Shimla: News items have been appearing in a section of the press quoting different quarters with regard to the tax liabilities imposed upon M/s Jai Prakash Associates by the Hon’ble High Court in its Judgement delivered on May 31, 2012, upholding the claim of the State Government to charge tax under HP Taxation (On Certain Goods Carried by Road) Act, 1999.
It is for the information of the people of the State and to arrest all claims and counter claims being filed by different parties in this regard once for all. It is clarified that M/s Jai Prakash Associates had set up its cement manufacturing unit in the backward panchayat area, village Bagga, Gram Panchayat Mangal, Tehsil Arki, District Solan, HP, which falls in category ‘C’ area, and is tax free zone under the Policy of the State. Company commenced commercial production of clinker from February 15, 2010. The State of Himachal Pradesh under its Industrial Policy of 2004, has been offering various incentives/exemptions/concessions to the industrial units set up in the Tax Free Zone of the State. These benefits are not available to the industrial units which have been declared as negative units.
State has enacted the HP Taxation (On Certain Goods Carried by Road) Act, 1999 (CGCR) and liability to pay the tax under the Act is with the person-in-charge of the mechanical vehicle on which the goods are carried, or the person-in-charge of goods, as the case may be. This tax is not payable by the manufacturing industrial unit, except in case, where the unit itself is engaged in transportation of its own goods. The Tax under the CGCR Act is compensatory in nature and the industrial units, under the said Act, are not entitled for any exemption. Accordingly, the Department of Excise and Taxation charged tax to the tune of Rs. 55 crore, approximately, on the goods carried by transporters of M/s JP Associates for transportation of clinker from its Bagga Unit to its grinding unit at Bagheri, Nalagarh and outside the State of Himachal Pradesh. The Company, however, kept protesting the levy of this tax and also sought clarifications from the Department. The Department responded by clarifying that the tax is not levied on the manufacturing and, the tax payable by the transporters. Therefore, the claim of the Company is wrong.
JP Associates filed a Civil Writ Petition against Excise and Taxation Department in the Hon’ble High Court of Himachal Pradesh and the Hon’ble Court in its Single Bench delivered its verdict in favour of the Company. State Government again filed Letters Patent Appeal (LPA) challenging the aforesaid Judgement before the Division Bench of the Hon’ble High Court of Himachal Pradesh with the contentions inter-alia that the tax under CGCR Act is compensatory in nature and being one in the shape of a fee, the industrial unit is not entitled for exemption and that the taxable event under the aforesaid Act is not on production but on the transportation of goods by road and the liability is on the person-in-charge of the vehicle on which the goods are carried or the person-in-charge of goods. It was also contended that the goods carried, being clinker, are covered by the negative list and further that there is no provision for exemption under the Act.
The Division Bench of the Hon’ble High Court, vide Judgement dated May 31, 2012, allowed the LPA and set-aside the Judgement passed by the Hon’ble Single Judge with the observation that the writ petitioner (M/s JP Associates) is not entitled for exemption from payment of the compensatory tax for carriage of clinker/cement from one place to another by using the roads in Himachal Pradesh. Hence the contention of the State Government that M/s JP Associates are liable to pay the transportation tax to the State was upheld.
This has been stated by official spokesman of Excise and Taxation Department here today.