M/S Chenab Textile Mills vs. State Th.Excise Deptt.And Ors.

Held

The Court held that the petitioner was not entitled to the benefit of exemption from additional toll tax on components, plant and machinery, building material, and other equipment procured from outside the State for its substantial expansion programme undertaken in 2006. The Court reasoned that SRO 22 of 2004, being statutory in nature, governed the exemption from additional toll tax to the exclusion of any other policy decision. Clause 3.11 of the Industrial Policy, 2004, which provided for toll tax exemption, was subject to SRO 22 of 2004. The Court found that SRO 22 of 2004, as originally promulgated, did not extend exemption to capital goods imported for substantial expansion by existing units. This was supported by the subsequent issuance of SRO 85 of 2008, which introduced such exemption for a specific period (01.04.2008 to 31.03.2009), indicating its absence prior to that date. The Court also noted that interdepartmental communications from the Department of Industries could not confer a right to exemption, as such benefits must be provided by law (Act of legislature or delegated legislation) as per Article 265 of the Constitution. Therefore, the impugned order of the Deputy Excise Commissioner was found to be in consonance with law.

Facts

The petitioner, M/s Chenab Textile Mills, an industrial unit established in 1966, undertook substantial expansion of its spinning mill in 2006, investing Rs. 108.00 Crores. The petitioner claimed eligibility for exemption from additional toll tax on plant and machinery imported for this expansion under the New Industrial Policy, 2004, and SRO 22 of 2004. Their claim was initially rejected by the Deputy Excise Commissioner, Toll Post Lakhanpur, vide order dated 03.04.2013. This rejection followed a previous writ petition (OWP No. 161/2007) where the High Court directed the respondents to examine the petitioner's request. The petitioner argued the impugned order was non-speaking, violated court orders, and ignored their status as a 'prestigious unit'. The respondents contended that SRO 22 of 2004, as originally issued, did not provide for such exemption, and it was only introduced later in 2008.

Key Issues

1. Whether the petitioner is entitled to exemption from additional toll tax on components, plant and machinery, building material, and other equipment procured from outside the State for its substantial expansion programme in 2006, in terms of the New Industrial Policy, 2004, and SRO 22 of 2004? Petitioner's arguments: The petitioner contended that the impugned order was in violation of the interim order passed by the Court on 15th May, 2010, and contrary to SRO 22 of 2004. They argued the order was non-speaking and demonstrated a lack of application of mind, as it failed to consider the New Industrial Policy, 2004, and the petitioner's status as a 'prestigious unit' which entitled them to toll exemption. They relied on Clause 3.14 of the Industrial Policy, 2004, which specifically addresses prestigious units. Respondents' arguments: The respondents argued that SRO 22 of 2004, issued under Section 5 of the Jammu and Kashmir Levy of Tolls Act, Samvat 1995, did not provide for the claimed exemption for existing industrial units undertaking expansion prior to the amendment in 2008. They pointed out that SRO 85 of 2008, dated 24.03.2008, introduced exemption for capital goods for substantial capacity expansion for a limited period (01.04.2008 to 31.03.2009), indicating that such benefits were not available before this amendment. They asserted that the Deputy Excise Commissioner correctly applied the law.