M/S Man Industries (INDIA) LTD.Thr.Devendra vs. The Assistant Commissioner Of Commercial Tax And 03 Ors.

Held

The Court held that the SPEC Division was rightly treated as a separate and distinct unit by the respondents, as it was engaged in the manufacturing of different products compared to the Saw Pipe Division, aligning with paragraph 6(iv) of Notification No. 43 dated 06.06.1995. The Court distinguished the present case from precedents like Deccan Cements and DSM Group of Industries, where units were either adjacent with inter-unit transfers or involved expansion/diversification, unlike the petitioner's situation with distinct manufacturing activities. Consequently, the petitioner was not entitled to the "Non Resident Dealer" status for the SPEC Division for the period of 11 years. As a result, the respondents were justified in assessing the tax payable by the petitioner for the assessment years 2005-06, 2006-07, 2007-08, 2008-09, and 2009-10. The Court found no grounds for interference, dismissing the writ petitions.

Facts

The petitioner, M/s Man Industries (India) Ltd., filed multiple writ petitions challenging orders that refused to recognize its 'SPEC Division' as a "Non Resident Dealer" for tax exemption under Notification No. A-3(1)-95-ST-V (43) dated 06.06.1995. The petitioner had previously established a 'Saw Pipe Division' which commenced production on 17.02.1996 and was granted eligibility for tax exemption. Subsequently, the SPEC Division was established on 22.04.1999 with a significant NRI investment, which the petitioner contended also met the criteria for exemption. The Industries Commissioner, vide an order dated 17.02.2006, refused to certify the SPEC Division as a Non Resident Dealer. This led to assessment of tax for assessment years 2005-06 to 2009-10, which were also challenged.

Key Issues

1. Whether the SPEC Division of the petitioner, established on 22.04.1999, qualifies as a "New Industrial Unit" for the purpose of claiming tax exemption under Notification No. A-3(1)-95-ST-V (43) dated 06.06.1995, considering it manufactures products different from the existing Saw Pipe Division? (Question of law) Petitioner's contention: The SPEC Division is a distinct unit manufacturing different products (coated and uncoated spirally, Saw welded tubes and pipes, and coating of pipes) compared to the Saw Pipe Division (large diameter welded steel pipes over 400 mm dia). Therefore, it should be treated as a separate unit eligible for the "Non Resident Dealer" status and exemption. They relied on the definition of "New Industrial Unit" in paragraph 6 of the notification, particularly sub-clause (iv) which states that the dealer manufactures different products in the new unit. Revenue's contention: The petitioner's earlier investment in the Saw Pipe Division had already exhausted the eligibility for "Non Resident Dealer" status based on the 26% equity investment by private promoters. The Directorate of Industries correctly applied the 'lock-in period' provision under paragraph 6, implying that the same NRI investment could not be utilized for a second unit. They also referred to the definition of "New Industrial Unit" and the conditions therein.