HC verdict on sales tax boon for existing units

GUWAHATI, March 28: The long pending issue before the Guahati High Court as to whether the existing industrial units which undertook expansion, modernisation and diversification work as per the 1991 industrial policy of the Government of Assam will be entitled to full sales tax exemption for seven years was finally decided in favour of the industries. Chief Justice NC Jain, as a third judge delivered his judgment yesterday holding that the existing industries were to be treated at par with the new industries under the 1991 industrial policy. Earlier there was a difference of opinion among the two learned Judges consisting the appellate Bench and, as such the case was referred to Justice Jain as the third judge. Ashok Saraf, senior advocate arguing on behalf of eight out of the nine industrial units submitted that the 1991 industrial policy granted full sales tax exemption to both new units as well as existing units undergoing expansion/modernisation/diversification. He submitted that there was no mention of any increase in production in the 1991 industrial policy. It was further argued that the only requirement was that there must be more than 25 per cent of the capital investment, 25 per cent increase in the installed capacity and 10 per cent increase in the labour employment. Saraf assailed the 1995 scheme on the ground of having made departure from the clear promises made in the 1991 industrial policy. The court accepted the arguments made on behalf of the industrial units and held that the 1991 industrial policy kept both new units and existing units at par in so far as sales tax benefits are concerned. The court observed that it is too much for the State now to contend that sales tax exemption would be available to an industrial unit to that extent only to which expansion was made by an industrial unit after having held out a profit in the year 1991 that both new units and existing units will be entitled to full sales tax exemption. The judge held that after making a clear cut provision in the 1991 policy, the State cannot take a somersault and change the scheme in the year 1995 to the detriment of the subjects. The Chief Justice NC Jain agreed with the views expressed by M Sharma, Judge, and allowed all the writ appeals filed by the industrial units. Ashok Saraf, senior advocate assisted by KK Gupta, D Baruah, R Saikia, Sunil Agarwal, advocates, BK Sarma, senior advocate and PK Tewari appeared for the appellants industries and PG Baruah, AG, BC Das and R Goswami advocates appeared for the State.