Industrial policy exemption turns on factory building ownership, not land ownership, where investment and genuine unit criteria are met

Industrial Policy, 1995 sales tax exemption was construed as an incentive for genuine new industrial investment, and the implementing notifications were read in that policy context. The requirement of exclusive ownership of the factory building was held not to require ownership of the land as well, while the separate lease-based limb addressed leased premises. This interpretation was supported by the text of the first limb, which omitted any land requirement, and by the policy objective of preventing bogus or fly-by-night units from claiming incentives. As the assessee owned the factory building and had made substantial investment, the eligibility condition was satisfied and the exemption was available.

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Issues: Whether the assessee was entitled to sales tax exemption under the Industrial Policy, 1995 and Notifications S.O. Nos. 478 and 479 dated 22 December 1995 on the basis that it owned the factory building though it did not hold the land by a registered lease for 15 years or more, and whether the implementing notifications had to be construed in the context of the incentive policy.

Analysis: The entitlement to exemption was examined in the light of clause 16 of the Industrial Policy, 1995, which linked the incentive to industrial investment and the setting up of genuine new units in the State. The notifications were held to be instruments to implement that policy. The requirement of ownership of the building or a registered long-term lease was understood as serving the object of ensuring real fixed investment and preventing bogus or fly-by-night units from claiming incentives. On that reading, the first limb of the notifications, which referred to exclusive ownership of the building, did not require ownership of the land as well. Even on a strict reading, the text of the first limb omitted the word land, while the second limb separately dealt with leased premises. Since the assessee owned the building in which the factory was situated and had made substantial investment, the eligibility condition was satisfied.

Conclusion: The assessee was entitled to the sales tax exemption under the Industrial Policy, 1995 and the related notifications, and the State's challenge to that entitlement failed.

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