Sales tax exemption for small-scale industries requires prior registration and strict compliance with the five-year eligibility period.

Exemption from sales tax under the Bihar Sales Tax Act was held available only to newly set up small-scale industries that were approved and registered with the Industries Department. Registration was treated as an express condition of eligibility, and the five-year concession period was read strictly from commencement of production, so the benefit could not extend to any period before registration or beyond the defined five-year window. The Court further applied strict construction to tax exemption provisions and declined any retrospective or equitable extension. On that reasoning, the industrial unit was not entitled to exemption for the disputed period and the claim was rejected.

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Issues: Whether exemption from sales tax under the two notifications issued under section 4(3)(b) of the Bihar Sales Tax Act, 1959 was available to a small-scale industrial unit which was registered with the Industries Department only after it had already completed more than five years from the date of commencement of production.

Analysis: The exemption notifications granted a concession to newly set up small-scale industries and defined such an industry as one approved and registered by the Industries Department. The Court held that registration was a necessary condition of eligibility and that the benefit could not relate back to a period when the unit was not yet registered. The expression granting exemption for five years from the date of production was read with the definition of a newly set up unit, so that the concession was available only while both conditions coexisted: approved registration and a unit still within five years of starting production. The Court further held that exemption provisions in taxation law must be strictly construed and that no equitable or retrospective extension could be implied.

Conclusion: The industrial unit was not entitled to exemption for the disputed period because it had become registered only after completion of more than five years from the date of starting production.

Final Conclusion: The reference was answered against the assessee and the claimed exemption was denied as the statutory conditions for the concessional benefit were not satisfied during the relevant period.

Ratio Decidendi: A tax exemption granted as a concession to newly set up small-scale industries cannot be claimed for any period prior to registration when registration is an express condition of eligibility, and the exemption is available only so long as the unit remains within the defined five-year period from commencement of production.

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