Case: Commnr. Of Sales Tax Vs. Industrial Coal Enterprises

not operate. In support of his contention that provision for exemption from payment of tax should by strictly construed, reliance is placed upon the judgment of this court in State Level Committee and another v. Morgardshammar India Ltd., 1996(1) SCC 108. A Bench of two Judges of this Court relied upon an earlier decision of Three Judges Bench in Novopan India Ltd. v. Collector of Central Excise and Customs, 1994 Supp.(3) SCC 606 and held that an exception (sic) an exempting provision in a taxing statute should be construed strictly and it is not open to the Court to ignore the conditions prescribed in Section 4-A of the Act and extend the exemption. Though the decision pertains to exemption under Section 4-A of the Act, the facts of the case are entirely different and the ruling has to be understood in the context thereof. 8. Our attention has also been drawn to another case under Section 4-A which came up before this Court. In Pappu Sweets and Biscuits and another v. Commissioner of Trade Tax, U.P. Lucknow, 1998(7) SCC 228. Far from helping the appellant, the ruling can be used against the appellant as it is held that the object of the relevant Exemption Notification and the intention of the State Government in granting exemption are to be taken into account for interpreting the word "sweetmeat" and the words "conditions of like nature". 9. Learned counsel for the appellant relied upon the decision of this Court in Divisional Level Committee and another v. Sahu Stone Crushing Industries, 1998(8) SCC 435. In that case, it is held that the provision in Section 4-A (%) (C) requiring registration of the unit the Factories Act if the capital investment exceeds Rs. 3 lakhs is mandatory. The Bench reversed the judgment of the High Court reported in M/s Sahu Stone Crushing Industries v. Divisional Level Committee, Jhansi, 1994 UPTC 1 which took the view that the expression "shall" in the Section could be read as "may". The ruling has no relevance in the present case as the industrial unit in that case was established in November, 1986 and the date of first sale was 3.12.1986. The Court had to consider. Section 4-A after it was amended w.e.f. 13.9.1985 under U.P. Act No. 28 of 1991. The said amendment Act inserted sub-s. (5)(c). We are in this case concerned with the Section as it stood on 9.8.1985 before the said amendment. 10. Learned counsel for the appellant argues that the subsequent legislation could be taken for the purpose of guidance for interpreting the provisions in the Act as it stood earlier. We are unable to accept this contention. It is pointed out by the court of Appeal in England in Attorney General v. Clarkson, 1900(1) QB 156 that subsequent Legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. Lindley M.R. said, "Our duty is to interpret the meaning of the Legislature, and if the Legislature in one Act have used language which is admittedly ambiguous, and in a subsequent Act have used language which proceeds upon the hypothesis that a particular interpretation is to be placed upon the earlier Act, I think the judges have no choice but to read the two Acts together, and say that the Legislature have acted as their own interpreters of the earlier Act." There is no such situation here. The subsequent Act relied on by learned counsel is one of amendment and it may be remedial. Moreover, in this case, there is no ambiguity in the provisions of the Act as it stood at the relevant time warranting an interpretation by the Legislature. Hence the subsequent Legislation introduced in 1991 with effect from 13.9.1985 will not help the appellant. 11. In Commissioner of Income-tax, Amritsar v. Straw Board Manufacturing Co. Ltd., 1989 Supp. (2) SCC 523 this Court held that in taxing states, provision for concessional rate of tax should be liberally construed. So as in Bajaj Tempo Ltd. Bombay v. Commissioner of Income-tax, Bombay City-III, Bombay, 1992(3) SCC 78, it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 12. We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. If the test laid down in Bajaj Tempo Ltd. case (supra) is applied, there is no doubt whatever that the exemption granted to the respondent from 9.8.1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction sought to be placed by the appellant is accepted, the very purpose and object of the grant of exemption will be defeated. After all, the respondent had only shifted the unit to its own premises which made it much more convenient and casier for the respondent to carry on the production of the goods undisturbed by the vagaries of the lessor and without any necessity to spend a part of its income on rent. It is not the case of the appellant that there was any mala fide on the part of the respondent in obtaining exemption in the first instance as a unit with a capital investment below Rs. 3 lakhs and increasing the capital investment subsequently to an amount exceeding Rs. 3 lakhs with a view to defeat the provisions of any of the relevant statutes. The bona fide of the respondent have never been questioned by the appellant.

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

Explanation:
0[ds]We are unable to accept this contention. It is pointed out by the court of Appeal in England in Attorney General v. Clarkson, 1900(1) QB 156 that subsequent Legislation may be looked at in order to see the proper construction to be put upon an earlier Act where that earlier Act is ambiguous. Lindley M.R. said, "Our duty is to interpret the meaning of the Legislature, and if the Legislature in one Act have used language which is admittedly ambiguous, and in a subsequent Act have used language which proceeds upon the hypothesis that a particular interpretation is to be placed upon the earlier Act, I think the judges have no choice but to read the two Acts together, and say that the Legislature have acted as their own interpreters of the earlier Act." There is no such situation here. The subsequent Act relied on by learned counsel is one of amendment and it may be remedial. Moreover, in this case, there is no ambiguity in the provisions of the Act as it stood at the relevant time warranting an interpretation by the Legislature. Hence the subsequent Legislation introduced in 1991 with effect from 13.9.1985 will not help the appellant.We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. If the test laid down in Bajaj Tempo Ltd. case (supra) is applied, there is no doubt whatever that the exemption granted to the respondent from 9.8.1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction sought to be placed by the appellant is accepted, the very purpose and object of the grant of exemption will be defeated. After all, the respondent had only shifted the unit to its own premises which made it much more convenient and casier for the respondent to carry on the production of the goods undisturbed by the vagaries of the lessor and without any necessity to spend a part of its income on rent. It is not the case of the appellant that there was any mala fide on the part of the respondent in obtaining exemption in the first instance as a unit with a capital investment below Rs. 3 lakhs and increasing the capital investment subsequently to an amount exceeding Rs. 3 lakhs with a view to defeat the provisions of any of the relevant statutes. The bona fide of the respondent have never been questioned by the appellant.