TMI Blog2004 (11) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003 - - - Dated:- 17-11-2004 - VARIAVA S.N., LAKSHMANAN AR. AND KAPADIA S.H. JJ. A. Saran, Additional Solicitor-General of India (Rajesh Pathak and Ashok Mathur, Advocates, with him), for the appellants. Gopichand Bharukha, Senior Advocate (Ajit Kumar Sinha, S.D. Sanjay and Devashish Bharukha, Advocates, with him), for the respondents. -------------------------------------------------- The judgment of the Court was delivered by Dr. AR. LAKSHMANAN J.- This appeal is preferred by the State of Jharkhand through the Commissioner of Commercial Taxes, Ranchi, Jharkhand, and five others against the final judgment and order dated January 15, 2003, passed by the division Bench of the High Court of Jharkhand at Ranchi in Writ Petition (T) No. 5712 of 2002 allowing and remitting back the same to the Joint Commissioner of Commercial Taxes (Admn.), Dhanbad Division, Dhanbad, for passing a fresh order in view of the observations and directions made in the judgment. The short facts are as follows: The erstwhile Government of Bihar came out with an Industrial Policy, 1995, providing certain incentives to the newly set up industrial units in the small-scale sector. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d desirous of availing tax incentive benefit under the Industrial Policy, 1995, will also obtain prior permission of the State Government in the Industries Department before August 31, 2000. 3.. The respondent herein, M/s. Ambay Cements, a small-scale industry which has obtained temporary registration certificate from the General Manager, District Industries Centre, Dhanbad, dated May 5, 2000, applied before the Joint Commissioner of Commercial Taxes (Admn.) for grant of exemption. The Joint Commissioner, vide his order dated August 26, 2000, granted the same with a condition that it will obtain prior permission from the State Government in the Industries Department. The Joint Commissioner, after examining the application for issue of the eligibility certificate, rejected the application on the ground that the respondent did not obtain the prior permission from the Industries Department in accordance with the provisions laid down in the statutory Notifications No. S.O. 57 and S.O. 58 dated March 2, 2000. The respondent-unit, on April 2, 2001, applied for the eligibility certificate under the provisions of S.O. No. 478 and S.O. No. 479 dated December 22, 1995, read with S.O. No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for setting up a new industrial unit and a prior permission granted by the State Government (Industries Department), as contemplated in the said notification, as aforesaid. One has also to keep in mind the object and purpose of the said Industrial Policy and the incentives granted thereunder which should not be frustrated on mere technicalities. We are left with no alternative than to hold that the temporary registration certification (annexure 5) can be treated as prior permission of the State Government (Industries Department) as contemplated under the aforesaid notification. 11.. In the result, the matter is remitted back to respondent No. 3, Joint Commissioner of Commercial Taxes (Admn.), Dhanbad Division, Dhanbad, for passing a fresh order in view of the observations and directions made hereinabove within a period of two months from the date of receipt of a copy of this order." 8.. Learned Additional Solicitor-General appearing for the appellants submitted that the High Court erred in allowing the writ petition filed by respondent No. 1 and directing the grant of exemption in favour of the same overlooking the fact that respondent No. 1 had admittedly not complied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ea Development Authority/Director of Indus- tries and Competent Officer of the Government of India: But all such units in which 500 crores or more capital will be invested for expansion then they shall be considered as new units for the purpose of this notification: But it is also that for the purpose of this notification all those units shall be considered as new units which has commenced production within five years after taking prior permission from the Industry Department of the State Government before August 31, 2000, even if those units commence production after August 31, 2000." 11.. Mr. Bharukha further submitted that the respondent has set up its establishment in the year 2000 and started its commercial production from April 2, 2001, and the permanent registration certificate to respondent No. 1 was issued on April 30, 2001, wherein it was stated that the respondent has started its production on April 2, 2001. Accordingly, after the commercial production had started, the respondent applied for exemption certificate on the requisite application form for granting sales tax exemption on purchasing raw materials and on sales of finished goods on April 2, 2001. Mr. Bharukha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statutory conditions prescribed for such grant in the absence of any challenge to the validity of such conditions. 15.. The Industrial Promotion Policy, 1995 (S.O. Nos. 478/479, dated December 22, 1995), was issued by the State Government in exercise of powers conferred under clause (b) of sub-section (3) of section 7 of the Bihar Finance Act, 1981 (Bihar Act No. 5 of 1981), by which the Governor of Bihar granted exemption to those new industrial units which start production between the period September 1, 1995, to August 31, 2000, who have obtained the registration certificate from the competent authority under the aforesaid Act and the tax exemption certificate after making information in form T.E. (Purchase II) and with this notification from levy of sales tax payable on purchase direct raw material required manufacturing of goods under the terms and conditions noted in the said policy. The "new industrial unit" is defined under clause 1(a) of the Act. Under S.O. No. 479 dated December 22, 1995, the Governor granted exemption to those new units/started function in between the period from September 1, 1995, to August 31, 2000, and obtained registration certificate from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, Commercial Taxes, on August 26, 2000, passed the following order: "Appearance filed. Prior permission is being given on the condition that production will be commenced soon. Besides, prior permission of the Industries Department shall be taken. (Sd.) Sh. J.N. Pandey, Joint Commissioner, Commercial Taxes (Admn.), Dhanbad Division, Dhanbad. Memo No. 959/Dhanbad, dated 26th August, 2000." 17.. On September 11, 2000, the Joint Commissioner, Commercial Taxes, in the concluding portion of his order stated as under: "Prior permission from the Industries Department has not been taken by the industrial unit. Their contention is that it is provisionally registered as a small-scale industrial unit in the Industries Department and afterwards permanently registered. This should be considered as permission letter prior to the registration certificate. Prior permission and registration in the Industries Department are two different aspects. Keeping this point in view the Department of Commercial Taxes at the time of according prior permission dated August 19, 2000, had also imposed a condition that proprietor of the unit shall also get prior permission from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the High Court that the grant of temporary registration certificate in favour of respondent No. 1 was sufficient and the same was equivalent to prior permission as prescribed under the notifications is not correct. We are of the opinion that the High Court has failed to appreciate the provisions laid down in the statutory Notifications S.O. No. 57 and S.O. No. 58 dated March 2, 2000, which expressly provide for obtaining prior permission separately. Non-compliance thereof would disentitle the respondent from grant of exemption. 21.. It is a matter of fact that the respondent has set up its establishment in the year 2000 and started its commercial production from April 2, 2001, only. It is seen from the Bihar Industrial Policy Resolution, 1995, and the statutory notification issued by the Commercial Tax Department, the new industrial units was defined as those industrial units which went into production between September 1, 1995, and August 31, 2000, and which have been granted licence/ memorandum/letter of intent or registration certificate from the competent Industries Department or Industrial Area Development Authority or Directorate of Industry or Competent Authority of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption notifications. 25.. In our view, the failure to comply with the requirements renders the writ petition filed by the respondent liable to be dismissed. While mandatory rule must be strictly observed, substantial compliance might suffice in the case of a directory rule. 26.. Whenever the statute prescribes that a particular act is to be done in a particular manner and also lays down that failure to comply with the said requirement leads to severe consequences, such requirement would be mandatory. It is the cardinal rule of the interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed. Since the requirement, in the instant case, of obtaining prior permission is mandatory, therefore, non-compliance of the same must result in cancelling the concession made in favour of the grantee-the respondent herein. 27.. For the foregoing reasons, we hold that the High Court has erred in allowing the writ petition filed by the respondent herein and directing the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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