Case: State Of Orissa  Vs. M/S Tata Sponge Iron Ltd

of the view that for the incentive under paragraph 7.5 read with entry No.44 as notified in S.R.O No. 1019 of 1992, exemption of tax did not provide any period of limitation. Neither the IPR, 1992 nor the Finance Department Notification in SRO No.1019 of 1992 provided any stipulation as to how long the exemption from sales tax would remain in force and therefore, the position that emerges therefrom, is that, such exemption granted under the Notification was to remain operative till the industry utilizes / exhausts the incentive granted to it. The petitioner is entitled to such benefit till such time such exemption is allowed to remain in force without being withdrawn by the subsequent notification. It is important to point out here that no such notification withdrawing such exemption has been brought to our notice in course of hearing. 9. Indisputably, pursuant to or in furtherance of the aforementioned IPR, 1992, the State Government amended the provisions of the Orissa Sales Tax Act. Section 6 of the said Act reads as under: 6. Tax Free Goods The State Government may, by notification, subject to such conditions and exceptions, if any, exempt from tax the sale or purchase of any goods, or class of goods and likewise withdraw any such exemption. 10. Indisputably, again pursuant to or in furtherance of the aforementioned provision, the Finance Department of the State of Orissa had issued notification bearing SRO No. 1091 of 1992 dated 23.09.1992 and inserted Entry 44 in terms whereof the respondent became entitled to exemption. Entry 44 of the said notification reads as under: 44. Sale of finished products of an existing industrial unit, located in Orissa i.e. an industrial unit which has gone into production before 1st August, 1992, and which has undertaken expansion / modernization / diversification of the said unit after the 1st day of August, 1992 on the basis of separate project report duly appraised by the financial institution, and a certificate to this effect that is, regarding expansion / modernization / diversification of the unit is produced from the concerned General Manager, Project Manager, District Industries; Centre in case of Small Scale Units and a certificate in Form E (92) is produced from the Director of Industries, Orissa in case of Medium, Large and pioneer Units. The exemption of sales tax shall be limited to 60 per cent of the additional capital investment, in plant and machinery only in Zone-C, 75 per cent of the additional capital investment in plant and machinery only in Zone-B and 100 per cent of additional capital investment in plant and machinery only in Zone-A. Explanation I:- Additional capital investment in plant and machinery means additional investment of 50 per cent of more of the undepreciated book value of fixed capital investment of an existing unit in acquisition of plant and machinery for expanding / modernization / diversifying the production of the said unit. Provided that the benefit of exemption is admissible only on the incremental sales arising out of such expansion / modernization and diversification. Provided further that no exemption as indicated above shall be allowed to the following categories of industries, namely: 1. Rice Hullers and Rice Mills. 2. Flour Mills including manufacture of Besan, Pulse Mill and chuda mills. 3-47 .................................................................. 5. Further, the eligibility certificate granted for sales tax concession on sale of finished products categorically states that exemption may be available as per Finance Department Notification No. SRO 1091 of 1992 as amended from time to time up to a ceiling amount of: 1. 100% of the additional capital investment in plant and machineries being located in ......Zone-A 2. 75% -do- .......Zone-B 3. 60% -do- ........Zone-C 11. It is not in dispute that in the said entry, during which the same would remain operative, no period far less the period of five or seven years had been mentioned. The only limitation prescribed thereby was that only 75% of the additional capital investment in Zone B would be allowed where the unit of the respondent is situate. 12. In terms of Clause 5 of IPR, 1992, the respondent became entitled to exemption from payment of sales tax on finished products for an amount of Rs. 49.45 crores being 75% of Rs. 63.95 crores invested in plant and machinery. 13. We may notice that the Finance Department of the State of Orissa passed a consequential order in IPR, 1992 bearing SRO No. 1091 of 1992 dated 23.09.1992 which was given effect from 1.08.1992. A bare perusal of the said notification would clearly show that whenever the period upto which the exemption, could be obtained was required to be stated had specifically been done therein, as for example Sl.Nos. 30A, 41, 42A and 43A etc. We may, furthermore, notice that against the Entry 44, however, what is mentioned is the extent to which such exemption would be granted. No period during which such exemption is to be obtained was stated. In other words, no period of limitation was fixed thereby. 14. In view of the clear legal provision as also the aforementioned notification dated 23.09.1992, there cannot be any doubt whatsoever that the exemption in respect of deferment of sales tax having been provided for under the Orissa Sales Tax Act as also the notification issued thereunder, the High Court, in our opinion, is correct in taking its view. 15. It is furthermore a well settled principle of law that an exemption notification must be liberally construed. [See Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Ltd., (2005) 13 SCC 789, Tata Iron & Steel Co. Ltd. v. State of Jharkhand and Others, (2005) 4 SCC 272, Government of India and Ors. v. Indian Tobacco Association, (2005) 7 SCC 396, Commnr. Of Central Excise, Raipur v. Hira Cement, JT 2006 (2) SC 369 . and P.R. Prabhakar v. Commnr. of Income Tax, Coimbatore, 2006 (7) SCALE 191 ]. The said principle, therefore, applies in all fours in the present case. 16. For the reasons aforementioned, there

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]9. Indisputably, pursuant to or in furtherance of the aforementioned IPR, 1992, the State Government amended the provisions of the Orissa Sales Tax Act. Section 6 of the said Act reads as under:6. Tax Free Goods The State Government may, by notification, subject to such conditions and exceptions, if any, exempt from tax the sale or purchase of any goods, or class of goods and likewise withdraw any such exemption10. Indisputably, again pursuant to or in furtherance of the aforementioned provision, the Finance Department of the State of Orissa had issued notification bearing SRO No. 1091 of 1992 dated 23.09.1992 and inserted Entry 44 in terms whereof the respondent became entitled to exemption. Entry 44 of the said notification reads as under:44. Sale of finished products of an existing industrial unit, located in Orissa i.e. an industrial unit which has gone into production before 1st August, 1992, and which has undertaken expansion / modernization / diversification of the said unit after the 1st day of August, 1992 on the basis of separate project report duly appraised by the financial institution, and a certificate to this effect that is, regarding expansion / modernization / diversification of the unit is produced from the concerned General Manager, Project Manager, District Industries; Centre in case of Small Scale Units and a certificate in Form E (92) is produced from the Director of Industries, Orissa in case of Medium, Large and pioneer UnitsThe exemption of sales tax shall be limited to 60 per cent of the additional capital investment, in plant and machinery only in Zone-C, 75 per cent of the additional capital investment in plant and machinery only in Zone-B and 100 per cent of additional capital investment in plant and machinery only in Zone-AExplanation I:- Additional capital investment in plant and machinery means additional investment of 50 per cent of more of the undepreciated book value of fixed capital investment of an existing unit in acquisition of plant and machinery for expanding / modernization / diversifying the production of the said unitProvided that the benefit of exemption is admissible only on the incremental sales arising out of such expansion / modernization and diversificationProvided further that no exemption as indicated above shall be allowed to the following categories of industries, namely:1. Rice Hullers and Rice Mills2. Flour Mills including manufacture of Besan, Pulse Mill and chuda mills5. Further, the eligibility certificate granted for sales tax concession on sale of finished products categorically states that exemption may be available as per Finance Department Notification No. SRO 1091 of 1992 as amended from time to time up to a ceiling amount of:1. 100% of the additional capital investment in plant and machineries being located in ......Zone-A11. It is not in dispute that in the said entry, during which the same would remain operative, no period far less the period of five or seven years had been mentioned. The only limitation prescribed thereby was that only 75% of the additional capital investment in Zone B would be allowed where the unit of the respondent is situate12. In terms of Clause 5 of IPR, 1992, the respondent became entitled to exemption from payment of sales tax on finished products for an amount of Rs. 49.45 crores being 75% of Rs. 63.95 crores invested in plant and machinery13. We may notice that the Finance Department of the State of Orissa passed a consequential order in IPR, 1992 bearing SRO No. 1091 of 1992 dated 23.09.1992 which was given effect from 1.08.1992. A bare perusal of the said notification would clearly show that whenever the period upto which the exemption, could be obtained was required to be stated had specifically been done therein, as for example Sl.Nos. 30A, 41, 42A and 43A etc. We may, furthermore, notice that against the Entry 44, however, what is mentioned is the extent to which such exemption would be granted. No period during which such exemption is to be obtained was stated. In other words, no period of limitation was fixed thereby14. In view of the clear legal provision as also the aforementioned notification dated 23.09.1992, there cannot be any doubt whatsoever that the exemption in respect of deferment of sales tax having been provided for under the Orissa Sales Tax Act as also the notification issued thereunder, the High Court, in our opinion, is correct in taking its view15. It is furthermore a well settled principle of law that an exemption notification must be liberally construed. [See Commissioner of Customs (Imports), Mumbai v. Tullow India Operations Ltd., (2005) 13 SCC 789,  Tata Iron & Steel Co. Ltd. v. State of Jharkhand and Others, (2005) 4 SCC 272,  Government of India and Ors. v. Indian Tobacco Association, (2005) 7 SCC 396,  Commnr. Of Central Excise, Raipur v. Hira Cement, JT 2006 (2) SC 369 . and P.R. Prabhakar v. Commnr. of Income Tax, Coimbatore, 2006 (7) SCALE 191 ]. The said principle, therefore, applies in all fours in the present case16. For the reasons aforementioned, there is no merit in this appeal which is dismissed accordingly with costs. Counsels fee assessed at Rs. 25,000/-.