Shimla: Fined Rs 100 Cr for having violated environment laws in setting up a cement plant, Jaiprakash Associates Ltd (JAL) claim to transportation tax exemption from the cement unit to outside the state was overturned yesterday by the High Court here, denying the company an accumulated tax relief of about Rs 50 crores.
Allowing a state government appeal spearheaded by excise and taxation department, a division bench of the High Court headed by Chief Justice Kurian Joseph and Justice Dharm Chand Chaudhary set aside an earlier judgment of a single judge by the same court ruling, “goods carried by road is not a road tax on goods. It is a compensatory tax in the shape of a fee.”
Earlier the judges drew a distinction between tax and compensatory tax by holding the position that tax is for revenue whereas compensatory tax was only the reimbursement or recompense to the service provider in the shape of a fee for a particular service.
The bench ruled that ‘liability is on the person in charge of the vehicle carrying the goods or the person in charge of the goods at the time of transport. There is no provision under the taxing Act for exemption. Therefore, the reliance placed on Rule 19 of the Incentive Rules for exemption for 10 years, even assuming it is available, is of no avail.”
The case before the courts consideration was whether the industrial unit engaged in manufacture of clinker and cement was entitled to benefit of exemption from payment of tax under HP Taxation (on Certain Goods Carried by Road) Act 1999.
Earlier the single judge of the court by inferring Rule 19 of Rules Regarding Grants of incentives, concession & facilities to industrial units in HP, 2004 had ruled that ‘mode of collection cannot determine the nature of the tax and the liability.’
Ruling in favour of JAL, the single judge had observed, “for all intents and purpose the liability to pay tax is of petitioner (JAL) who is owner / incharge of the goods.
The judge had concluded, “admittedly, the goods which are being manufactured by new industrial unit situation in a tax free zone of backward panchayat Mangal are the goods which cannot be subject to state taxes for a period of ten years from the date of its commercial production and hence no tax under Act 199 can be realized from the petitioner.
The states claim for tax under Act 1999 arose because clinker manufactured at the new unit was being transported outside the state for manufacture of cement was not accepted
Overturning the earlier order, the double bench observed that the tax is not on the goods manufactured but a compensatory tax on goods transported by roads and concurred with the states contention that the liability to pay tax on the carriage of good is only on the person in charge of the vehicle in which the goods are carried.
The judges concluded that JAL was not entitled for exemption for 10 years from payment of the compensatory tax for carriage of clinker / cement from one place to another by using roads in Himachal Pradesh.
When contacted, Jagdish Sharma, commissioner, excise and taxation said that since the cement plant commenced production the overall tax liability that was contested was of about Rs 60 crore, which included about Rs 10 crores as interest amount.
Separately, Jaiprakash Associates Ltd today placed a review petition before the division bench of Justice Deepak Gupta and Justice Sanjay Karol contenting that the Rs 100 Cr costs imposed on it on May 4, 2012 for violations in setting up the cement plant was “too harsh, punitive and unbearable and it shall amount to virtually closing down of the industry, which is already suffering from recession.”
A month after the judges had decreed dismantling of the small thermal plant set up as a captive plant to the cement unit, the review petition declares that that the company did not install any plant or machinery in the partially constructed civil structure built by it to house the captive thermal plant.
Without serving any notices, the court adjourned the hearing to June 15.