Industrial investment incentive schemes must be construed liberally; eligible capital investment cannot be reduced without express prohibition.

The Rajasthan Sales Tax Incentive Scheme, 1998 was construed as a liberal industrial investment incentive, and the definition of "new industrial unit" was held broader than under earlier schemes. Because the scheme contained no express prohibition on shifting plant and machinery between two units of the same assessee within the State, the Screening Committee could not import a restrictive condition to reduce the eligible capital investment merely on that basis. The exclusion of such investment was therefore unjustified and unsustainable, and the revision petition succeeded with the orders of the Screening Committee and the Tax Board set aside.

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Issues: Whether the State Level Screening Committee was justified in reducing the eligible capital investment under the Rajasthan Sales Tax Incentive Scheme, 1998 on the ground that part of the plant and machinery was shifted from one unit of the same assessee to another unit.

Analysis: The incentive scheme was framed to encourage industrial investment within the State and its definition of "new industrial unit" in clause 2(k) of the 1998 Scheme was broader than the earlier schemes. The scheme did not contain any prohibition against shifting plant and machinery between two units under the same ownership and management when the investment continued within the State. In the absence of an express restriction, the screening authority could not add a condition reducing the benefit merely because machinery was shifted for business expediency. The scheme had to be construed in the light of its object, and exemption or incentive provisions directed toward economic development required a liberal and purposive construction.

Conclusion: The reduction of eligible investment was unjustified and unsustainable.

Final Conclusion: The revision petition succeeded and the orders of the Screening Committee and the Tax Board were set aside.

Ratio Decidendi: Where an incentive scheme intended to promote industrial investment contains no express prohibition, the benefit cannot be curtailed by importing a restrictive condition inconsistent with the scheme's object and language.

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