Industrial incentive policy cannot be narrowed by notification that adds a new eligibility condition for raw-material tax exemption.

An industrial incentive policy granted old units, with plant and machinery investment not exceeding Rs. 15 crores on 1.4.1993, a limited exemption on purchase of raw materials for seven years under paragraph 10.4(i)(b). The policy had to be read as a whole, and that clause did not add any condition that the unit must have foregone benefits under an earlier incentive scheme. A later notification could implement the policy, but could not impose an additional substantive restriction that narrowed the entitled class. The restrictive condition in the notification was therefore inconsistent with the policy and invalid to that extent.

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Issues: (i) Whether paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993 entitled old industrial units, having investment on plant and machinery not exceeding Rs. 15 crores on 1.4.1993, to sales tax exemption on purchase of raw materials for seven years from 1.4.1993. (ii) Whether Notification No. S.O. 95 dated 4.4.1994, by imposing the further condition that such units must not have availed any benefit under an earlier industrial incentive policy, was consistent with the policy and valid.

Issue (i): Whether paragraph 10.4(i)(b) of the Industrial Incentive Policy, 1993 entitled old industrial units, having investment on plant and machinery not exceeding Rs. 15 crores on 1.4.1993, to sales tax exemption on purchase of raw materials for seven years from 1.4.1993.

Analysis: The policy had to be read as a whole, and not by isolating the opening paragraph alone. While the main thrust of the policy was to promote units commencing production after 1.4.1993, paragraph 10.4 made a specific distinction between new units under clause (a) and old units under clause (b). Clause (b) used clear language to extend the facility to old industrial units satisfying the investment limit, without adding any further condition regarding prior availing of benefits under earlier policies. The provision therefore conferred a limited raw-material tax exemption on the specified old units.

Conclusion: The old industrial units satisfying the investment condition were entitled to the facility under paragraph 10.4(i)(b).

Issue (ii): Whether Notification No. S.O. 95 dated 4.4.1994, by imposing the further condition that such units must not have availed any benefit under an earlier industrial incentive policy, was consistent with the policy and valid.

Analysis: Paragraph 10.5 empowered the Commercial Taxes Department to issue a notification to give effect to the policy, but not to add to or subtract from the benefits already granted by the policy itself. A condition excluding units that had earlier enjoyed benefits was not merely an administrative safeguard against misuse; it altered the substantive entitlement created by paragraph 10.4(i)(b). The notification therefore introduced an additional classification not contemplated by the policy and deprived a class of units of the promised benefit.

Conclusion: The impugned condition in the notification was inconsistent with the policy and invalid to that extent.

Final Conclusion: The petitioners succeeded in establishing their entitlement to sales tax exemption on purchase of raw materials, and the restrictive condition in the notification was struck down.

Ratio Decidendi: Where a policy expressly grants a benefit to a defined class of units, a delegated notification issued to implement that policy cannot impose an additional substantive condition that narrows the class or withdraws part of the granted benefit.

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