TMI Blog2014 (3) TMI 905X X X X Extracts X X X X X X X X Extracts X X X X ..... ver there is a particular enactment and a general enactment in the same statute and the latter, taken in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply.” - Specific governs the general is not an absolute rule but is merely a strong indication of statutory meaning that can be overcome by textual indications that point in the other direction - This rule is particularly applicable where the legislature has enacted comprehensive scheme and has deliberately targeted specific problems with specific solutions - A subject specific provision relating to a specific, defined and descriptable subject is regarded as an exception to and would prevail over a general provision relating to a broad subject. The item 1E is subject specific provision introduced by an amendment in 1996 - The amendment removed “new cement industries” from the non-eligible Annexure-B and placed it into Annexure-C amongst the eligible industries - It classified the cement units for eligibility of tax exemption into three categories: small, medium and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereby and whereunder the High Court has dismissed the revision petition filed by the Revenue and upheld the case of the respondent-assessee. 2. The respondent-assessee is a new industrial unit manufacturing cement situated within Panchayat Samiti, Pindwara, Rajasthan. It is an admitted fact that it started its commercial production on 27.05.1997. It is also not disputed that the respondent-assessee has fixed capital investment (for short, the FCI ) exceeding ₹ 500/- Crores and employs more than 250 employees. 3. The core issue arises out of the respondent-assessee s application for grant of eligibility certificate for exemption from payment of Central Sales Tax and Rajasthan Sales Tax to the State Level Screening Committee, Jaipur under the Sales Tax New Incentive Scheme for Industries, 1989 (for short the Scheme ). 4. For convenience of discussion, we would first notice the relevant scheme and certain provisions and thereafter proceed towards analysis of the facts in the instant case. The Scheme for exemption from payment of sales tax was notified by the State of Rajasthan in exercise of its powers under sub-section(2) of Section 4 of the Rajasthan Sales Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary for the purpose of disposal of this appeal. 6. It is neither in dispute nor could be disputed by the revenue that the respondent is not a New Industrial Unit . 7. Clause 2(e) defines eligible fixed capital investment (FCI) to mean investment made in land, new buildings, new plant and machinery and imported second hand machinery from outside the country and installation expenditure capitalized for plant and machinery and installation capitalized for plant and machinery s capitalized interest during construction not exceeding 5% of the total fixed capital investment; and technical know-how fees or drawing fees paid in lump-sum to foreign collaborators or foreign suppliers as approved by Government of India or paid to laboratories recognized by the State Government or Central Government and Rail Sidings, rolling stock, racks and railway engines, owned by the unit. 8. Clause 2(i) defines Prestigious Unit . The same is as under:- Prestigious Unit means a new industrial unit first established in any Panchayat Samiti of the State during the period of this Scheme in which investment in fixed capital exceeds ₹ 10/- cores with a minimum permanent employment of 250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l acquire the status of a Very Prestigious Unit in order to claim enhanced proportionate benefits under the Scheme. 12. Clause 2(k) provides for constitution of Screening Committee for the purpose of consideration and to grant Eligibility Certificate under the New Incentive Scheme both for small and medium and also large scale industrial units to avail benefit under the New Incentive Scheme. The note appended to this sub-clause speaks of Small Scale Units, Medium Scale Units and Large Scale Units. Small Scale Units means a unit of which investment in plant and machinery does not exceed ₹ 60/- Lakhs, a Medium Scale Unit means a unit of which the project cost does not exceed Rs. Five Crores and Large Scale Unit means a unit of which the project cost exceeds Rs. Five Crores. 13. Clause 3 of the notification speaks of applicability of the Scheme. By this clause, the State Government has made the Scheme applicable to (a) new industrial units, (b) industrial units going in for expansion or diversification and (c) sick units. 14. Clause 4 of the Scheme provides for exemption from Payment of Sales Tax as per parameters mentioned in Annexure C to the said notification. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility in case of small, medium and large scale units respectively 125% of FCI in case of small scale units subject to an overall limit of ₹ 1.00 crore and 100% of FCI in case of medium and large scale units. Seven years. 1F. Large scale granite and marble units. 25% of total tax liability 100% of FCI Seven years. 2. Units (Other than (a) cement unit except in Tribal Sub- Plan area and (b) large scale granite and marble units going in for expansion or diversificati on. 75% of total tax liability 100% of additional FCI Seven years. 2A. Leather based units going in for expansion or diversification 75% of total tax liability 100% of additional FCI Seven years 3. Sick Units 50% of total tax liability 100% of FCI in case of medium and large scale units 125% of FCI in case of small scale units. Seven years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total tax liability and the maximum time limit for availing exemption from tax is eleven years. 17. Reverting to state the facts, the respondent-assessee had applied to the State Level Screening Committee for claiming benefit of exemption at 75% under the Scheme. The Committee rejected the claim of the respondent- assessee and observed that since the respondent-assessee is a large scale unit covered under the specific provision of Item 1E of Annexure C , it is entitled to 25% exemption, by its order dated 15.01.1998. 18. Being aggrieved by the said order, the respondent-assessee filed appeal before Rajasthan Tax Board, Ajmer (for short, the Board ) in respect of the calculation of eligible FCI as well as the exemption under the Scheme. The Board while remanding the matter to the State Level Screening Committee held that the respondent-assessee is entitled to 75% tax exemption by holding the respondent-unit as Prestigious Unit under the Scheme. 19. The revenue being aggrieved by the decision of the Board, filed Tax Revision Petition before the High Court under Section 86(2) of the Act. The High Court dismissed the revision petition filed by the revenue and upheld the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement units except those located in Sub-Plan area, respondent-unit may not be entitled to avail the benefit of the Scheme. 23. Per contra, learned counsel, Shri Sudhir Gupta would justify the reasoning and the conclusion reached by the High Court while rejecting the revenue s revision petition and thereby confirming the view expressed by the Board. He would, inter alia, submit that Item 1E is only an exception to the general rule envisaged in Item 1 and not an exception to the other Items in the Annexure-C, i.e., Items 2 to 7 as it is not intended to govern the entire field of exemptions made available to the cement industry so as to deny the benefits to a unit even if it falls under another Item envisaging better incentives. He would further submit that since new cement unit is specifically excluded from application of Item 1 (new units generally), Item 2 (expanding/diversifying unit) and Item 5 (very prestigious unit) but not Item 4 (prestigious units), Item 6 (export oriented prestigious/pioneering unit) and Item 7 (export oriented very prestigious units), it falls that the intention behind such express exclusion is such that but for the said exclusion, cement industries woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ems 4 and 5 to also exclude operation of General entry; and (c) the special entry would not exclude the applicability of general entry in context of the Scheme so as to exclude the operation of items 4, 6 and 7. Thereby implying that though there exists an overlap between the general and special provision, the general provision would also be sustained and the two would co-exist. 27. Before we deal with the fact situation in the present appeal, we reiterate the settled legal position in law, that is, if in a Statutory Rule or Statutory Notification, there are two expressions used, one in General Terms and the other in special words, under the rules of interpretation, it has to be understood that the special words were not meant to be included in the general expression. Alternatively, it can be said that where a Statute contains both a General Provision as well as specific provision, the later must prevail. 28. We are mindful of the principle that the Court should examine every word of a statute in its context and must use context in its widest sense. We are also in acquaintance with observations of this Court in Reserve Bank of India v. Peerless General Finance and Investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latter treating the common subject matter more specifically or minutely than the former. Corpus Juris Secundum, 82 C.J.S. Statutes 482 states that when construing a general and a specific statute pertaining to the same topic, it is necessary to consider the statutes as consistent with one another and such statutes therefore should be harmonized, if possible, with the objective of giving effect to a consistent legislative policy. On the other hand, where a general statute and a specific statute relating to the same subject matter cannot be reconciled, the special or specific statute ordinarily will control. The provision more specifically directed to the matter at issue prevails as an exception to or qualification of the provision which is more general in nature, provided that the specific or special statute clearly includes the matter in controversy. (Edmond v. U.S., 520 U.S. 651, Warden, Lewisburg Penitentiary v. Marrero, 417 U.S. 653) 31. The maxim generalia specialibus non derogant is dealt with in Volume 44 (1) of the 4th ed. of Halsbury's Laws of England at paragraph 1300 as follows: The principle descends clearly from decisions of the House of Lords in Seward v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on can require that when the words of one part of statute convey a clear meaning it shall be necessary to introduce another part of statute which speaks with less perspicuity, and of which the words may be capable of such construction, as by possibility to diminish the efficacy of the first part. (Anandji Haridas and Co. (P) Ltd. v. S.P. Kasture, (1968) 1 SCR 661, Patna Improvement Trust v. Lakshmi Devi, 1963 Supp (2) SCR 812, Ethiopian Airlines v. Ganesh Narain Saboo, (2011) 8 SCC 539, Usmanbhai Dawoodbhai Memon v. State of Gujarat, (1988) 2 SCC 271, South India Corpn. (P) Ltd. v. Secy., Board of Revenue, Trivandrum, (1964) 4 SCR 280, Maharashtra State Board of Secondary and Higher Secondary Education v. Paritosh Bhupeshkumar Sheth, (1984) 4 SCC 27) 34. In J.K. Cotton Spinning Weaving Mills Co. Ltd. v. State of U.P., (1961) 3 SCR 185, this Court has clarified that not only does this rule of construction resolve the conflicts between the general provision in one statute and the special provision in another, it also finds utility in resolving a conflict between general and special provisions in the same legislative instrument too and observed that: 9. We reach the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1155 states that it is based, like other linguistic canons of construction, on the rules of logic, grammar, syntax and punctuation, and the use of language as a medium of communication generally. As Lord Wilberforce observed in Associated Minerals Consolidated Ltd v Wyong Shire Council [1975] AC 538, 554, that it is still a matter of legislative intention, which the courts endeavour to extract from all available indications. 36. In Waverly Jute Mills Co. Ltd. v. Raymon Co. (India) (P) Ltd., (1963) 3 SCR 209 and Union of India v. India Fisheries (P) Ltd., AIR 1966 SC 35 this Court has observed that when there is an apparent conflict between two independent provisions of law, the special provision must prevail. In CCE v. Jayant Oil Mills (P) Ltd., (1989) 3 SCC 343 this Court has accepted the aforesaid rule as the basic rule of construction that is to say a more specific item should be preferred to one less so. In Sarabjit Rick Singh v. Union of India, (2008) 2 SCC 417 this Court has in fact followed the aforesaid precedents thus: 58. The Act is a special statute. It shall, therefore, prevail over the provisions of a general statute like the Code of Criminal Procedure. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason of the remedy. (emphasis supplied) 38. In LIC v. D.J. Bahadur, (1981) 1 SCC 315 this Court was confronted with the question as to whether the LIC Act is a special legislation or a general legislation and while considering the rule in discussion, this Court observed thus: 49. the legal maxim generalia specialibus non derogant is ordinarily attracted where there is a conflict between a special and a general statute and an argument of implied repeal is raised. Craies states the law correctly: The general rule, that prior statutes are held to be repealed by implication by subsequent statutes if the two are repugnant, is said not to apply if the prior enactment is special and the subsequent enactment is general, the rule of law being, as stated by Lord Selbourne in Sewards v. Vera Cruz, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision is this: In passing a special Act, Parliament devotes its entire consideration to a particular subject. When a general Act is subsequently passed, it is logical to presume that Parliament has not repealed or modified the former Special Act unless it appears that the Special Act again received consideration from Parliament. Vide London and Blackwall Railway v. Limehouse District Board of Works, and Thorpe v. Adams. 41. In Gobind Sugar Mills Ltd. v. State of Bihar, (1999) 7 SCC 76 this Court has observed that while determining the question whether a statute is a general or a special one, focus must be on the principal subject- matter coupled with a particular perspective with reference to the intendment of the Act. With this basic principle in mind, the provisions must be examined to find out whether it is possible to construe harmoniously the two provisions. If it is not possible then an effort will have to be made to ascertain whether the legislature had intended to accord a special treatment vis- -vis the general entries and a further endeavour will have to be made to find out whether the specific provision excludes the applicability of the general ones. Once we come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case. Howsoever, it is true that the canons of construction must be applied to extract most beneficial re-conciliation of provisions. In case of fiscal statute dealing with exemption, it would require interpretation benefiting the assessee. But here the introduction of the subject specific entry vide amendment into general scheme of exemption speaks volumes in respect of intention of the legislature to restrict the benefit to cement industries as available only under Item 1E, which categorically classified them into three as per their FCI. The specific entries being mutually exclusive have been placed so systematically arranged and classified in the Scheme. The construction of provisions must not be divorced from the object of introduction of subject specific provision while retaining other generalized provision that now specifically exclude the new cement industries, which could otherwise fall into its ambit, lest such interpretation would be not ab absurdo (i.e., interpretation avoiding absurd results). 46. Therefore, in our considered view the respondent-Company would only be eligible for grant of exemption under Item 1E as a large new cement unit in accordance with its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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