Purposive interpretation of industrial exemption notification extends relief to machinery acquired during the setting-up process after production begins.

An exemption notification under section 4(2) of the Rajasthan Sales Tax Act, 1954 covering plant and machinery for setting up a new industry was construed purposively. The setting up of an industrial unit was treated as a continuous process, not as a completed event on the start of commercial production. Machinery ordered during the setting-up stage and purchased within the life of the notification remained eligible, even if received after production commenced. Applying that approach, the assessee was entitled to exemption for the two machines purchased after commencement of commercial production, and the tax authorities' denial was held incorrect.

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Issues: Whether the process of setting up a new industrial unit under the exemption notification continued beyond commencement of commercial production so as to entitle the assessee to tax exemption on plant and machinery purchased and received after that date.

Analysis: The exemption notification under section 4(2) of the Rajasthan Sales Tax Act, 1954 was held to apply to plant and machinery for setting up a new industry during the operative period of the notification. The setting up of an industrial unit was treated as a continuous process and not as a completed event on the date of commencement of commercial production. Where the machinery formed part of the project report, was ordered during the setting up stage, and was purchased within the life of the notification, a narrow or pedantic construction was rejected in favour of a purposive approach consistent with the object of the exemption.

Conclusion: The assessee was entitled to exemption in respect of the two machines purchased after commencement of commercial production, and the denial of exemption by the tax authorities was incorrect.

Ratio Decidendi: For a notification granting exemption for plant and machinery used in setting up a new industry, the relevant inquiry is whether the machinery was acquired as part of the continuous process of setting up the unit within the notification period, not whether it was received after commercial production had begun.

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