M/S. JAI BEVERAGES PVT. LTD. versus STATE OF J & KAND ORS.

Citation: [2006] SUPP. 2 S.C.R. 497 · Decided: 12-05-2006 · Supreme Court of India · Bench: B.P. SINGH · Disposal: Appeal(s) allowed

Judgment (excerpt)

M/S. JAi BEVERAGES PVT. LTD. 
V. 
STATE OF J & KAND ORS. 
MAY 12, 2006 
[B.P. SINGH, TARUN CHATTERJEE AND ALTAMAS KABIR, JJ.] 
Jammu & Kashmir General Sales Tax Act, 1962: Section 5. 
New Industrial Policy (1998~2003)-Payment of sales tax-Exemption 
from-Incentives- "Prestigious units "-The said Industrial Policy offered a 
package of incentives to industrial units and in particular to "prestigious 
units" having a capital investment of Rs. 25 crores or more-A soft drink 
manufacturing unit was set up by a company-A Notification was issued by 
the State Government exempting "prestigious units" from payment of 
General Sales Tax and Central Sales Tax for a period of 5 years from the 
date of production or until such amount of exemption reached the level of 
150% of capital investment in the project, whichever occurred earlier-On 
the same date another Notification was ·issued regarding exemption of 
General Sales Tax on sale of finished goods manufactured by medium and 
large scale industries-"Soft drinks" has been shown as item No. VJ/I in the 
Schedule to the Notification-The company, whose unit was registered as a 
medium scale industry, applied to the Government making a proposal for 
investment of Rs. 25 crores or more and the State Government agreed to 
grant permission to it-The State Government's nodal agency entered into 
a Memorandum of Understanding (MOU) with the company-A certificate 
was issued to the effect that the company was entitled to avail of incentives 
as a prestigious industry from the date of its commercial production 
However, by a communication it was conveyed that the competent authority 
had not agreed to grant exemption from payment of Stiles Tax/Toll Tax to 
the company-Writ petition filed by the company was dismissed by the High 
Court-Held: The negative list concept does not apply to "prestigious" 
industrial units-The industrial unit set up by the company fulfilled all the 
conditions laid down in the Government's New Industrial Policy and, 
therefore it is a "prestigious unit"-Hence, the company is entitled to 
all the incentives and subsidies applicable to "prestigious .units" under 
the New Industrial Policy of the State Government-High Court's judgment 
set aside. 
497 
A 
B 
c 
D 
E 
F 
G 
H 
498 
SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R. 
A 
The appellant-company claiming to be a "prestigious unit" having 
B 
c 
D 
a capital investment of over Rs. 25 crores claimed exemption from 
payment of General Sales Tax and Central Sales Tax under a Notification 
issued by the State Government pursuant to its Industrial Policy of 
1998-2003. Under the said Industrial Policy, a package of incentives was 
offered to industrial units and in particular to "prestigious units" having 
a capital investment of Rs. 25 crores or more. 
The appellant-company set up a soft drink manufacturing unit in 
the State. A Notification was issued by the State Government exempting 
"prestigious units"' from payment of General Sales Tax and Central 
Sales Tax for a period of 5 years from the date of production or until 
such amount of exemption reached the level of 150% of capital investment 
in the project, whichever occurred earlier. On the same date another 
Notification was issued regarding exemption of General Sales Tax on 
sale of finished goods manufactured by medium and large scale industries. 
"Soft drinks" has been shown as item No. VIII in the Schedule to the 
Notification. 
The appellant, whose unit was registered as a medium scale 
industry, applied to the Government making a proposal for investment 
of Rs. 25 crores or more and the State Government agreed to grant 
E permission to it. The State Government's nodal agency entered into a 
Memorandum of Understanding (MOU) with the appellant-company. A 
certificate was issued to the effect that the appellant was entitled to avail 
of incentives as a prestigious industry from the date of its commercial 
production. However, by a communication it was conveyed that the 
F 
competent authority had not agreed to grant exemption from payment 
of Sales Taxffoll Tax to the appellant. Being aggrieved the appellant 
filed a writ petition before the High Court, which was dismissed. Hence 
the appeal. 
G 
The following questions arose before the Court: 
(a) 
Whether the industrial unit set up by the appellant fulfilled 
all the necessary conditions for being declared a "prestigious 
unit"? 
H 
(b) Whether the negative list appended to the Notification applied 
J

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