Page No.# 1/20 GAHC010053792017 undefined THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) Case No. : WP(C)/7453/2017 M/S. CACHAR ISPAT PVT. LTD. and ANR. HAVING REGD. OFFICE AT 12. M.S. ROAD, FANCY BAZAR, GUWAHATI- 781001, ASSAM. 2: MR. KANHAIYALAL SURANA R/O. FANCY BAZAR KAMRUP GUWAHATI ASSAM AND ONE OF THE DIRECTORS OF M/S CACHAR ISPAT PVT. LTD THE PETITIONER NO.1 VERSUS THE STATE OF ASSAM and 4 ORS. REP. BY THE SECRETARY GOVT. OF ASSAM, DEPTT. OF INDUSTRIES AND COMMERCE GOVT. OF ASSAM, DISPUR, ASSAM. 2:THE COMMISSIONER AND SECY. TO THE GOVT. OF ASSAM DEPTT. OF FINANCE DISPUR. 3:ASSAM INDUSTRIAL DEVELOPMENT CORPORATION HAVING ITS REGD. OFFICE AT R.G. BARUAH ROAD GUWAHATI-781024 ASSAM. 4:THE MANAGING DIRECTOR ASSAM INDUSTRIAL DEVELOPMENT CORPORATION R.G. BARUAH ROAD GUWAHATI-781024 Page No.# 2/20 ASSAM. 5:THE DIRECTOR OF INDUSTRIES GOVT. OF ASSAM INDUSTRIAL ESTATE BAMUNIMAIDAM GUWAHATI-781021 ASSAM Advocate for the Petitioner : MR S KHOUND, MS.M HAZARIKA,MR. A MOLLAH Advocate for the Respondent : SC, INDUSTRIES and COMMERCE, MR D DEKA (R-3,4),MR. J K GOSWAMI (r-3,4),MR. M ALI,MR. D SARMAH,MR. M PHUKAN,MR. S CHAMARIA BEFORE HONOURABLE MR. JUSTICE SOUMITRA SAIKIA Judgment and Order Date of Hearing and Judgment : 25.02.2025 Heard Ms. M. Hazarika, learned Senior Counsel assisted by Ms. S. Newar, learned counsel for the petitioner. Also heard Mr. A. Kalita, learned Standing Counsel, Industries and Commerce Department for the respondents no. 1 & 5, Mr. P. Nayak, learned Standing Counsel, Finance Department for the respondent no.2 and Mr. D. Deka, learned Standing Counsel, Assam Industrial Development Corporation for the respondents no. 2 & 3. 2] The petitioners before this Court is a private limited company having its Registered Office in the District of Cachar and is represented by the Director of the present proceedings. Page No.# 3/20 3] Pursuant to the announcement of the Industrial Policy of Assam, 2003 by the Government of Assam by notification No.CI.310/2001/Pt-II/61 dated 26.09.2003 the petitioner being desirous of establishing an Industry of manufacturing M/s Cachar Ispat Pvt. Ltd at Village-Pangram in the district of Cachar, submitted its application for being considered as an eligible Industry to avail the benefits announced by the Industrial Policy of Assam, 2003. Under the Industrial Policy of Assam, 2003 various incentives were announced by the Government of Assam. Insofar as the writ petitioners are concerned, their claim in the present proceedings is in respect of the subsidy for a sales tax exemption. In order to avail the sales benefits, three categories are specified under the Clause 3.13 of the Industrial Policy of Assam, 2003. The petitioner is a registered enterprise under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 as a small enterprise. 4] In terms of the procedure prescribed under the Industrial Policy of Assam, 2003, necessary applications were furnished by the petitioner no.2 and upon due scrutiny the Eligibility Certificate as required under the Industrial Policy of Assam, 2003 was granted to the petitioner on 23.07.2007. At serial number 4 (four) of the said Eligibility Certificate, the 'Fixed Capital Investment' under different heads are shown. Under Plant and Machinery the investment found to have been made by the petitioner was Rs.96,10,991.00 (Rupees Ninety Page No.# 4/20 Six Lakhs Ten Thousand Nine Hundred Ninety One). The Eligibility Certificate was issued by the Assam Industrial Development Corporation Ltd. (AIDC). However, insofar as the eligibility for availing the exemptions are concerned, The Sales Tax Exemption for the period mentioned was shown to be a maximum of 100% of the fixed capital investment as reflected in the Eligibility Certificate. 5] According to learned Senior Counsel for the petitioners, since the petitioner no.1 is registered as a small enterprise and as it is a new unit in terms of Clause 3.13 of the Industrial Policy of Assam, 2003, it was entitled for a sales tax exemption to a maximum of 150% of fixed capital investment up to 7 (seven) years. The petitioners, being aggrieved that, notwithstanding its eligibility to be treated as a small enterprise and given the benefit of sales tax exemption up to 150%, the entitlement was curtailed as reflected in the Eligibility Certificate to a maximum of 100% thereby treating the unit to be a medium enterprise. Being aggrieved, the petitioners filed a representation for rectification in the Eligibility Certificate. Since their grievances were not redressed by the respondents, the petitioners approached this Court by filing WP(C) no. 5457 of 2013 and a Coordinate Bench of this Court after considering the materials placed before the Court as well as the provisions of the Industrial Policy of Assam, 2003 by order dated 29.11.2016 disposed of the writ petition with a direction to the Assam Industrial Development Corporation and the Page No.# 5/20 Director of the Industries to take appropriate action in the matter of granting appropriate Eligibility Certificate to the petitioners in terms of Industrial Policy of Assam, 2003. This order was passed in view of the fact that the Court noticed that the only question for a decision before the Court is whether the investment in the petitioners’ plant and machinery crossed Rs.1 Crore or not. 6] Pursuant to this order passed by the Court, the Industries Department issued the order dated 17.08.2017, whereby the petitioners’ claim to avail 100% Sales Tax Exemption under Industrial Policy of Assam, 2003 was rejected. Being aggrieved, the present writ petition has been filed. 7] Learned Senior Counsel for the petitioners submits that a bare perusal of the Eligibility Certificate reflects that though the petitioners claimed that it had invested more than Rs.1 Crore in plant and machinery, the AIDC authorities upon verification limited the amount of investments under plant and machinery to the extent of Rs.96,10,991.00 (Rupees Ninety Six Lakhs Ten Thousand Nine Hundred Ninety One). Consequently, it is clear from the Eligibility Certificate itself that the investment made by the petitioners in plant and machinery is below Rs.1 Crore. 8] As per Clause 2.3.IX of the Industrial Police of Assam, 2003, “the Small Scale Industries” are defined to mean an industrial unit having investment in Page No.# 6/20 plant and machinery up to Rs.1 Crore or as prescribed or modified by the Government of India from time to time. Learned Senior Counsel for the petitioners, therefore, submits that in terms of the Industrial Policy of 2003 itself the petitioner no.1 is to be treated as a small scale enterprise in view of the investments reflected in the Eligibility Certificate which is below Rs.1 Crore. However, the claim of the petitioners was rejected on the ground that the petitioner no.2 had claimed that the investment was more than Rs.1 Crore. Learned Senior Counsel for the petitioners further submits that although the petitioners had claimed investments in plants and machinery to be more than Rs. 1 Crore, the evaluation made by the AIDC, as reflected in the Eligibility Certificate, shows the investment of the petitioners have been valued at Rs. 96,10,991.00 (Rupees Ninety Six Lakhs Ten Thousand Nine Hundred Ninety One), and which valuation was accepted by the petitioners without any objection. 9] Be that as it may, even if the claims of the petitioners are considered by the Authorities that it had invested more than Rs. 1 Crore, then also the petitioners’ claims cannot be rejected for availing the benefit of sales tax exemption up to 150% as provided in the Clause 3.13 of the Industrial Policy of 2003, inasmuch as, there is no dispute that the petitioner no.1 is a registered unit under the Micro, Small and Medium Enterprises Development (MSMED) Act, Page No.# 7/20 2006 which came into force from 02.10.2006 where Small Enterprises are defined as enterprises where the investment in plant and machinery is more than Rs.25 Lakhs but does not exceed Rs.5 crores. There is no dispute that the petitioner no.1 is a registered MSMED Enterprise and the eligibility certificate was issued on 23.07.2007 which is after the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, came into force. The claim of the respondents that the investments of the petitioner no.2 was more than Rs.1 Crore and therefore, the petitioner no.1 cannot be included in a small enterprise or a small industry, is in conflict with the mandate of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, and is therefore incorrect. Learned Senior Counsel for the petitioners therefore submits that the Industrial Policy, 2003 being a beneficial scheme to develop the industries in the Northeastern region and the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, which is a central statute has been brought into force to facilitate the promotion and development and enhancement of competitiveness of micro, small, and medium enterprises and for matters connected therewith or incidental thereto. Learned Senior Counsel for the petitioners, therefore, submits that the rejection of the petitioner's claim for availing the exemption of the benefit of same to the extent of 150% under the Industrial Policy of 2003 is contrary to the provisions specified under the Industrial Policy as well as the Page No.# 8/20 same is also in conflict with the provisions of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, and should, therefore, be interfered with, set aside and quashed. In support of her contentions, learned Senior Counsel for the petitioners refers to the judgments rendered in :- a. Commissioner of Customs (Preventive) Mumbai vs. M. Ambalal and Company reported in (2011) 2 SCC 74 b. Brite Rubber Processor Pvt. Ltd vs. Union of India reported in 2019 SCC OnLine Tri 210 c. Daga Metal Industries vs. Commercial Tax Officer, Alipore Charge & Ors. reported in 1987 SCC OnLine Cal 290 10] Mr. D. Deka, learned Standing Counsel, AIDC submits that the Department has filed an affidavit-in-opposition which encloses minutes of the meeting of the State Level Committee for AIDC for Grant of Eligibility Certificate under the Industrial & Investment Police of Assam, 2008 held on 21.03.2017. Referring to the said minutes enclosed to the affidavit learned Standing Counsel, AIDC submits that the State Level Committee had arrived at the finding that the gross value of plant & machinery was considered as per the claim of the unit in its application dated 19.05.2006, was shown to be Rs. 1,07,71,780.68 (Rupees One Crore Seven Lakhs Seventy One Thousand Seven Hundred Eight and Sixty Eight Paisa). The Committee had therefore resolved after the detailed Page No.# 9/20 deliberations to direct the AIDC to issue a speaking order to the petitioners declaring it a Medium Scale Unit. He further submits that the order dated 17.08.2017 passed by the AIDC impugned in the present petition was issued in pursuance to the directions by the State Level Committee held in its meeting on 21.03.2017. On a pointed query by the Court, Mr. Deka submits that the AIDC does not dispute the Eligibility Certificate dated 23.07.2007 issued to the petitioners. 11] Mr. A. Kalita, learned Standing Counsel, Industries and Commerce Department submits that the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 came into force with effect from 02.10.2006 and the criteria for “small enterprises” having been specified in the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 showing the investments to be up to Rs.5 Crores, perhaps this aspect of the matter was not considered by the State Level Committee while arriving at the conclusion as reflected in the impugned order dated 17.07.2017. 12] Learned counsel for the parties have been heard. Pleadings on record including the impugned order dated 17.08.2017 have been carefully perused. 13] Upon perusal of the Industrial Policy of Assam, 2003, it is seen that the said Policy of 2003 defines the Small Scale Industry at Clause 2.3.IX where Page No.# 10/20 investment to be made in plant and machinery is specified to a limit of Rs.1 Crore or as prescribed or modified by the Government of India from time to time. The Eligibility Certificates to be issued to various industrial units as prescribed under Clause 2.5. Under Clause 2.5 (1) (ii), it is the Director of Industries & Commerce who on approval of the State Level Committee can issue the eligibility certificate where the investment in plant and machinery is above Rs.10 Lakhs and up to Rs.100 Lakhs (Rs.1 Crore). Clause 2.6 prescribes the implementing agency in respect of SSI Sector will be the Director of Industries & Commerce, District Industries & Commerce Center and for Large/Medium/Heavy and FDI Sector, it will be AIDC Ltd. Clause 3 of the Policy provides for the various fiscal incentives under the Industrial Policy. Clause 3.13 provides for Sales Tax Exemption which reads as under: “(As notified Vide No.CI.310/2001/Pt.III/90 dtd/29/10/2003) All new units and existing units going in for expansion/diversification/modernisation/will be granted sales tax exemption for sale of finished products and purchases of raw materials as per following scale. Page No.# 11/20 14] Under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, classification of enterprises are specified in Section 7 of the Act, where at Section 7 (a)(ii) that a small enterprise is defined as an enterprise where the investment in a plant and machinery is more than Rs.25 Lakhs but does not exceed Rs.5 Crores. The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, was incorporated with effect from 02.10.2006. 15] Having noticed the provisions of the Industrial Policy of Assam, 2003 read with the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, it is clear that amongst the many incentives offered by the Industrial Policy, sales tax exemption is one of the fiscal benefits offered. In the facts of the present case, there is no dispute raised that the petitioner no.1 is not a new unit. There is also no dispute with regard to the Eligibility Certificate issued by Category SSI/Tiny/SSSBEs Medium and Large New Unit 7 years subject to maximum 150% of fixed capital investment 7 Years subject to maximum of 100% of fixed capital investment. Units undergoing expansion/diversification/ modernisation 7 years subject to maximum of 100% of additional fixed capital investment. 7 years subject to maximum of 90% of additional fixed capital investment. Sick/Relief/Undertaking Units 3 years subject to maximum of 100% of additional investment made for Rehabilitation 3 years subject to maximum of 100% of additional investment made for Rehabilitation. Page No.# 12/20 the Director of Industries & Commerce Department, Government of Assam. The petitioner had clearly submitted the various asset investments under various heads. Under the head plants and machinery, the investment made by the petitioner is shown to be Rs. 96,10,991.00 (Rupees Ninety Six Lakhs Ten Thousand Nine Hundred Ninety One). According to the petitioners, the investments shown to have been made in the plant & machinery in its application for grant of Eligibility Certificate were beyond Rs.1 Crore. However, the Eligibility Certificate issued by the Director of Industries & Commerce Department pursuant to such enquiry and verification made by the Authorities where the valuation is shown to Rs. 96,10,991.00 (Rupees Ninety Six Lakhs Ten Thousand Nine Hundred Ninety One). The same is not disputed by the Industries & Commerce Department nor was it sought to be withdrawn at any point in time. In the impugned order dated 17.08.2017 the prescription under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is also referred to which shows that under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the investment in plant and machinery in respect of small enterprises is more than Rs. 25 Lakhs but should not exceed Rs. 5 Crores. The order also reflects that the unit had shown to have invested an amount of Rs.2,12,39,520.23 (Rupees Two Crore Twelve Lakh Thirty-Nine Thousand Five Hundred Twenty And Twenty-Three Paise) and out of Page No.# 13/20 which an amount of Rs. 1,07,71,780.68 (Rupees One Crore Seven Lakh Seventy- One Thousand Seven Hundred Eighty And Sixty-Eight Paise) is shown to be in the head of plant and machinery. The petitioners’ unit started commercial production on 03.02.2006. The impugned order dated 17.08.2017 reflects that since the unit started for commercial production on 03.02.2006 which is prior to the incorporation of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the unit was considered as a Medium Scale Unit. The impugned order dated 17.08.2017 also refers to the earlier direction of this Court to consider the case of the petitioners. In the penultimate paragraph it is reflected that in compliance of the State level Committee Decision held on 21.03.2017, the application for grant of Eligibility Certificate to avail 150% VAT exemption under Industrial Policy of Assam, 2003 was rejected. 16] Since this order stated to have been passed in compliance of the direction of the State Level Committee, a reference to the said decision as reflected in the minutes of the 14th Meeting of the State Level Committee for AIDC held on 21.03.2017 is necessary which is enclosed at Annexure-R3, Page- 66 of the affidavit filed by the AIDC. A perusal of the minutes of the meeting dated 21.03.2017 reflects that after scrutiny and evaluation of the investments made in plant and machinery, although the eligible value was found to be Page No.# 14/20 Rs.96,10,991.00 (Rupees Ninety-six lakh ten thousand nine hundred ninety- one), the gross value of plant and machinery was considered as per the claim of the petitioners made in its application which is Rs. 1,07,71,780.68 (Rupees One Crore Seven Lakh Seventy-One Thousand Seven Hundred Eighty And Sixty-Eight Paise) and accordingly, the Committee directed the AIDC to pass a speaking order to the petitioners declaring the petitioner no.1 to be a Medium Scale Industry. In terms of the said minutes of the meeting held by the AIDC the impugned order dated 17.08.2017 was passed. There is no dispute as is seen from the pleadings as well as from the arguments made before the Court that the Eligibility Certificates which was granted by the Authorities reflects the investments made in plant and machinery to the tune of Rs.96,10,991.00 (Rupees Ninety-Six Lakh Ten Thousand Nine Hundred Ninety-One). This Eligibility Certificate was not sought to be modified or withdrawn by the concerned Authority. If that be so, then as per the Industrial Policy itself the petitioner no.1 being a new unit is entitled for a sales tax exemption up to 7 (seven) years to a maximum of 150% of the fixed capital investment. The reasons for the authorities to disregard the evaluation made by the AIDC showing the investment in plant and machinery as reflected in the Eligibility Certificate are not clear. The minutes of the meeting dated 21.03.2017 does not reveal any material to show that there was any error either of procedure or law Page No.# 15/20 at the time of valuation by the authorities while granting the Eligibility Certificate, to arrive at the amount of Rs.96,10,991.00 (Rupees Ninety-Six Lakh Ten Thousand Nine Hundred Ninety-One) as shown to be the amount invested in the plant and machinery. No explanation to that effect is found in the minutes of the meeting dated 21.03.2017 or in the subsequent impugned order dated 17.08.2017. If the investments made by the petitioners in the plant and machinery are to be considered over the amount arrived at by the authorities after due verification made by the concerned authorities in respect of the investments made and the figures reflected in the Eligibility Certificate dated 23.07.2007 then such exercise undertaken to verify the claim of the petitioner will carry no meaning. When the authority is duly empowered to carry out the provisions of a scheme announced by the Government of Assam such authority in regard to undertake and/or carry out such provisions as per the procedure prescribed and not any other manner. 17] Be that as it may, in the impugned order 17.07.2017, the reference to the criteria prescribed under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, reflects that small enterprises are categorized by the investments made in plant and machinery of more than Rs.25 Lakhs but up to Rs.5 Crores. Even if this criteria is applied, the claim made by the petitioners to be a small enterprise cannot be rejected as the investment made Page No.# 16/20 is shown to be more than Rs.1 Crore but less than Rs.5 Crores. This aspect of the matter was not taken into account by the State Level Committee while deliberating and arriving at the decision as reflected in minutes enclosed to the affidavit filed by the respondents no. 3 & 4. Under the Industrial Policy of 2003, announced by the Government of Assam, several incentives were offered to encourage various industries to set up their operations and avail themselves of the benefits. As is reflected from the Industrial Policy, 2003, there are several incentives offered in respect of power supply, subsidy, feasibility, study cost, working capital loan, marketing assistant, including exemptions from payment or sales tax. The scheme of the Industrial Policy of Assam, 2003 reflects that once an Industry applies for exemption of tax, the same is required to be examined by the various components including the State Level Committee. Once the petitioner is granted an Eligibility Certificate then the competent Authority under the Industrial Policy is duty bound in law to honour the promise made by the Government and offer all such benefits as well as exemptions including fiscal benefits as are found to be entitled to the Industry concerned. The State Level Committee is comprised of representatives of various State Government Departments. Under the Industrial Policy representatives of the various Departments of the Government are to comprise the State Level Committee. Where there are several Departments involved in deliberating and arriving at a Page No.# 17/20 decision, in the pursuance to a promise laid out by the State, these components or representatives of various Departments cannot be seen to be arriving in different conclusions. The Government must speak in one voice. The Policy is not floated by the various components or by the several Departments involved. The Industrial Policy of Assam is a policy of the State which hand out promises to offer incentives to the industrial units to encourage them to set up their industries, in the State to usher industrial development. Therefore, all components and all Departments within the Government of the State must work in tandem to grant benefits to any Industry as considered eligible without there being any conflict in the individual conclusions arrived at. In this context, a reference to the judgment of Apex Court rendered in Vadilal Chemicals Ltd. vs. State of Andhra Pradesh and Others reported in (2005) 6 SCC 292 may be referred. In the said matter it was held that where the Government had announced the Industrial Policy inviting the Industrialists to set up their industries and held out a promise to give them all benefits all notified under the Industrial Policy, then the respective departments of the Government must work in tandem to ensure that the promise held out by the Government in the Industrial policy is properly implemented in terms of the promise held out. The Departments cannot have contrary views in respect of the functioning of an Industry as the same will be contrary to the scheme of the Industrial Policy Page No.# 18/20 Itself. So far as the judgments of the Apex Court referred to by the Senior Counsel is concerned, it is a good law that beneficial legislation should be given extended latitude, so that the benefits envisioned by the Government can be availed by such units or parties, subject to the relevant conditions and the limitations set forth in the Policy. In the present case, no such latitude or benefit is even called for in respect of the petitioner. The authorities had rejected the claim of the petitioner in respect of the investments made in plant and machinery and had arrived at their own conclusion which is reflected in the Eligibility Certificate. That figure in the Eligibility Certificate itself makes the petitioners eligible for the benefits claimed for under the Industrial Policy of Assam, 2003. Even assuming that the decision of the State Level Committee of AIDC taken in its impugned order dated 17.08.2017 that the investments shown to have been made by the petitioners was more than Rs.1 Crore is to be accepted as the criteria over the evaluation conducted by the AIDC as reflected in the Eligibility Certificate, then also it will not debar the petitioners from claiming the said benefits, inasmuch as, the Policy itself classifies Small Scale Industry to be industries having investments in plant and machinery up to a limit of Rs.1 Crore or as prescribed or modified by Government of India from time to time. This policy admittedly was announced prior to the incorporation of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Page No.# 19/20 However, the Eligibility Certificate was issued on 23.07.2007 after the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 was incorporated. Therefore, the criteria prescribed under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, will be applicable in this case. 18] As discussed above, under the criteria prescribed under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, where the investment in plant and machinery is more than Rs. 25 lakhs but up to Rs. 5 Crore, as specified by the Government of India through a central statute the industry/unit shall be considered as a small enterprise. Even if it is considered that there could be any conflict between the provisions of the Industrial Policy of Assam, 2003 and the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, , it is needless to say that the central statute must prevail over the provisions of the State Industrial Policy. 19] Under such circumstances, this Court is of the view that the claims made by the petitioners stand justified. The writ petition therefore stands allowed. The impugned order dated 17.08.2017 passed by the AIDC stands set aside. The matter is remanded back to the State Level Committee of AIDC to decide the matter in terms of the directions of this Court and thereafter, grant Page No.# 20/20 all benefits in terms of the Eligibility Certificate granted as per the entitlement prescribed under the Industrial Policy Act, 2003. While redeciding this matter, the decision of the State Level Committee for AIDC in its meeting held on 21.03.2017 will have no bearing. The AIDC shall complete the entire exercise within a period of 3 (three) months from the date of receipt of a certified copy of this order. 20] The writ petition accordingly stands disposed of in terms of the above. No order as to cost. JUDGE Comparing Assistant