Subordinate notifications cannot narrow fiscal incentives granted by policy; old industrial units retained raw-material sales tax exemption.

Old industrial units that began production before 1 April 1993 and had plant-and-machinery investment not exceeding Rs. 15 crores were held entitled under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993 to sales tax exemption on raw material purchases for seven years from 1 April 1993. The policy clause was treated as creating a distinct entitlement for that class of units, and the general opening language could not cut down its clear terms. A notification under the Bihar Finance Act could implement the policy, but it could not add a disqualifying condition excluding units that had earlier taken industrial incentives, because that would narrow the substantive benefit granted by the policy. The additional condition was therefore invalid.

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Issues: (i) Whether old industrial units that had started production before 1 April 1993 and had investment on plant and machinery not exceeding Rs. 15 crores on that date were entitled to sales tax exemption on purchase of raw material under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993. (ii) Whether the notification issued under section 7(3) of the Bihar Finance Act, 1981 could validly impose the additional condition that such units must not have availed any prior industrial incentive benefit.

Issue (i): Whether old industrial units that had started production before 1 April 1993 and had investment on plant and machinery not exceeding Rs. 15 crores on that date were entitled to sales tax exemption on purchase of raw material under paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993.

Analysis: Paragraph 10.4(i)(b) separately dealt with old industrial units and granted them the facility for seven years from 1 April 1993 if their investment on plant and machinery did not exceed Rs. 15 crores on that date. The policy was required to be read as a whole, but the clear language of this specific clause could not be cut down by the general opening portion of the resolution. The clause created a distinct entitlement for the specified class of old units and attached no further condition regarding prior availing of benefits under an earlier policy.

Conclusion: The entitlement under paragraph 10.4(i)(b) was upheld in favour of the assessee.

Issue (ii): Whether the notification issued under section 7(3) of the Bihar Finance Act, 1981 could validly impose the additional condition that such units must not have availed any prior industrial incentive benefit.

Analysis: The power to issue a notification under section 7(3) was meant to carry out the industrial policy and could not be used to negate or subtract a benefit already granted by the policy itself. A condition that excluded otherwise eligible old industrial units because they had earlier taken benefits under another policy was repugnant to paragraph 10.4(i)(b). Conditions of administration and anti-misuse measures were permissible, but not a condition that amended the substantive entitlement created by the policy.

Conclusion: The impugned condition in the notification was invalid and was rightly struck down in favour of the assessee.

Final Conclusion: The appeals failed, and the old industrial units retained their entitlement to sales tax exemption on purchase of raw material under the 1993 policy without the additional disqualifying condition introduced by the notification.

Ratio Decidendi: Where a government policy grants a specific fiscal benefit in clear terms, a subordinate notification issued to implement that policy cannot impose an additional condition that takes away or narrows the substantive benefit conferred by the policy.

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