TMI Blog2010 (10) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... for filing quarterly return under the Act up to the date of payment, no merit in this appeal, hereby rejected - Civil Appeal No. 4277 of 2002 - - - Dated:- 22-10-2010 - JAIN D.K. AND DATTU H.L. JJ. A.K. Ganguli, Senior Advocate (Sanjay Sen, Rana S. Biswas, Anurag Sharma, Hemant Singh, Mridul Chakravorty and Ms. Indra Sawhney, Advocates, with him) for the appellants. M. Chandrasekharan, Senior Advocate (Tara Chandra Sharma and Ms. Neelam Sharma, Advocate, with him) for the respondents. -------------------------------------------------- The judgment of the court was delivered by H.L. DATTU J. This appeal is directed against the judgment and order passed by the High Court of Calcutta in W.P.T.T. No. 102 of 2000 dated September 14, 2001. The issues which require our consideration and decision in this appeal are: the meaning of the expression "investment" for the purpose of notification issued by the State of West Bengal under the West Bengal Sales Tax Act and the corresponding Rules; the construction and interpretation of an exemption notification; and whether the interest is payable on tax only on quantification of tax by way of assessment under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of assessment under the Act 1994 along with an assessment for the broken period between April 1, 1995 to April 30, 1995. In appeal, the assessment order passed by the tax officer was confirmed by the Deputy Commissioner, Commercial Taxes. The assessee filed second appeal before the West Bengal Sales Tax Tribunal. The Tribunal has confirmed the order passed by the first appellate authority. In the writ petition filed, the High Court of Calcutta confirmed the order passed by the Tribunal in exercise of its writ jurisdiction. The learned senior counsel Sri A.K. Ganguli for the assessee submits that the term "investment" used in the notification refers to the actual value of the machinery after allowing depreciation as distinct from the cost of acquisition of such machinery. Alternatively, it is submitted that though the initial value of the plant and machinery was more than Rs. 5 lakhs, on account of successive yearly depreciation in their value, the total value of plant and machinery was less than Rs. 5 lakhs during the relevant assessment periods and, therefore, the appellant's small-scale industrial unit is eligible for exemption from payment of tax in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial unit in West Bengal: Provided that the small-scale industrial unit is registered with the Directorate of Cottage and Small-scale Industries of Government of West Bengal, and investment by the dealer in plant and machinery of such unit is less than Rs. 5 lakhs." In exercise of the power conferred by section 4AA of the Act, 1954, the State Government has issued Notification No. 1428-F.T. dated May 26, 1994. The notification is as under: "Registered No. WB/SC-247 No. WB (PART I)/94/SAR-122 THE CALCUTTA GAZETTE Extraordinary Published by authority Jayistha 5 Thursday, May 26, 1994 Saka 1916 Part I Orders and notifications by the Governor of West Bengal, the High Court, Government Treasury, etc. Government of West Bengal, Finance Department Taxation No. 1428-F.T. Calcutta, the 26th May, 1994 NOTIFICATION Whereas the Governor is satisfied that it is necessary so to do in the public interest; Now, therefore, in exercise of the power conferred by section 4AA of the West Bengal Sales Tax Act, 1954 (West Bengal Act IV of 1954) (hereinafter referred to as the said Act), the Governor is pleased hereby to dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying out the purposes of the Act. In exercise of the power so conferred, the State Government has framed rule 41 of the 1995 Rules. The rule provides for exemption from tax on sales of certain fruit and vegetable products, etc., manufactured in small-scale industrial units in West Bengal. The rule is as under: " Exemption from tax on sales of certain fruit and vegetable products, etc., manufactured in small-scale industrial units in West Bengal. Where a dealer makes sales of (i) fruit product, that is to say, fruit juice, fruit syrup, fruit concentrate, fruit squash, fruit cordial, fruit sarbat, fruit jam, fruit jelly, fruit marmalade, fruit pickle, amsatta, chutney, kasundi, fruit sauce, ketchup, fruit pulp, fruit peel, (ii) processed fruit, that is to say, canned, crystallized or glaced fruit, (iii) canned, bottled or any other preserved fruit, (iv) processed food, commonly known as instant food, that is to say, pre-cooked or curried vegetable and vegetable soup, (v) vegetable product, that is to say, vegetable pulp, vegetable peel, vegetable juice, (vegetable sauce, vegetable pickles) or vegetable sarbat, manufactured in his small-scale industrial unit in We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 004) or as the "placing of money to gain profit" (Bloomsbury English Dictionary, Reprint, 1985). Speaking of investment in the context of the Income-tax Act, 1961, this court observed in Commissioner of Income-tax, Lucknow v. U.P. Co-operative Federation Ltd. [1989] 176 ITR 435 (SC). AIR 1989 SC 915, quoting P. Ramanatha Aiyar's Law Lexicon (reprint edition 1987) that: "The term 'invest' is used in a sense broad enough to cover the loaning of the money but is not restricted to that mode of 'investment' or loans made on commercial paper. The word 'invest' has been judicially defined as follows: 'To place property in business; to place so that it will be safe and yield a profit. It is also commonly understood as giving money, for some other property (as) investing funds on lands and houses. "Investment" means, in common parlance, putting out money on interest, either by way of loan, or by purchase of income producing property. . .'" (emphasis supplied) (para 9) In Inland Revenue Commissioners v. Desoutter Brothers Ltd. [1946] 1 All ER 58 (CA), it is stated: "The word 'investment', is not a word of art but has to be interpreted in a popular sense. It is not capable of lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption from payment of sales tax either under the Rules or under the notification. Contention (b) The second contention of learned senior counsel for the assessee is that the notification providing for exemption should be liberally construed having regard to the purpose and object it seeks to achieve. The conditions for availing of exemptions are generally laid down in the notifications granting exemptions. Sometimes, exemptions are grafted in the Rules framed in this behalf. In Crawford's Statutory Construction, it is stated that "provisions" providing for an exemption may be properly construed strictly against the person who makes the claim of an exemption. In other words, before an exemption can be recognized, the person or property claimed to be exempted must come clearly within the language apparently granting the exemption. In our opinion, the principle to be kept in view while interpreting exemption notification is that the meaning of the words given in the exemption notification is to be gathered from the language employed in the notification. Notifications by which exemption or other benefits are provided by the Government in exercise of its statutory powers no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The aforesaid principle is summed up by this court in G.P. Ceramics Pvt. Ltd. v. Commissioner, Trade Tax, U.P. [2009] 19 VST 284 (SC)., [2009] 2 SCC 90, as under: "It is now a well established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally." (emphasis supplied) (para 29). The preamble to the notification in this case states that "whereas the Governor is of opinion that industrial unit is manufacturing certain goods in West Bengal which are in need of financial assistance and accordingly it is necessary to formulate a scheme of industrial promotion to assist such unit for the purposes mentioned hereinabove". Clearly, the purpose of this notification is to promote industrial activity and development in the State of West Bengal. However, as is clear from the discussed cases, it is a necessary pre-condition that first the assessee should fall within the clear wording of the notification. The assessee in this matter falls outside the parameters of this notification, since his investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed date, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day of the month next following the prescribed date up to the month preceding the month of full payment of tax for such period or up to the month prior to the month of assessment under section 11 in respect of such period, whichever is earlier, upon so much of the amount of tax payable by him according to such assessment as remains unpaid at the (end of each such month of default:) Provided that where an assessment under section 11 is made for more than (one period) and such assessment does not show separately the tax payable for the period in respect of which interest is payable under this sub-section, the Commissioner shall estimate the tax payable for such period on the basis of such assessment after giving the dealer an opportunity of being heard. (3) Where a dealer fails to make payment of any tax payable after assessment by the date specified in the notice issued under sub- section (3) of section 11 for payment thereof, he shall pay a simple interest at the rate of two per centum for each English calendar month of default from the first day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth of default from the first day of the month next following the prescribed date up to the month preceding the month of full payment of tax for such period or up to the month prior to the month of assessment under section 45 or section 46, as the case may be, in respect of such period, whichever is earlier, upon so much of the amount of tax payable by him according to such assessment as remains unpaid at the end of such month of default: Provided that where an assessment under section 45 or section 46 is made for more than one period and such assessment does not show separately the tax payable for the period in respect of which interest is payable under this sub-section, the Commissioner shall apportion the tax payable for such period on the basis of such assessment. (3) A dealer liable to pay interest under sub-section (1) or sub- section (2) of this section or sub-section (8) of section 40, as the case may be, shall, in the prescribed manner, pay into a Government Treasury or the Reserve Bank of India the amount of interest payable by, or due from, him by such date as may be prescribed. (4) Interest under sub-section (1) or sub-section (2) of this section shall be payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the assessment of tax is completed and the amount of the tax assessed becomes due only after the issue of notice of demand as provided in sub-section (1) but there is no requirement in the case of payment of tax due on the basis of quarterly return to be filed by the dealer. It is solely governed by sub-section (3): where the tax due on the basis of quarterly return is not paid before the expiry of the last date of filing of such return under the Act, it is not necessary to issue any notice of demand but on the default being committed by the dealer, he becomes liable to pay interest under sub- section (2) on the amount of such tax from the last date of filing quarterly returns prescribed under the Act. In the present case, it is the admitted position that tax due on the basis of quarterly return was not paid as required by sub-section (3) and the appellant was, therefore, liable to pay interest on the amount of tax in respect of which default was committed at the rate prescribed in sub-section (2) from the last date prescribed for filing quarterly return under the Act up to the date of payment. In view of the above, there is no merit in this appeal. It is hereby rejected. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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