Expanded industrial unit entitled to sales tax deferment under incentive scheme, with narrow exclusion rejected.

An expanded small-scale industrial unit certified as a medium industrial unit remained entitled to deferment of sales tax under the industrial incentive notification. The Orissa HC read the notification issued under section 7 of the Orissa Sales Tax Act, 1947, together with S.R.O. No. 790/90 dated 16.08.1990, and held that the incentive scheme could not be applied so narrowly as to exclude an expanded SSI unit that had become a medium unit and was duly certified by the competent authority. Deferment of tax was treated as one of the benefits flowing from the I.P.R. incentives, so the orders denying that benefit were unsustainable.

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Issues: Whether an existing small-scale industrial unit, which by expansion is certified as a medium industrial unit, is entitled to the benefit of deferment of sales tax under the relevant industrial incentive notification.

Analysis: The unit had been granted the relevant industrial benefits on the footing that, by expansion, it had become a medium industrial unit. The Court read the notification issued in exercise of powers under section 7 of the Orissa Sales Tax Act, 1947, along with S.R.O. No. 790/90 dated 16.08.1990, and held that the benefit of the incentive scheme could not be confined in such a narrow manner as to exclude expanded SSI units that had become medium units and were otherwise certified by the competent authority. The Court treated deferment of tax as one of the benefits flowing from the I.P.R. benefits available to such a unit.

Conclusion: The expanded unit was entitled to deferment of payment of sales tax, and the impugned orders denying that benefit were not sustainable.

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