WB VAT: Writ petition dismissed holding that State action of not granting remission is not arbitrary

Electrosteel Castings Limited Vs Deputy Commissioner of Commercial Taxes & ors. (Calcutta High Court)

Calcutta High Court dismissed the writ petition holding that State action for not granting of remission of tax cannot be said to be arbitrary. Accordingly, held that writ petition is devoid of merit.

Facts- The petitioner no. 1 claims to be one of the leading producers of Ductile Iron (DI) Pipes and has set up its unit at Khardah for the manufacture of DI Pipes with an installed capacity of 60,000 metric ton.

The petitioner undertook expansion of the unit from time to time and became eligible for remission of sales tax under various Incentive Schemes of the State. It is the further case of the writ petitioners that the actual investment made up to 31.03.2005 including the expansion programs undertaken by the unit stood at Rs. 250.88 cores i.e., Rs. 251 crores. The petitioners claim to have made a further investment of Rs. 23 crores during the period from 01.04.2005 to 31.12.2005 taking the total investment till 31.12.2005 at Rs. 274 crores. The petitioners claim that the Gross Value of Fixed Capital Assets (GVFCA) was determined at Rs. 194 crores. Petitioners prayed for enhancement of GVFCA by Rs. 80 crores to include the investment made by the petitioner till 31.12.2005.

The Standing committee of the industries of the State Cabinet in its meeting held on 18.03.2006 enhanced the Fixed Capital Investment (FCI) by Rs. 57 crores instead of 80 crores as prayed for by the petitioner. The Special Secretary to the Government of West Bengal by a letter dated 20.06.2006 informed the petitioner that the investment of Rs. 23 crores made after 31.03.2005 will not be counted.

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