Subsequently, it is stated, the limit of investment was raised to Rupees thirty lakhs, as a result of which the said unit also fell under the definition of small scale unit .
They approached their government, which is seeking to protect their interest by inter alia exempting them totally from the levy of sales tax on the sale of their products.
With a view to protect the local edible oil industry, the Government of Jammu Kashmir issued S.R.O.93 of 1991 on March 7, 1991 under Section 5 of the Jammu Kashmir Sales Tax Act, 1962 directing that the goods manufactured by a dealer operating as a small scale industrial unit in the State and registered with Director of Industries and Commerce, Handicrafts or Handloom Development, subject to the companyditions specified below, shall be exempted from payment of tax to the extent and for the period specified in the Schedule forming Annexure A. All the units manufacturing edible oil in the State are small scale industrial units as defined by the Jammu Kashmir Government.
On the Jammu Kashmir High Court dismissing the writ petition, they have approached this Court.
It appears that initially the limit was an investment of Rupees Ten lakhs according to which one unit in the State did number qualify as a small scale industrial unit.
By a majority of 43, S.K. Das, Kapur and Sarkaria, JJ.
In December, 1993/May, 1994, the rate of tax was raised from four percent to eight percent, as stated above.
The Letters Patent Appeals preferred by the appellants have also been dismissed by the Division Bench relying mainly upon the decision of this Court in Video Electronics Private Limited .
It is stated that S.R.O.213 of 1993 issued on December 3, 1993 shifting edible oils from Schedule D to Schedule C was rescinded within about a week thereafter but was re issued as S.R.O.124 of 1994 on May 27, 1994 .
With the raising of the rate of sales tax to eight percent, the outside manufacturers were obliged to pay at eight percent while the local manufacturers were exempt fully.
The Jammu Kashmir Sales Tax Act companytains four Schedules, Each of the Schedules carries a particular rate of sales tax.
joined by Subba Rao, J., this Court upheld the companystitutionality of the Act on the ground that the taxes levied by it are companypensatory in nature and, therefore, outside the purview of Article 301.
On December 20, 1993, edible oils were shifted from Schedule D to Schedule C, which prescribes the rate of tax at eight percent.
Because of certain inherent problems, the companyt of production of edible oil in Jammu Kashmir is said to be higher than the companyt of production of similar edible oil in the adjoining States with the result that the manufacturers of edible oil in the adjoining States are able to sell their products in Jammu Kashmir at a price lower than the price at which the local manufacturers are able to sell.
Edible oils were previously included in Schedule D which prescribes the rate of tax at four percent.
It is then that some of the outside manufacturers including the appellants herein, approached the Jammu Kashmir High Court by way of writ petitions which were dismissed by a learned Single Judge.
That has given rise to the writ petition from which the present appeal arises.
This is said to have created a situation where the local industries faced the prospect of closure at any rate, they were number able to companypete with the out State manufacturers.
P. Jeevan Reddy, J. Leave granted.
The State of Jammu Kashmir seeks to encourage and promote the industrialisation of the State like every other State in the companyntry.
Edible oil industry is one such.
