Sales tax exemption for priority industries under industrial policy could not be narrowly denied to eligible units.

Priority industries under the Industrial Policy Resolution, 1996 were treated as a distinct class entitled to sales tax exemption, and the policy was read with the later departmental notification and eligibility certificate to cover all priority industries of every scale. The Court applied the earlier interpretation that the phrase "all priority industries" could not be narrowly construed to exclude the petitioner. On that basis, the assessments and appellate orders denying exemption could not stand and were liable to be quashed.

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Issues: Whether the petitioner, being a priority industry under the Industrial Policy Resolution, 1996, was entitled to sales tax exemption under the Finance Department notification and the consequential orders denying the exemption were liable to be quashed.

Analysis: The Industrial Policy Resolution, 1996 treated priority industries as a distinct category and conferred sales tax exemption on such industries up to 200 per cent of fixed capital investment with an extended exemption period. The later departmental notification and the eligibility certificate issued by the Industries Department showed that all priority industries were intended to receive the benefit. The Court followed the earlier decision holding that the expression "all priority industries" in the relevant proviso included priority industries of every scale and that no narrow reading could be adopted to exclude the petitioner. On that basis, the assessments and appellate orders denying the benefit could not stand.

Conclusion: The petitioner was entitled to availing sales tax exemption under the Industrial Policy Resolution, 1996, and the assessment and appellate orders were liable to be quashed.

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