Industrial incentive exemption applies up to the turnover ceiling, with tax payable only on excess sales turnover.

The industrial incentive notification was construed together with the policy to preserve its object of encouraging units in backward and developing areas. An eligible unit was entitled to exemption or concessional sales tax up to the prescribed turnover ceiling, according to its category and location. Once turnover exceeded that limit, the benefit did not disappear for sales within the ceiling; tax became payable only on the excess turnover. This interpretation avoided rendering the incentive scheme unworkable and maintained the intended tax relief structure.

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Issues: Whether the sales tax exemption or concessional rate under the industrial incentive notification was available only up to the prescribed turnover limit, or whether crossing that limit disentitled the unit from the entire benefit including sales within the limit.

Analysis: The incentive policy and the notification were to be read together to give effect to the object of encouraging industrial units in backward and developing areas. The scheme showed that eligible units were intended to receive full exemption or concessional tax up to the specified turnover ceiling, depending on their category and location. A construction that denied the benefit altogether once the turnover marginally exceeded the ceiling would render the policy unworkable, defeat the incentive structure, and create an unrealistic burden where tax was demanded on sales for which no tax had been collected from customers.

Conclusion: The eligible unit remained entitled to exemption or concession up to Rs. 60 lakhs or Rs. 45 lakhs, as applicable, and full sales tax became payable only on the turnover exceeding the prescribed limit.

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