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2024 (1) TMI 1228 - DELHI HIGH COURTCharacterization of receipts - nature of the benefit received - sales tax subsidy/incentive under the Package Scheme of Incentives Scheme, 1993 - revenue or capital receipt - submission of revenue was that merely the fact that the sales tax subsidy under the 1993 Scheme was received based on the eligibility certificate issued after the commencement of the production would not render the receipt as one on capital account HELD THAT:- The common thread running through various incentives provided under the scheme (to which we have referred above) was the setting up a new unit or large-scale investment in fixed capital. The fact that the eligibility certificate was to be issued by the agency implementing the scheme after the commencement of commercial production by the eligible unit appears to have been incorporated in the 1993 Scheme to ensure that the object and the purpose of the 1993 Scheme, which was to industrialise underdeveloped and developing areas was fulfilled. Thus, in our opinion, the argument advanced on behalf of the appellant/revenue that a perusal 1993 Scheme would show that the incentives were tied in with production is untenable. The complete focus of the 1993 scheme was to achieve the object, as noticed above, engrafted in its preamble. Assessee was entitled to avail of sales tax subsidy/incentive under two eligibility certificates dated 13.12.1994 and 15.10.1996 [as amended] for 14 years and 13 years & 11 months, respectively, subject to a maximum entitlement of 110% of capital investment made in setting up of the industrial units. Investment in capital assets such as land, buildings, plant and machinery was only a measure adopted for calculating the sales tax subsidy/incentive [which in this case was availed by the respondent/assessee by retaining the sales tax it had levied on its goods]. A perusal of the eligibility certificate dated 13.12.1994 would show that it was issued for setting up a “new unit”, while the eligibility certificate dated 15.10.1996 was given to a "pioneer unit" which had undertaken expansion. Therefore, the argument that the sales tax subsidy/incentive was granted to assist in carrying on business operations and thereby help make the industries more profitable, both on facts and in law is untenable. The sole purpose of the 1993 Scheme was to set up new units and/or expand existing units in underdeveloped and developing areas The question of law, as framed is answered in favour of the respondent/assessee and against the appellant/revenue. The sales tax subsidy/incentive received by the respondent/assessee under the 1993 Scheme was a capital receipt.
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