M/S KRISHI RASAYAN EXPORTS PVT LTD. v. BIHAR STATE ELECTRICITY BOARD

: Mr. Binita Singh, Advocate : Mr. Vinay Kirti Singh, Advocate ----------- 8/

08.12.2009 Heard learned counsel for the petitioner and the State as well as Electricity Board. The petitioner has prayed for quashing the order dated

10.05.2005 passed by the Financial Controller (Rev.), respondent no.2, whereby he has been pleased to reject the representation of the petitioner filed in pursuance of the order passed by this Court in CWJC No. 10630 of 2003 dated 26.09.2003 for grant of exemption from payment of MMG charges for a period of five years in terms of Clause 9.6 of the 1995 Industrial Policy. The petitioner has his unit at Bela Industrial Estate, M.I.C., P.O. Muzaffarpur. It is a small scale industry having low-tension connection. The Unit was started in the year, 1973 after all necessary - 2 - formalities. The Government of Bihar with a view to promote industrial growth in the State of Bihar, came out with an Industrial Policy in the year 1995 commonly known as Industrial Policy of 1995. The aforesaid industrial policy was also adopted by the Board. Clause

9.6 of the Industrial Policy, 1995 deals with power incentive. It provides exemption from payment of minimum guarantee charge for new industrial units having connected load upto 500 KVA for a period of five years, if it has come into production between 01.04.1993 to

31.08.2000 or has undertaken defined expansion / diversification during the aforesaid period. The Board in paragraph 6 has given definition of Expansion / Modernization / Diversification. It is stated that Expansion / Modernization / Diversification of an existing industrial unit would mean additional fixed capital investment in plant and machinery of 50 per cent or more of the undepreciated value of fixed capital investment in the existing unit leading to incremental production capacity which would not be less than 50 per cent of the initial installed capacity. The definition dealing with expansion / diversification Clause further states that in order to qualify for the sales tax incentives, a unit undertaking expansion / modernization/ diversification should send prior intimation to the General Manager, District Industries Centres or the Managing Director of the Industrial Area Development Authorities and Deputy Commissioner, Commercial Taxes as the case may be. The petitioner asserts that before taking expansion / - 3 - modernization / diversification it informed authorities concerned stated above. Still they were denied the benefit of MMG, as such they moved this Court in writ jurisdiction bearing C.W.J.C. No. 10630 of

2003. This Court disposed of the application with an observation that if petitioner makes a representation, the same will be disposed of in accordance with law. Thereafter petitioner filed a detailed representation before the Financial Controller (Revenue). The Financial Controller (Revenue) noticed the provision regarding expansion / modernization / diversification would also hold good for grant of incentives in electricity matter, as there is no separate provision in this regard in the Industrial Policy for it. However, he disallowed the exemption only on the ground that the petitioner has not submitted any paper to show that they had taken prior permission of the competent authorities before taking expansion / modernization / diversification. The respondent no.2 in his order noted that only a copy of the sanction order, issued under the signature in the Executive Director, Industrial Area Development Authority, Bela, Muzaffarpur was submitted, which too was of the year 2004. According to petitioner, even as per the definition clause appearing in paragraph 6 of the counter affidavit of the Board, no prior permission was required for undertaking expansion / diversification programme for the purposes of grant of electric exemption. He submits that aforesaid permission was necessary only for grant of Sales Tax reliefs. He submits that as the authorities - 4 - insisted for one such certificate, the petitioner even obtained certificate of expansion from the Executive Director, the Executive head of the Industrial Authority under Muzaffarpur region. The petitioner submits that a unit cannot be deprived of a given benefit under policy / scheme, as certain formalities were undertaken later. The petitioner in support of his submission has relied upon a decision rendered in the case of Mangalore Chemicals and Fertilisers Limited Vs. Deputy Commissioner of Commercial Taxes and others reported in 1992 Supp (1) SCC 21. He submits that unjust enrichment policy relied by Board laid down in the case of Mafatlal Industrial Limited & others Vs. Union of India and others reported in (1997) 5 SCC 536 would also not be applicable in the instant case. He submits that in Mafatlal Industrial Ltd. (supra), the Hon’ble Apex Court was considering insertion in Clause 11 in the Central Excise Act relating to refund of Excise amount. The Hon’ble Apex Court held that fiscal burden should not be shifted back to the consumer. Further more, in the instant case, the Board itself has adopted Industrial Policy which provides for grant of certain benefits to the new units or the units undertaking expansion / diversification for overall economic industrial growth. He submits that even for getting aforesaid benefit, the petitioner has to pay a price in terms of heavy investment. Mr. Vinay Kirti Singh, learned counsel for the Board by referring to Clause 16.3 states that in case of expansion and diversification identical treatment as a new unit would be in respect to - 5 - purchase of raw materials and Sales Tax. He states that principle laid down in Mafat Lal case regarding enrichment policy would be applicable in that case. He submits that in any case the Deputy Secretary, Department of Industries, Government of Bihar vide letter no. 200 dated 07.02.2005 clarified on behalf of Government that under Industrial Act 1995 only the General Managing Manager, D.I.C. and Director of the Bihar Industrial Area Development Authority and not Executive Director of regional authority are competent authority to grant certificate for expansion. It would appear from impugned order representation of the petitioner has been cancelled only on the ground that the unit had not obtained certificate from the Managing Director, Industrial Area Development Authority or the General Manager of District Industries Centre. However, the Financial Controller (Revenue) found the petitioner’s limit was eligible on all other counts. It nowhere appears from the impugned order that the claim of the petitioner regarding diversification / modernization in terms of Clause

9.6 of the Act is not correct and genuine. It would even appear from letter dated 07.02.2005 of Deputy Secretary, Department of Industries, Government of Bihar that benefit of MMG would also be applicable in case of expansion / modernization / diversification of exceeding unit as provided. In case of Mangalore Chemicals and Fertilisers Limited (supra) referred above, the Hon’ble Apex Court was also considering the issue of non-fulfillment of procedural requirement. In the aforesaid - 6 - case, an eligibility certificate from the department of Industries and Commerce was necessary for the concession. The petitioner therein had not obtained the aforesaid certificate. One of the issues which fell for consideration before the Hon’ble Apex Court was, whether petitioner was entitled to benefit of concession as appearing in notification dated 30.06.1969. I would do no better than to quote paragraph 9 of the aforesaid judgment of the Hon’ble Apex Court: “9. There is, as set out earlier, no dispute that the appellant was entitled to the benefit of the Notification dated June 30, 1969. There is also no dispute that the refunds were eligible to be adjusted against sales tax payable for respective years. The only controversy is whether the appellant, not having actually secured the “prior permission” would be entitled to adjustment having regard to the words of the Notification of August 11, 1975, that “until permission of renewal is granted by the Deputy Commissioner of Commercial Taxes, the new industry should not be allowed to adjust the refunds”. The contention virtually means this: “No doubt you were eligible and entitled to make the adjustments. There was also no impediment in law to grant you such permission. But see language of clause 5. Since we did not give you the permission you cannot be permitted to adjust.” Is this the effect of the law?” In view of the judgment of the Hon’ble Apex Court and also in view of finding that the Revenue Officer did not find the petitioner otherwise ineligible for grant of benefit of exemption of minimum charge, except for not having obtained prior permission from specified authorities, though petitioner had obtained subsequent certificate from - 7 - Executive Director of Regional Authority, this Court sets aside the impugned order dated 10.05.2005 and remit the matter to the Secretary, Bihar State Electricity Board, Patna for consideration of this matter in accordance with law. This application is allowed to the extent mentioned above. Uday/ (Samarendra Pratap Singh, J.)