Industrial policy deferment notification read as a whole: repayment cap runs from deferment start, with interest directed at a reduced rate.

An industrial policy deferment notification was construed as a whole to preserve both the eligibility period and the outer repayment limit; the thirteen-year cap had to run from the original start of deferment, so the repayment schedule had to conclude by 31.08.2013. On delayed repayment, the Court treated the facts as special and did not apply penalty, while directing payment of interest at a reduced rate of 12% per annum. The interpretive principle stated was that a taxing notification must be read according to its plain words, but in a manner that maintains the scheme and avoids an absurd or self-defeating result.

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Issues: (i) Whether the deferment repayment period under the industrial policy notification had to be computed from the original date of start of deferment so as to conclude within thirteen years from that date; (ii) whether the assessee was liable to pay interest for delayed repayment and whether penalty could be imposed.

Issue (i): Whether the deferment repayment period under the industrial policy notification had to be computed from the original date of start of deferment so as to conclude within thirteen years from that date.

Analysis: The notification granted deferment for a fixed eligibility period and required repayment in ten equal six-monthly instalments after completion of that period, with the further stipulation that repayment must be completed within thirteen years from the date of start of deferment. The language had to be read as a whole and in the context of the policy. A construction that treated the thirteen-year cap as beginning only from the date on which deferment was actually allowed in 2006 would render the repayment structure and the outer limit internally inconsistent and would produce an anomalous result. The words used in the notification were therefore required to be given a meaning that preserved both the eligibility period and the maximum outer limit.

Conclusion: The repayment schedule had to end by 31.08.2013, and the assessee's interpretation was rejected.

Issue (ii): Whether the assessee was liable to pay interest for delayed repayment and whether penalty could be imposed.

Analysis: The case involved special facts, including the earlier payment made pursuant to the Court's order and the nature of the dispute over conversion from exemption to deferment. Penalty under the rules was not treated as applicable on these facts. As regards delayed repayment, the Court moulded relief by directing payment of interest at a reduced and specific rate rather than the rate asserted by the Revenue.

Conclusion: Penalty was not applied, and the assessee was directed to pay interest at 12% per annum.

Final Conclusion: The appeal succeeded in part for the Revenue on the question of the repayment timeline, while the Court declined to apply penalty and substituted a direction for payment of interest at 12% per annum.

Ratio Decidendi: A taxing notification must be construed according to its plain words as a whole, but the interpretation adopted must preserve the scheme of the provision and avoid an absurd or self-defeating result.

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