Deferred sales tax eligibility turns on whether bottles and crates count as plant for fixed capital investment purposes.

In a deferred sales tax scheme, the meaning of "plant" was read in the context of fixed capital investment and manufacturing function, so articles used mainly for storage or packing of finished goods were not treated as plant. On that approach, bottles and crates used by a soft drinks manufacturer were excluded from fixed capital investment for deferment benefit. Government notifications and circulars excluding such items from plant and machinery were treated as relevant to eligibility assessment, and the administrative exclusion was not displaced on the material presented. The resulting position was that bottles and crates could not be counted for deferment purposes.

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Issues: (i) Whether bottles and crates used by a soft drinks manufacturer are "plant" within rule 2(v) of the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990 so as to form part of "fixed capital investment" for deferment benefit; (ii) Whether the Government notifications and circulars excluding such items from the value of plant and machinery could be ignored while determining eligibility for deferment.

Issue (i): Whether bottles and crates used by a soft drinks manufacturer are "plant" within rule 2(v) of the Bihar Sales Tax Supplementary (Deferment of Tax) Rules, 1990 so as to form part of "fixed capital investment" for deferment benefit.

Analysis: The expression "plant" in the Deferment Rules was held to require construction in the context of the scheme of deferred sales tax meant for fixed assets having permanence and a manufacturing function. The broader income-tax cases on the meaning of plant were treated as context-specific and not of universal application. On that reading, the relevant apparatus for manufacture was distinguished from articles used for storage or packing of the finished product. Bottles and crates were therefore not treated as plant for the purposes of the Deferment Rules.

Conclusion: The claim that bottles and crates constitute plant for deferment purposes was rejected, and the finding was against the assessee.

Issue (ii): Whether the Government notifications and circulars excluding such items from the value of plant and machinery could be ignored while determining eligibility for deferment.

Analysis: The company had sought eligibility as a small-scale industrial unit, and its own registration materials did not include bottles and crates under plant and machinery. The notifications and circulars issued under the industrial regulatory framework clarified that storage-related items used for finished products were to be excluded while computing plant and machinery. Since the factual basis for challenging that exclusion was not properly pleaded by counter-affidavit in reply to the amended challenge, the objection could not displace the administrative determination.

Conclusion: The exclusion of bottles and crates from plant and machinery for eligibility determination was upheld, and the finding was against the assessee.

Final Conclusion: The deferment benefit was confined to the fixed capital investment otherwise admissible, and investment in bottles and crates was not eligible to be counted for that purpose.

Ratio Decidendi: The meaning of "plant" in a fiscal incentive scheme must be gathered from the context, object, and scheme of the provision, and articles used mainly for storage or packing of finished goods are not necessarily plant merely because they are employed in the business.

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