9911796707
TMI Blog1995 (11) TMI 342X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated March 25, 1989, has been rejected by the State Level Committee, exercising its power to grant eligibility certificate for the purposes of tax exemption under section 4-A of the U.P. Sales Tax Act, 1948. By order dated March 25, 1989, the Divisional Level Committee declined to grant eligibility certificate in favour of the petitioner on the ground that machinery worth Rs. 4,59,675.20 used in the unit was purchased from M/s. Modi Steels, Modinagar, vide Bill No. 234 dated April 27, 1984, which the latter had purchased for its own use. The Divisional Level Committee was of the view that the aforesaid machinery was not new and hence the petitioner was not entitled to get the facility of tax exemption. The review application has been rejected vide order dated June 19, 1991, on ground aforestated besides the ground that one hydraulic machine used in the unit was also old. The submission made by the counsel appearing for the petitioner is that the machineries purchased by the petitioner vide bill No. 234 dated April 27, 1984, from M/s. Modi Steels, Modinagar, were altogether brand new machines. In that M/s. Modi Steels, Modinagar, had no doubt purchased the machinery for their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned, it was admittedly a new ground which did not find mention in the earlier order dated March 25, 1989. The petitioner is entitled to have its say with regard to the second ground which pertains to an hydraulic press used in the petitioner's unit being old one. Inasmuch as it is settled by a number of decisions of this Court that if review application in a matter arising out of section 4-A of the Act is rejected on new ground without affording opportunity of hearing to the owner of unit, the order of rejection would be vitiated by error of law. Accordingly the petition succeeds and is allowed. The impugned order dated June 19, 1991, is quashed with the direction that in case the petitioner submits its explanation with regard to the grounds taken in the impugned order, the same shall be considered and decided afresh in the light of observations made in this judgment within three months after affording an opportunity of hearing to the petitioner. The interim order dated July 20, 1991, shall remain operative till the disposal of the matter by the State Level Committee in accordance with this order, provided a certified copy of this order is produced before the Convenor, State Leve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orth Rs. 4,59,575 was acquired from M/s. Modi Steels under bill No. 244 dated April 27, 1984. Admittedly, the said machinery was acquired by M/s. Modi Steels for setting up a unit of its own but it is stated that it abandoned that idea later and sold the machinery to the respondent. The question is whether the respondent-unit cannot claim to be a "new unit" within the meaning of Explanation (i) to sub-section (2) of section 4-A on account of the fact that part of the machinery acquired by it was acquired for use in any other factory or workshop in India. Section 4-A provides for exemption from sales tax of goods manufactured by a new unit during the first five-year period, subject to the terms and conditions specified therein. Explanation (i), with which alone we are concerned herein, reads as follows: "Explanation.-For the purposes of this section,- (i) 'new unit' means a factory or workshop whether set up by a dealer already having an industrial unit manufacturing the same goods at any other place in the State or an industrial unit, manufacturing any other goods on, or adjacent to, the site of an existing factory or workshop; but does not include- (a) any factory or workshop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit does not qualify as a "new unit". According to the authorities, it is enough that the machinery or part of the machinery installed in the new factory or workshop is "acquired for use in any other factory or workshop in India". It is immaterial, they say, whether such machinery was actually used or not in any other factory or workshop in India. Clause (a) does not contemplate an enquiry of the nature ordered by the High Court, they say. On the other hand, the contention of the respondent-unit, which has been upheld by the High Court is that unless the machinery acquired for use in any other factory or workshop in India is actually used in that other factory or workshop in India, the disqualification provided by clause (a) in the Explanation is not attracted. Section 4-A is an elaborate one. It contains several features and provides for several situations, with all of which we are not concerned herein. It is enough for the present purpose to note that a new unit starting production on or after first day of October, 1982, is entitled to exemption from sales tax provided the unit satisfies the requirements and conditions prescribed by the section. Inter alia, it must furnish to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exemption provided by section 4-A. It is submitted by Sri S.K. Dhaon, learned counsel for the respondent, that the aforesaid interpretation would not be a reasonable one and would not be consistent with the object underlying section 4-A. It is submitted that section 4-A is devised to encourage new industries. Disqualifying a unit from the benefit of the section on the mere ground that part of the machinery installed in the unit was acquired by another person for setting up a unit, which in fact he never did, would not be consistent with the object underlying the section, says Sri Dhaon. We are unable to see any unreasonableness in the interpretation placed by us. All the words used in the clause have to be given their due meaning. None of them can be treated as a surplusage. It is not also possible to ignore the words expressly employed in the said clause or to explain them away on notions of one's own reasonableness. Indeed, there appears to be good reason behind the use of both the said expressions in the clause. The Legislature, it is obvious, wanted to avoid an enquiry into the factual issue of actual user where the machinery (which expression means machinery, accessories o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxation have a tendency to increase the burden on the other unexempted class of tax-payers and should be construed against the subject in case of ambiguity. It is an equally well-known principle that a person who claims an exemption has to establish his case. Indeed, in the very case of Parle Exports (P) Ltd. [1989] 75 STC 105 (SC); (1989) 1 SCC 345, relied upon by Shri Narasimhamurthy, it was observed: (STC page 116; SCC page 357, para 17). 'While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed. It must, however, be borne in mind that absurd results of construction should be avoided.' The choice between a strict and a liberal construction arises only in case of doubt in regard to the intention of the Legislature manifest on the statutory language. Indeed, the need to resort to any interpretative process arises only where the meaning is not manifest on the plain words of the statute. If the words are plain and clear and directly convey the meaning, there is no need for any interpretation. It appears to us the true rule of construction of a provision as to exemption is the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption." The learned counsel for the respondent, however, relied upon the decision in Collector of Central Excise, Bombay v. Parle Exports (P.) Ltd. [1989] 75 STC 105 (SC); (1989) 1 SCC 345 rendered by a Bench of this Court comprising Sabyasachi Mukharji and S. Ranganathan, JJ. The observations in paras 17 and 18 (at pages 116-117 of STC) are particularly relied upon by the learned counsel: "17. How then should the courts proceed-The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rementioned including the three-Judge Bench decision in Novopan India Limited (1994) Supp 3 SCC 606. It may be noted that this decision was referred to in Mangalore Chemicals and Fertilizers [1991] 83 STC 234 (SC); (1992) Supp 1 SCC 21 and yet a slightly different principle enunciated. So far as decision in Hindustan Aluminium Corporation Ltd. [1981] 48 STC 411 (SC); [1982] 1 SCR 129; AIR 1981 SC 1649 [referred to in Parle Exports Ltd. [1989] 75 STC 105 (SC); (1989) 1 SCC 345; 1989 SCC (Tax) 84] rendered by a Bench comprising Tulzapurkar and R.S. Pathak, JJ., is concerned, it only holds that the expression "metal" occurring in a notification issued under the U.P. Sales Tax Act should be understood in its primary sense, i.e., in the form in which it is marketable as a primary commodity. The learned Judges held that the subsequent forms evolved from the primary form constituted distinct commodities marketable as such and must be regarded as new commercial commodities and not included within the four corners of the notification. This decision cannot therefore be understood as supporting the proposition enunciated in Parle Exports [1989] 75 STC 105 (SC); (1989) 1 SCC 345; 1989 SCC (Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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