Everest Engg. and Sales vs State of Punjab and Others

Rajive Bhalla, J.—The petitioner prays for issuance of a writ quashing letter dated May 17, 1995, issued by the Excise and Taxation Commissioner, Punjab. Counsel for the petitioner submits that the petitioner was granted an eligibility certificate, dated, March 5, 1990/March 19, 1990, enabling him to claim exemption from payment of sales tax under an industrial policy, notified by the State of Punjab on March 30, 1989. The State of Punjab thereafter amended the Punjab General Sales Tax Act, 1948 (hereinafter referred to as, "the Act") by incorporating section 30A to provide for exemption from payment of sales tax, etc. The Punjab General Sales Tax (Deferment & Exemption) Rules, 1991 (hereinafter referred to as, "the Rules"), were notified on March 20, 1991. Rule 5 of the Rules provides for exemption from payment of sales tax provided an assessee applies for exemption within thirty days of issuance of an eligibility certificate. Section 30A of the Act and Rules, however, did not provide for exemption from sales tax to industrial units that had obtained eligibility certificates before the amendment. The petitioner, however, filed an application, on February 19, 1992, praying for exemption from sales tax on the basis of eligibility certificate dated March 5, 1990/March 19, 1990. During pendency of the application, a proviso was added to section 30A of the Act to allow exemption to industries that came into production for the first time on or after the first day of April, 1989. The Explanation to the proviso refers to the industrial policy of 1989, thereby clearly indicating that industries that were granted eligibility certificates/exemptions under the 1989 policy would also be eligible to apply for exemption from payment of sales tax u/s 30A of the Act. The application for exemption filed by the petitioner has, however, been dismissed on an erroneous premise that it is barred by limitation. It is further submitted that as the right to file an application for exemption from sales tax was not available to the petitioner and only became available after introduction of the proviso to section 30A of the Act, vide amendment introduced on September 14, 1992, there is no question of the application, which was already pending adjudication on introduction of provision to section 30A of the Act or on enactment of the Rules, being barred by limitation.

Counsel for the respondents submits that as the petitioner was issued an eligibility certificate under the industrial policy, it was required to apply within thirty days. The proviso to section 30A of the Act was introduced on March 29, 1990 whereas the petitioner applied for grant of exemption certificate on February 19, 1992. It is further submitted that the Excise and Taxation Commissioner is empowered to condone delay of six months alone and as provisions of the Limitation Act do not apply, the petitioner''s application was rightly rejected.

We have heard counsel for the parties and perused the impugned letter. Admittedly, the petitioner was issued an eligibility certificate dated March 5, 1990/March 19, 1990 under an industrial policy that predates enactment of section 30A of the Act. The State of Punjab realised that the industrial policy granting exemption from sales tax is not based upon a statutory provision and, therefore, incorporated section 30A of the Act, by way of an amendment, dated March 29, 1990, to provide for exemption from payment of sales tax. Section 30A of the Act empowers the State Government to grant exemption from payment of tax for such period and subject to such conditions as may be prescribed. Section 30A of the Act as originally enacted, did not specifically refer to already existing industries, possessing eligibility certificates. The State of Punjab, therefore, introduced a proviso to section 30A of the Act with effect from November 14, 1992 along with an Explanation, postulating that in case of an industry that came into production for the first time on or after the first day of April, 1989, the Government may exempt such industry from payment of sales tax with effect from first day of April, 1989 subject to such conditions as may be prescribed.

Section 30A of the Act read along with the proviso and Explanation reads as follows:

30A. Power to exempt certain class of industries.--The State Government may, if satisfied that it is necessary or expedient so to do in the interest of industrial development of the State exempt such class of industries from the payment of tax, for such period and subject to such conditions, as may be prescribed:

Provided that in the case of industries which came into production for the first time on or after the first day of April, 1989, or wherein modernisation, expansion or diversification has been carried out in accordance with the Industrial Policy, 1989, the Government may exempt such industries from the payment of tax with effect from the first day of April, 1989, subject to such conditions as may be prescribed:

Provided further . . .

Explanation.--For the purpose of this section,--

(i) the Industrial Policy, 1989 shall mean the industrial policy of 1989, notified by the Government of Punjab in the Department of Industries, as amended from time to time.

(ii) ...

It would be appropriate at this stage to point out that the petitioner had obtained an eligibility certificate prior to this amendment and had filed an application for exemption from sales tax on February 19, 1992. An application for condonation of delay was filed subsequently. The Excise and Taxation Commissioner has dismissed the application as barred by limitation.

Section 30A of the Act as originally enacted, did not deal with units eligible for exemption under the industrial policy of 1989. The petitioner, therefore, had no right to pray for exemption from payment of sales tax u/s 30A, as originally enacted. The proviso and Explanation added to section 30A of the Act that came into force on November 14, 1992 clarified that exemptions would be provided to industries which have come into production for the first time on or after the first day of April, 1989. Thus, the right to apply for exemption, u/s 30A of the Act, was conferred upon the petitioner, for the first time on November 14, 1992, on which date the petitioner''s application was already pending adjudication.

The proviso and the Explanation having been added during pendency of the application filed by the petitioner, there was no question of the application being barred by limitation. The Excise and Taxation Commissioner was, therefore, not empowered to hold that the application was barred by limitation. In view of what has been held hereinabove, we allow the writ petition, set aside the impugned letter and remit the matter to the Assistant Excise and Taxation Commissioner, Amritsar, to consider the matter afresh, in accordance with law.