TaxTMI 
TaxTMI 
TaxTMI 
1984 (12) TMI 280
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...., 1974. A similar notification dated 14th March, 1974 was issued which was to remain in force from 1st April, 1974 to 31st March, 1979. It is an admitted position that the industrial unit with which we are concerned, started production on 5th January, 1971. However, it was registered as small-scale industry by the Industries Department of the State Government on 2nd July, 1976. The dispute regarding granting of exemption has arisen in respect of the period from 1st July, 1972 to 31st March, 1976. 3.. From the notification dated 19th September, 1969 (annexure 1) it appears that an exemption from levy of general sales tax and special sales tax has been given "on sales of finished products by the newly set up small-scale industries at the first stage of sale after production for a period of five years from the date the industry starts its production". Explanation (1) of the said notification is as follows: "'Small-scale industry' means an industrial unit with an investment upto Rs. 7.5 lacs on plant and machinery, excluding the value of land and building and approved and registered by the Industries Department of the Government of Bihar." In view of the explanation aforesaid an ind....
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....e of the above order the case finally came for hearing before the Full Bench. S.B. Gadodia, K.M. Lal, B.S. Lal and M.S. Mittal, for the petitioner. T.K. Das, Standing Counsel, and J.P. Gupta, junior Counsel to Standing Counsel, for the respondents. JUDGMENT SANDHAWALIA, C.J.-The true import and impact of the two notifications issued under section 4(3)(b) of the Bihar Sales Tax Act, 1959 for exempting the newly set up small-scale industries from the incidence of general and special sales tax is the primal question necessitating this reference to the Full Bench. Equally at issue is the correctness of the observations in the earlier Division Bench judgment in Kailash Roller Flour Mills v. Assistant Commissioner of Commercial Taxes [1981] 48 STC 297. 2.. The facts are not in dispute and lie within a narrow compass. The State of Bihar in order to extend incentives for the setting up of small-scale industries within it issued Notification No. A. STGL-E-1013/69/9924 F.T. dated the 19th September, 1969 granting exemption from the levy of general sales tax as well as special sales tax on the sales of finished products by the newly set up smallscale industries for a period of five years ....
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....tain anomalous results flowing therefrom the case was referred to a larger Bench for an authoritative decision. 5.. At the very threshold it may be noticed that there is no dispute on the facts and the consequent answer to question No. (1). It is the common and admitted ground that the date of commencement of production of the industrial unit is the 1st of January, 1971. Calculating arithmetically the same is not within five years of the date of registration with the Industries Department which again is undisputed as being the 2nd of July, 1976. Therefore, it must be held that the petitioner-firm started production beyond the period of five years from the date of its registration. The answer to question No. (1), therefore, has to be rendered in the negative. 6.. Adverting now to the second question, the core of the argument of Mr. Gadodia on behalf of the petitioner-firm is that under the said two notifications all the newly set up small-scale industrial units would be entitled to the benefit of exemption, irrespective of the date of their registration with the Industries Department, in case they had commenced production within a period of five years prior to the issuance of the ....
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....ar is pleased to exempt from the levy of both 'general sales tax' and 'special sales tax' sales of finished products by newly set up small-scale industries at the first stage of sale after production for a period of five years from the date the industry starts its production subject to the conditions that- (a) The owners of the industry shall issue serially cash/credit memos for sales of finished goods which will contain the names and address of the purchaser, description of goods sold and its price, the exemption certificate number and dated signature of the seller, and (b) the owner of the industry shall maintain sales and purchase registers as also stock register for sales and purchases of goods, and (c) the owner of the industry shall remain liable to render such accounts of his sales as become applicable under the provisions of the Bihar Sales Tax Act, 1959 on demand by the authorities appointed under section 8 of the aforesaid Act and shall obtain certificate of registration under section 9 of the said Act after his gross turnover exceeds the specified quantum as mentioned under section 3 of the Bihar Sales Tax Act, 1959. Explanation: Same as in Notification No. 9924 dat....
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....nly should the industry be a small-scale one, but it also must be a newly set up one which has been precisely defined with the commencement of the date of production as the focal point. Looking at the two notifications, so far as small-scale industry is concerned, the criteria are the approval and registration by the Industries Department and so far as its newly set up nature is concerned, the criterion is the commencement of the date of production, till five years thereafter. 10.. Now a plain look at the explanation and definition of "small-scale industry" would show that as regards the factum of being a small-scale industry the core of the matter is the date of its approval and registration by the Industries Department. It is not any and every small-scale industry which is eligible for exemption under the notifications, even though in actual fact it may even be smaller than the prescribed ones. To come within the same, it must satisfy the tests which are inflexibly prescribed. The factual requirement is that the investment on plant and machinery (excluding the value of land and buildings) must not exceed Rs. 7.5 lacs. The formal requirement then is that it must be approved and ....
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....graph 2 were to read as "The notification shall remain in force from 19th June, 1969 to the 19th of June, 1970", could it possibly be said that even though the notification itself was only for a year yet the exemption must extend over five years. As I said earlier, the period for which the exemption may be given is the very bounty of the State and not any inherent right thereto. It is within the power of the State to grant exemption for one year, two years or three years as it may desire and no inflexible right for exemption for a full period of five years is either inherent or even remotely flowing from the terms of the notification. Clause (ii) of the explanation, therefore, is the second rule of eligibility or qualification for claiming exemption from sales tax and does not determine the time factor for which the same would be available. In a way it only declares that such eligibility as a newly set up small-scale industrial unit can exist only from the date of starting production till five years thereafter and the moment the said period is crossed the unit would cease to be a newly set up one and become an ordinary industrial unit and consequently ineligible for any further con....
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....ave sought exemption and claimed refund of the tax duly paid at the relevant time. 14.. Even more untenable is the stand of the petitioner that the benefit of exemption could extend even five years prior to the date of the notification on the 19th June, 1969. If that were to be so, a small-scale industrial unit starting production in 1964-65 would be within the ambit of the example noticed in the preceding paragraph. If the yearly assessments in such a case were to be finalised in the years 1965 to 1969 on the 18th June, could the assessee therein claim exemption? The answer would be obviously in the negative because at that stage even the very hint of the concession and the existence of the notification on The statute book would be totally non-existent. It must, therefore, be held that the incidence of a tax cannot be allowed to rest on the fortuitous or accidental circumstance of the date when the assessment order may come to be made in the original or by way of remand. If that were allowed to be so, the levy of tax would depend upon the vagaries of the assessing officers and the unpredictable fortunes of a long drawn litigation in such cases rather than on a firm foundation and....
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....el for the respondents rightly submitted that the rival aspect that the exemption must from the nature of things stem only from the date of registration was not even referred to, far from being considered or adjudicated upon. The learned judges, therefore, viewed the issue in a vacuum without any reference to the date of registration, which, as already noticed, is the sine qua non for eligibility and the consequent claim of concession for exemption. Yet again this inflexible period of five years was sought to be rested on the allegedly unequivocal language of the notifications. With respect, it is not so and the language far from being unequivocal is indeed ambivalent and this was so held by the Bench itself in the opening part of the judgment in the following words: "There seems to be no end to the conundrums suggested at the Bar regarding the interpretation of two notifications which I shall hereinafter mention and I suppose, there will be no end to those conundrums until such notifications are effaced and fresh notifications, if any, in more concise and unequivocal terms are issued should the State Government so choose." Yet again this assumption of five year period seems to p....
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....-scale ones. It is plain that even though an industrial unit may be a small-scale one in fact, it would not be entitled to the exemption till it was duly registered with the Department of Industries. Equally even if it was registered but the period of the commencement of its production had exceeded five years, it would cease to be a newly set up unit and ineligible for exemption on that ground. If, as I have said earlier, the right to exemption is rested on the firm ground of the date of its registration then any small-scale industrial unit, which had already started production four years ago from that date, would get the benefit only for the remaining period of one year (if covered by the notification), because it would cease to be a newly set up unit thereafter. 19.. Even the sequence of these notifications granting and withdrawing the exemption would give the lie direct to the assumption that there was any intent to grant the concession for an inflexible period of five years. Indeed, these notifications show no method in their whimsiciality. It would appear that the first notification (annexure 1) was issued on the 19th of September, 1969 but retrospectivity was sought to be gi....
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....e concession of exemption herein is made available only to the small-scale industries in their infancy. The claim, if one may put it metaphorically, subsists till such a small-scale industry attains the age of five years from the date of its birth, viz., the date of starting production. The object and purpose is to lend a hand to such an industry in its teething period of the first five years. In my view, it is not made available for a blanket period of five years of exemption irrespective of the age of the small-scale industry. Indeed the moment the small-scale industry crosses this limit of five years-from the date of its production it gets out of the definition of being a newly set up one and thus ceases to be eligible for the exemption. It was submitted rightly, though somewhat picturesquely, before us that the exemption is for a small-scale industry, which is a minor up to its age of five years, and not for older ones beyond that limit. 22.. It is the admitted position in the present case that the industrial unit had already completed more than five years from the date it started production and when it secured the approval and registration of the Industries Department on the ....
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....ere is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used." After approving this classic statement of Rowlatt, J., in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64, the Supreme Court in Income-tax Commissioner, Patiala v. Shahzada Nand and Sons AIR 1966 SC 1342 added that "To this may be added a rider: in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the Court as to what is just or expedient." A statute, here the statutory instruments, must be read as a whole. I may also notice the wellknown canon of construction of statute, which will equally apply to the construction of statutory notification, as noticed by Honourable the Chief justice in Nawal Kishore Agrawal v. ....
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....espondents is accepted, it cannot be denied that the five years' period stated in the first part of the notification becomes otiose, which, under no rule of construction can be permitted. To give effect to all parts of the notifications and for giving a harmonious construction it must be held that what is intended by clause 2 of both the notifications was that if a newly set up smallscale industry started production between 19th June, 1969 and 31st March, 1974 such industry would be entitled to exemption for five years counting from the date it started production. Likewise, under the notification dated 14th March, 1974 if a newly set up small-scale industry went into production between 1st April, 1974 and 31st March, 1979 such industry would be entitled to an exemption for five years computing from the date when it started production. The same interpretation must be put with regard to industry covered by explanation (ii), that is to say, if it had not completed five years on the date the notifications came into force, it would get exemption for five years from the date it started production. The periods mentioned in clause 2 of both the notifications do not curtail or reduce the pe....