SC dismisses Jharkhand's appeal in sales tax case

New Delhi, Apr 2 (UNI) The Supreme Court has dismissed an appeal by Jharkhand government challenging a High Court decision that Tata Cummins Ltd was not liable to pay it Rs 54.5 crore as sales tax.

The bench, comprising Mr Justice Ashok Bhan and Mr Justice S H Kapadia, in their judgement dated March 24, directed said Tata Cummins Ltd was making a contribution to the industrial growth of the state and was therefore entitled to tax exemptions announced by the Bihar government in its industrial policy announced in 1995.

The respondent company, a sister concern of the Tata Group, had invested about Rs 302 crore, had paid Rs 600 crore as tax and was employing 800 workers.

The company, which is an assesse under the Bihar Finance Act, 1981, had taken about 37.19 acres of land from Telco, its partner in the joint venture, which had 99-year-long lease from Tisco which in turn had a valid lease from the government.

Tata Cummins, being the owner of the factory premises, claimed exemption benefits under clauses 16.1 and 16.2 of the policy, which the Deputy Commissioner rejected on December 2, 1998.

The Sales Tax department of the state had raised a demand of Rs 54.5 crore against it for the period commencing from April 1, 2004.

The High Court, holding that the company was entitled to the benefits of the industrial policy, directed the state to adjust the amount of Rs 54.5 crore towards its Sales Tax liabilities commencing from April 1, 2004.

The apex court held the notifications meant for implementation of the industrial policy can not override the incentive policy, and directed that the Company need not refund the amount to the state.

UNI AKS-SC VJ VC1137