Exemption notification and mandatory return scrutiny: eligible new industrial units kept CST relief for the full incentive period.

An amended exemption notification was construed to extend Central Sales Tax relief to new industrial units commencing commercial production between 01.08.2006 and 31.03.2013 for the full incentive period of 6 years and 8 months, because the eligibility clause and the duration clause had to be read together according to their plain language. The notification's non obstante clause in the duration provision could not be ignored by reference to administrative minutes or proposals. The statutory scrutiny procedure for returns under Section 60 and Rule 44 was also held mandatory; the authority was confined to the prescribed notice-based process and could not exceed that procedure, so the impugned scrutiny order and related demand were not sustainable.

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Issues: (i) Whether the amended exemption notification entitled new industrial units commencing commercial production between 01.08.2006 and 31.03.2013 to exemption from Central Sales Tax for the full incentive period of 6 years and 8 months; (ii) Whether the statutory procedure for scrutiny of returns under Section 60 and Rule 44 was mandatory and confined the authority to issuing notice.

Issue (i): Whether the amended exemption notification entitled new industrial units commencing commercial production between 01.08.2006 and 31.03.2013 to exemption from Central Sales Tax for the full incentive period of 6 years and 8 months.

Analysis: The amended notification contained two distinct operative parts. Paragraph 3 identified the class of new industrial units eligible for incentives, namely those commencing commercial production on or after 01.08.2006 up to 31.03.2013. Paragraph 4 then contained a non obstante clause and fixed the total period of incentive for both existing and new units at 6 years and 8 months. The text of paragraph 4 could not be ignored by relying on minutes of meetings or the administrative proposal. The ordinary meaning of the notification required that eligible new units falling within paragraph 3 would receive the incentive, while paragraph 4 governed its duration.

Conclusion: The exemption was available to the petitioners, and the benefit continued for 6 years and 8 months.

Issue (ii): Whether the statutory procedure for scrutiny of returns under Section 60 and Rule 44 was mandatory and confined the authority to issuing notice.

Analysis: Section 60 authorised scrutiny of returns for checking correctness of tax application and calculation. Rule 44 required scrutiny to detect mistakes and, where a mistake was found, the authority was to serve notice for rectification or communicate the result of scrutiny within the prescribed time. The procedure was mandatory, and the authority could not travel beyond issuing notice in the manner attempted in the case.

Conclusion: The scrutiny order passed beyond the permissible statutory procedure and could not be sustained.

Final Conclusion: The revisions succeeded, the assessee's entitlement to Central Sales Tax exemption was upheld, and the impugned tax demand based on the contrary interpretation was set aside.

Ratio Decidendi: Where an exemption notification contains both the class of eligible units and a separate clause fixing the duration of incentive, both clauses must be given effect according to their plain language, and mandatory statutory scrutiny procedure cannot be bypassed by the assessing authority.

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