TMI Blog2000 (5) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... t" as defined in paragraph (ii) of clause 2(i) of the Scheme of 1989. 3.. In the first instance, the State Level Screening Committee, vide its letter dated October 6, 1995, conveyed its decision dated September 1, 1995 that the respondent-assessee is eligible for the benefit of exemption from tax under Sales Tax Incentive Scheme, 1989, in the Central Sales Tax Act and deferment of tax under the Scheme of 1989 under the Rajasthan Sales Tax Act on the basis of a new very prestigious industrial unit on the sale of cement. In pursuance of the above finding, the Joint Director of Industries directed the Assistant Commercial Taxes Officer, IInd COR, Chittorgarh, to issue eligibility certificate to the respondent-assessee. It was also informed to the Assistant Commercial Taxes Officer that the eligible fixed capital investment was stated to be, subject to verification, Rs. 1,86,90,47,040. 4.. In compliance of the above direction, the Assistant Commercial Taxes Officer issued the eligibility certificate dated October 31, 1995 to the respondent-assessee certifying that the new industrial unit of the respondent-assessee is entitled to enjoy benefit of deferment of tax up to the limit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Therefore, the extent of relaxation granted and the benefits extended in the case of large scale cement industries of all sorts must be confined to the benefits extended by the two provisos [second proviso to clause 2(j) and second proviso to clause 4 of the Scheme of 1989] which were introduced simultaneously. 9.. It was also urged that vide notification dated June 13, 1994 with effect from June 15, 1994, the limit of exemption that could be claimed by a large scale cement plant outside tribal sub-plan area, having fixed capital investment of Rs. 100 crores or more was fixed at 50 per cent of the tax liability. Therefore, as on the date the respondent-assessee commenced its commercial production, it was not entitled to get the benefit except what was provided under second provisos to clause 2(j) and 4 of the Scheme of 1989. The general provisions contained in annexure C appended to the Scheme of 1989 are applicable to all classes of eligible industrial units generally, which do not fall within the list of ineligible industries for sales tax deferment under the scheme and, therefore, those provisions contained in annexure C will not govern the case of large scale cement indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its in accordance with the parameters incorporated in annexure-C appended to the Scheme of 1989. Had the second proviso to clause 4(a) not been inserted, the effect of insertion of second proviso to clause 2(j) would manifestly be that large scale cement plants corresponding to the definition of "new very prestigious unit" shall be eligible to the benefit of deferment of tax to the extent provided in clause (5) of annexure C which is indubitably applied to all new prestigious units. By this clause (5) of annexure C, new very prestigious units are made entitled to deferment of 90 per cent of the total tax liability, of course subject to the maximum deferment of 100 per cent of the fixed capital investment to be available during a period of 11 years. Since second proviso to clause 4(a) only restricts the extent of percentage of deferment of tax to 50 per cent in the case of large scale cement industries instead of 75 per cent in the case of new units generally and does extend to the new very prestigious units, the restriction imposed by second proviso to clause 4 of the scheme on the operation of the substantive provision as a result of insertion of second proviso to clause 2(j) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to any exemption or exception, such exception must strictly be construed before a person is allowed to enter the field of exemption/exception. Here the benefit of doubt in construing the statement goes in favour of the Revenue. However, once a tax-payer or tax incident enters the field of exception or exemption, the rule of liberal construction governs in interpreting the exemption so as to effectuate the purpose for which the exemption is granted. In both the fields, the rule of construction is the same. Ultimately, in the case of levy, before a tax-payer is subjected to levy, the provision of taxing statute must be strictly construed so as to bring a person within the net of the charge. So also once a person is subjected to levy, the provision of exception or exemption therefrom must be strictly construed so as to take away the person outside the purview of the charge. However, where a person is subjected to exemption, the benefit of any doubt in the construction of the statute or the provision about the extent of the scope of such exemption ought to be resolved in favour of the subject where there is a room for two opinions. However, where there is no room for two opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction." 21.. The Supreme Court in Mangalore Chemicals Fertilizers Limited v. Deputy Commissioner of Commercial Taxes [1991] 83 STC 234; (1992) Supp. 1 SCC 21 said: "It appears to us the true rule of construction of a provision as to exemption is one stated by this Court in Union of India v. Wood Papers Ltd. [1991] 83 STC 251 (SC); AIR 1991 SC 2049." 22.. It was again stated in Bombay Chemical P. Ltd. v. Collector of Central Excise [1995] 99 STC 339 (SC); AIR 1995 SC 1469, in which though no reference has been made to the aforesaid two decisions, that the test of strict construction of exemption notification applies at the entry, that is, whether a particular goods are capable of falling in one or the other category but once it falls within the category then the exemption notification has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st 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. There is no caveat to above principles in large number of precedents cited on both sides. The question in each case required consideration for applying above principles of construction which necessarily need be scanned in the light of facts and circumstances established in each case and cannot be imported as strait-jacket into another case. 27.. In the instant case, the controversy centres around firstly the effect of insertion of second provisos to clauses 2(j) and 4(a) of the scheme; and secondly whether the term "large scale industry" can be assigned different meaning for the purposes of second provisos to clauses 2(j) and 4(a) of the Scheme of 1989? 28.. Here, it would be appropriate to notice the relevant provisions of the Scheme of 1989. In exercise of the powers conferred by section 7(2B), Rajasthan Sales Tax Act, 1954, the State Government notified the "Sales Tax Deferment Scheme" which, inter alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery was not exceeding rupees sixty lakhs and the medium scale unit was one in which the project cost was not exceeding rupees five crores. Similarly the large scale unit was one in which the project cost was exceeding rupees five crores. While classifying small-scale unit, the investment only in plant and machinery was to be taken into consideration and not the entire project cost but however, for the purpose of classifying units as medium scale unit and large scale unit, investment in entire project cost was to be taken into consideration. From the note reproduced above, it is clear that all units having whole project cost above Rs. 5 crores are categorised as large scale industrial unit. 30.. The above definition "eligible fixed capital investment" goes to show that the total project cost is different from investment in new plant and machinery and land. For the purpose of sanctioning the scheme and quantifying the fixed capital investment, so that the benefit available under the scheme may be linked with a new industrial unit, in addition to the above general classification, new industrial units have been further classified into three specific categories, viz., "pioneerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of investment to exceed Rs. 100 crores establishment of the new industrial unit in any Panchayat Samiti of the State and during the period of this scheme in which investment in fixed capital is Rs. 100 crores or more, brings such large scale industry in the category of "New Very Prestigious Unit". 32.. In addition to the above features of the scheme, the scheme further provided for "sick industrial unit", "eligible area", "banned areas" and "ineligible industries" in clause 2(b)(c)(d) and (j) of the Scheme of 1989, which read as under: "2(b) 'Sick industrial unit' means- (i) an industrial unit which has incurred cash losses in two complete and consecutive financial years immediately preceding the commencement of this scheme or during the operative period thereof, and is likely to continue to incur cash losses in the next financial year and has an erosion on account of cumulative cash losses to the extent of 50 per cent or more of its net worth and being potentially viable is taken up by a Central or State level financial institution or a bank, under a programme of rehabilitation; or (ii) an industrial unit which is declared sick during the operative period of this scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plants using rotary kiln with a licensed capacity not exceeding 300 tonnes per day or 99,000 tonnes per annum; and new industrial units in the Tribal sub-plan area find mention in the list of industries not eligible for sales tax deferment under the New Deferment Scheme, 1989. 35.. In this background of the generality of the scheme, the bone of contention falls around the amendment introduced in the scheme by insertion of second proviso to clause 2(j) and second proviso to clause 4 of the scheme. It will be appropriate here to reproduce second proviso to clause 2(j) and second proviso to clause 4 of the Scheme of 1989 as they stood at the time the new industrial unit of the respondent-assessee commenced its commercial production, in extenso: "2(j) 'Ineligible industries' means the industries listed in annexure 'B' to this notification, which will not be eligible for sales tax incentive. Provided ................. Provided further that large scale new cement plants established, except in tribal sub-plan area, shall be entitled to deferment of tax as provided in clause 4 of this notification. 4.. Deferment of tax on sales.-(a) An industrial unit, which is granted eligibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... except in the tribal sub-plan area, shall be entitled to claim deferment of tax to the extent of 25 per cent of their tax liability under the Act) with all other restrictions applicable to an industrial unit as provided in annexure 'C' (** Inserted by notification dated March 6, 1991). 38.. Ordinarily the rule of construction is that when the Legislature uses some word in different parts of the sections or statute, there is a presumption that the word is used in the same sense throughout unless this presumption is misplaced by the context. The principle was stated by the Supreme Court in Bhogilal Chunilal Pandya v. State of Bombay AIR 1959 SC 356: "Words are generally used in the same sense throughout in a statute unless there is something repugnant in the context." 39.. It was reiterated in Raghubans Narain Singh v. Uttar Pradesh Government AIR 1967 SC 465: "It is well settled rule of construction that where the Legislature uses the same expression in the same statute at two places or more than the same interpretation should be given to that expression unless context requires otherwise." 40.. In Farell v. Alexander [1976] 2 All ER 721, it has been succinctly said: Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is that having project costs of over Rs. 100 crores. Investment in fixed capital of Rs. 100 crores or more is directly related to classifying any large scale unit of that magnitude to be a very prestigious unit, which is primarily on the basis of the scale of investment. Therefore, as on the date, the respondent-unit commenced its commercial production it fell within the definition of large scale unit having project costs of over Rs. 100 crores and thus also fell to be governed by the second proviso to clause 4(a) of the Scheme of 1989. That is on the anvil of assigning the same meaning to the same expressions used in two provisos. Admittedly in second proviso to clause 2(j) a large scale cement plant has been used irrespective of its further classification into prestigious or very prestigious unit to which category also, the large scale unit may belong. If they were to be considered as different classes of units for the purposes of this scheme then this will have to be accepted that the prestigious and very prestigious units have still not been included within expression "large scale unit" in the exception carved out from the ineligible industries under second proviso to clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lished in the State of Rajasthan outside tribal sub-plan areas would not enjoy any benefit. The second proviso to clause 4 of the scheme restrict the extent of the benefit too to the large scale new industrial units. In the first instance without further classification, it is not that the scheme framing authority rest contended with the insertion of second proviso to clause 2(j) of the Scheme but instead it simultaneously made provision in clause 4 of the Scheme also to provide extent of exemption to provide integral contextual link between the two. 46.. In the context of the Scheme dealing with the cement plants, it would also be appropriate to refer to the legislative history in dealing with the extent of incentive/deferment Scheme to the cement plants in Rajasthan. The New Deferment Scheme, 1989 came into force while the Rajasthan Sales Tax Deferment Scheme, 1987 was already in operation. The Scheme of 1989 had extended the benefits to the same extent which were existing under the Scheme of 1987. However, the two schemes were simultaneously operating as is apparent from the fact that the New Deferment Scheme, 1989, has come into force with retrospective effect, i.e., with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w very prestigious unit was not classified. The definition of pioneering unit and prestigious unit under the Scheme of 1987 were in pari materia with the definition of these terms as provided in the Scheme of 1989. Therefore, it is clear that all cement plants were kept out of the scope of Deferment Scheme unless the same was established in tribal sub-plan area or a mini cement plant. In the Scheme of 1987, item No. 10 was inserted in annexure B, the list of ineligible industries substituted for the existing provision as noticed above in the exactly same manner in which it found place in the Scheme of 1989 and has been made effective retrospectively. 48.. It may be further pertinent to note here that in the list of industries not eligible for deferment of sales tax, the entry No. 10 relating to cement plants in the present form was inserted with effect from February 22, 1990 and simultaneously, second proviso to clause 4 of the Scheme of 1987 was added, which reads as under: "Provided that mini cement plants using vertical shaft kiln with a licensed capacity not exceeding 200 tonnes per day or 66,000 tonnes per annum, or mini cement plants using rotary kiln with a licensed capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme of 1989 with effect from March 6, 1991 as referred to above, one cannot miss direct link between the two, viz., extension of benefit of New Deferment Scheme, 1989 to the large scale new cement plants established except in tribal sub-plan area which were hitherto in the list of industries not eligible for deferment of sales tax annexure B was not amended as such and were linked with deferment of tax as provided in second provisos to clause 2(j) and clause 4 of the scheme of 1989. The second proviso to clause 2(j) of the scheme was substituted with the addition of "large scale new cement plants" established, except in tribal sub-plan area, shall be entitled to deferment of tax to the extent of 25 per cent of their tax liability under the Act with all other restrictions applicable to an industrial unit as provided in annexure C. 51.. Here significantly it has to be noticed that while second proviso to clause 2(j) refers to the large scale "new cement plants established outside tribal sub-plan area" to be entitled to deferment of tax as provided in clause 4 of the scheme, the substitution of second proviso to clause 4 does not restrict the extent of benefit to the large scale ne ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
