Industrial incentive policy exemption cannot be narrowed by notification where finished goods are stock transferred outside the State.

An industrial unit was held entitled to purchase tax exemption on raw materials used to manufacture finished goods in Bihar, even though part of the finished products was transferred by stock transfer. The Industrial Incentive Policy, 1993 was construed liberally to promote industrial growth, and paragraphs 10.4 and 10.5 were found not to require sales only within Bihar. A notification under section 7 of the Bihar Finance Act could not add a restriction absent from the policy, and the exemption under section 7(3) could not be curtailed by implying an outside-State sales bar. Promissory estoppel also supported the assessee because it had acted on the policy incentive.

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Issues: Whether the industrial unit was entitled to exemption from purchase tax on raw materials used for manufacture of finished goods in Bihar, even when a part of the finished products was transferred outside Bihar by stock transfer.

Analysis: The Industrial Incentive Policy, 1993 was framed to promote balanced industrial growth and had to be construed liberally in favour of the entrepreneur. Paragraphs 10.4 and 10.5 of the policy did not impose any condition that the finished products must be sold only within Bihar. The notification issued under section 7 of the Bihar Finance Act could not add a restriction inconsistent with the policy. Section 4 of the Act was subject to section 7, and once an exemption notification operated under section 7(3), the exemption could not be curtailed by reading into the notification a further condition that sales outside the State, including by stock transfer, would defeat the benefit. The principle of promissory estoppel also supported the assessee, since the unit had acted on the policy incentive and expanded its operations accordingly.

Conclusion: The assessee was entitled to exemption from purchase tax on raw materials used for manufacture of products in Bihar, notwithstanding that the finished products were sold outside Bihar by stock transfer.

Ratio Decidendi: A notification issued to implement an industrial incentive policy cannot impose a condition that is not found in the policy itself, and an exemption under section 7 of the Bihar Finance Act must be given effect according to the policy's liberal object, including where finished goods are sold outside the State.

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