TMI Blog2002 (10) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... m S.T. 70 under rule 28-A of the Rules vide application dated May 9/23, 1994. The Assistant Excise and Taxation Officer-cum-Assessing Authority, Panipat, rejected the claim vide letter dated November 17, 1994 (annexure P-5) on the ground that the unit fell within the scope of entry 10 of the notification dated March 9, 1992. The petitioner, thereupon, filed a reply dated November 29, 1994 explaining that it was manufacturing ethanol or ethyl alcohol and thus did not fall under the aforesaid entry which merely covered units based on such alcohol. The case was placed before the Higher Level Screening Committee for consideration. The Higher Level Screening Committee rejected it vide order dated August 7, 1996 in the following terms: "The committee after hearing the representative of the unit, observed that this item falls in the negative list at serial No. 10 of the notification dated January 11, 1994 issued by the Excise and Taxation Department. It has been clearly mentioned in the notification that ethanol (ethyl alcohol) based industries except non-molasses alcohol were not eligible for sales tax exemption/deferment benefit. Since the unit is using molasses for the manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts dated July 24, 1997 (annexure P-13) in support of its claim. The appellate authority, however, once again rejected the appeal vide order dated October 9, 1997 in the following terms: "After hearing both the parties and from the perusal of the record, I feel that the basic question on which the decision of the case hinges is whether the case of the appellant-industry making ethanol (ethyl alcohol) from molasses is covered under entry No. 10 of the notification dated February 11, 1994 or not. Rule 28-A, sub-rule (13) made under the Haryana General Sales Tax Act, 1973 provides that 'the incentive of exemption/deferment of payment of tax shall be available to the industries or class of industries except those specified in Schedule III appended to these Rules'. List of these industries have been provided in Schedule III issued under notification dated February 11, 1994. Serial No. 10 of this Schedule provides 'ethanol (ethyl alcohol) based industries except non-molasses alcohol industries'. It is an admitted fact that the appellant-unit is manufacturing ethyl alcohol from molasses. The bare reading of entry No. 10 shows that it has two parts, i.e., ethyl alcohol based industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Government, Haryana, and the Higher Level Screening Committee respectively as also the assessment orders for the years 1994-95 and 1995-96 dated December 9, 1996 (annexures P-7 and P-8). 4.. Mr. J.K. Sibal, Senior Advocate appeared on behalf of the petitioner and contended that the denial of the eligibility certificate for exemption of sales tax is based on a total misreading of entry No. 10 of the negative list of notification dated February 11, 1994. This entry reads as under: "10. Ethanol (ethyl alcohol) based industries except non-molasses alcohol industries." Here italicised. According to him, the industries falling under this item are the industries which are "based on ethanol (ethyl alcohol)" and not the industries which are manufacturing ethanol (ethyl alcohol). An industry can be said to be based on ethanol (ethyl alcohol) if it is using ethanol (ethyl alcohol) as its base raw material. It clearly postulates a stage which is post-manufacture. He further contended that once the ethanol manufacturing industry could not be said to be included in the meaning of "ethanol (ethyl alcohol) based industry", it could not be held otherwise by referring to the exception prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nol (ethyl alcohol) based industries" includes ethyl alcohol manufacturing industries also were to be accepted, then there was no necessity to introduce entry No. 24 in the 1996 notification to include distilleries/breweries in the negative list. He, then, referred to entry No. 8 of the 1997 notification to show that the rule-making authority is alive to the distinction between a "manufacturer of ethyl alcohol" and "industries based on ethyl alcohol". If the industries based on ethyl alcohol included the manufacturers of ethyl alcohol, there was no need to mention manufacturer of ethyl alcohol separately in this entry. He further pointed out that distilleries and breweries had separately been included in items Nos. 22 and 30 of this notification. Thus, it was vehemently argued that once the plain language of the main clause of entry No. 10 of the notification shows that a manufacturer of ethyl alcohol is not covered under the said entry, it cannot be so inferred by referring to the exception provided in the said entry. 6.. The learned counsel placed strong reliance on the decision of the Supreme Court in Abhoy Pada Saha v. Sudhir Kumar Mondal AIR 1967 SC 115. In this case, the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he court cannot proceed to make good deficiencies in a provision, if any. For this purpose, he placed reliance on the judgment of the Supreme Court in State of Punjab v. Jullundur Vegetables Syndicate [1966] 17 STC 326; AIR 1966 SC 1295. He also placed reliance on another judgment of the Supreme Court in Bajaj Tempo Limited, Bombay v. Commissioner of Income-tax, Bombay City-III, Bombay [1992] 196 ITR 188 (SC); (1992) 3 SCC 78, wherein it has been held that a provision in a taxing statute granting incentive for promoting economic growth and development should be construed liberally. Since a provision intended for promoting economic growth has to be interpreted liberally, the restriction on it, too, has to be construed so as to advance the objective of the provision and not to frustrate it. He pointed out that in the present case also, the provision for exemption of sales tax under section 13-B of the Act has been incorporated in order to promote industrial growth in the State of Haryana and, therefore, the restriction placed in the negative list has to be construed strictly and in a manner which promotes the objective and purpose of the provision for exemption. 9.. Mr. Mohan Jain, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. In other words, a proviso cannot be torn apart from the main enactment nor can it be used to nullify or set at naught the real object of the main enactment. While interpreting a proviso care must be taken that it is used to remove special cases from the general enactment and provide for them separately. In short, generally speaking, a proviso is intended to limit the enacted provision so as to except something which would have otherwise been within it or in some measure to modify the enacting clause. 13.. In Dwarka Prasad v. Dwarka Das Saraf AIR 1975 SC 1758, it has been held that if, on a fair construction, the principal provision is clear, a proviso cannot expand or limit it. A proviso must be limited to the subject-matter of the enacting clause. A proviso must prima facie be read and considered in relation to the principal matter to which it is a proviso. It is not a separate or independent enactment. The apex Court went on to observe that words are dependent on the principal enacting words, to which they are tacked as a proviso. They cannot be read as divorced from their context. 14.. Similarly, in Madhu Gopal v. VI Additional District Judge AIR 1989 SC 155, it has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct according to which sale of goods is the taxable event. Section 13B empowers the State Government to grant exemption from payment of sales tax to such class of industries and for such period as it may consider necessary and expedient to do so in the interest of industrial development of the State. Rule 28A lays down the class of industries, period and other conditions for exemption. Sub-rule 2(f) prescribes the eligibility criteria. Clause (i)(iv) of this sub-rule provides that to be eligible for exemption the industrial unit should not be included in Schedule III appended to these Rules. Thus, according to him, from the above scheme it is evident that unless a dealer can prove its entitlement to exemption, it has to pay tax under section 6 of the Act. In other words, the onus to prove that particular industrial unit does not fall in the negative list (Schedule III of the Rules) is on the dealer. 19.. He further points out that section 13B does not specify any particular industry or class or classes of industries which are entitled to exemption. The discretion in this behalf has been left to the executive which has been given the power to make rules in this regard by issuing no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry. The learned Advocate-General then contended that the entry No. 10 consists of two categories, viz., (i) Ethanol (ethyl alcohol) based industries and (ii) except non-molasses alcohol industries. The effect of two negative terms in (ii), i.e., "except" and "non" would be that molasses alcohol industries would fall in this category. This, according to him, is the only way this entry can be read. 20.. He further pointed out that if the interpretation placed by the petitioner on the first part of this entry, viz., "Ethanol (ethyl alcohol) based industries" was to be accepted, then the second part providing for the exclusion of non-molasses alcohol industries would be rendered redundant. This, according to him, would be contrary to the well-settled principle of interpretation that no provision should be interpreted in a manner which makes any part of the same as redundant. Every word and expression has to be ascribed a meaning. 21.. Mr. Surya Kant cited the judgment of the Supreme Court in Tata Oil Mills Co. Ltd. v. Collector of Central Excise [1991] 82 STC 225 to contend that to understand the language in a notification, one has to keep in mind the object and purpose of exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s" and, therefore, the molasses alcohol industries would be included in the first part making it ineligible for claiming exemption. 24.. In reply, counsel for the petitioners contended that it is a well-settled position in law that in interpreting a taxing statute, equitable considerations are entirely out of place. They referred to the observations of the Supreme Court in several judgments to show that there is no scope for intendment or presumptions or assumptions while interpreting a taxing statute. 25.. In Commissioner of Sales Tax, U.P. v. Modi Sugar Mills Ltd. [1961] 12 STC 182 (SC); AIR 1961 SC 1047, it has been held that in interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed. It cannot import provisions in the statutes so as to supply any assumed deficiency. 26.. Similarly, in Hansraj Gordhandas v. H.H. Dave, Assistant Collector of Central Excise and Customs, Surat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh (2000) 6 SCC 550, it has been held (at page 553) that "no court is justified in imputing to the Legislature an intention that it has not clearly expressed in the language it has employed." 31.. In A.V. Fernandez v. State of Kerala [1957] 8 STC 561 (SC); AIR 1957 SC 657, it has been held that if a case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the Legislature and by considering what was the substance of the matter. 32.. In Bharathidasan University v. All India Council for Technical Education (2001) 8 SCC 676, it has been held that when the legislative intent finds specific mention and expression in the provisions of the Act, itself, the same cannot be whittled down or curtailed and rendered nugatory by giving undue importance to the so-called object underlying the Act. It is hard to ignore the legislative intent to give definite meaning to words employed in the Act and adopt an interpretation which would tend to do violence to the express language as well as the plain meaning and patent aim and object underlying the various other provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case only. In other words, an exception takes out a portion which, but for such exception, would fall within the main provision. The controversy in the present petition has, therefore, to be considered in the light of the aforesaid settled rules of construction. 36.. At the very outset the contention raised on behalf of the respondents that this entry consists of two parts, i.e., (i) "Ethanol (ethyl alcohol) based industries" and (ii) "except non-molasses alcohol industries" must be rejected. A plain reading of the entry shows that it is one single sentence in which part (i) is the main clause and part (ii) is an exception provided thereto. If the contention of the respondents that part (ii) above is to be considered as a separate category were to be accepted, then, it would mean that every industry other than "non-molasses alcohol industries" would fall in the negative list. For example, a cycle manufacturing industry is not a "non-molasses alcohol industry" and by virtue of this interpretation, it would fall in the negative list. Instances can be multiplied by referring to various other industries. Such interpretation would render the need for listing any other industry in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of entry 10 of the negative lists of 1992 and 1994 only refers to industries which are based on ethanol. In other words the industries which consume ethanol as an input are covered by the main clause. A perusal of the impugned orders shows that while rejecting the claim of the petitioners, it has been observed that entry No. 10 clearly shows that the exception has been provided to qualify further the main clause, i.e., "Ethanol (ethyl alcohol) industries". The appellate authority has totally omitted the word "based" because of which the entire meaning of the entry has been mis-interpreted. If the interpretation sought to be placed by the respondents on the expression "Ethanol (ethyl alcohol) based industries" were to be accepted, it would render the word "based" in this expression as totally redundant. This is contrary to the well-settled principles of interpretation. In Aswini Kumar Ghose v. Arabinda Bose 1953 SCR 1, it was held that it is not a sound principle of construction to brush aside words in a statute as being inapposite surplusage, if they can have appropriate application in circumstances conceivably within the contemplation of the statute. 39.. The next question fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Even otherwise, a citizen is guided by what is stated in the notifications or trade notices. He is neither required to go behind them to find out the intendment of the Government nor does he have any access to the Government records. The apex Court in the case of Swadeshi Polytex Ltd. AIR 1990 SC 301, has clearly observed that exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government. In the case of Tata Oil Mills Co. Ltd. [1991] 82 STC 225 (SC) the object and purpose of the notification was taken into account to grant exemption to a dealer and not for denying it. 41.. The contention of the respondents that this interpretation will make the provision unworkable as the State has no machinery to verify as to whether alcohol consumed by a particular industry has been made out of molasses or non-molasses cannot be a ground for giving the entry a meaning different from what its plain language shows. The case law cited by the petitioners on the subject is very clear. In case there is any practical difficulty, it is not the duty of the court to stretch the words used in a particular enactment or notification to fill in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
