring a finality to this claim of Tata Cummins Limited one way or the other at the earliest. Investigation into the claim has already completed the first round by going up to the Supreme Court and it is really in the second round that the Joint Commissioner has taken a fresh decision in the light of the direction of the Supreme Court. Now he has rendered a decision, though of course, as highlighted by the learned Senior Counsel for Tata Cummins Limited, he has not dealt with one of the aspects especially referred to in the order of the Supreme Court and highlighted before him as can be seen from his summary of the arguments raised before him. Now to ask Tata Cummins Limited to invoke the power of the Commissioner under Section 46(4) of the Bihar Finance Act appears to us to be inexpedient and even unnecessary. No doubt, as pointed by the learned Advocate General, questions of facts may be involved in deciding the claim of Tata Cummins Limited, but those questions of fact are not such complicated questions as to justify a detailed investigation of various items of evidence or of individual branchlets constituting a bundle of facts. No doubt, as pointed by the learned Advocate General, questions of facts may be involved in deciding the claim of Tata Cummins Limited, but those questions of fact are not such complicated questions as to justify a detailed investigation of various items of evidence or of individual branchlets constituting a bundle of facts. It appears to us to be really a case of interpretation of the relevant provisions to see whether on the facts not seriously disputed, Tata Cummins Limited would be entitled to the benefit claimed. On the whole, it appears to us that it will be just and proper to render a decision, one way or the other, on the claim for exemption raised by Tata Cummins Limited at this belated stage. 12. Moreover, as is well known, the existence of an alternative remedy is not an absolute bar to the Court exercising jurisdiction under Article 226 of the Constitution of India. It would depend on the facts and the circumstances of a particular case. Considering the nature of the claim involved and the questions which are to be decided, we are satisfied that this is a fit case where we should not decline jurisdiction under Article 226 of the Constitution of India merely on the ground that the petitioners can invoke the sao motu. power of revision of the Commissioner. We, therefore, over-r