Commercial Tax Officer, Rajasthan vs Binani Cement Ltd. & Anr

2. The respondent-assessee is a new industrial unit manufacturing cement situated within Panchayat Samiti, Pindwara, Rajasthan. It is an admitted fact that it started its commercial production on 27.05.1997. It is also not disputed that the respondent-assessee has fixed capital investment (for short, “the FCI”) exceeding Rs.500/- Crores and employs more than 250 employees.

4. For convenience of discussion, we would first notice the relevant scheme and certain provisions and thereafter proceed towards analysis of the facts in the instant case. The Scheme for exemption from payment of sales tax was notified by the State of Rajasthan in exercise of its powers under sub-section(2) of Section 4 of the Rajasthan Sales Tax Act, 1954 (for short, “the Act”). The scheme exempts certain industrial units from payment of tax on the sale of goods manufactured by them within the State. It specifies and categorizes the districts, types of units, the extent of exemption from tax (in percentage), the maximum exemption available in terms of percentage of fixed capital investment (FCI) and the maximum time limit for availing such exemption from tax. By introducing a deeming clause, the scheme is deemed to have come into operation with effect from 05.03.1987 and to remain in force upto 31.03.1992. An amendment to the aforesaid notification was brought in by issuing notification – S. No.763: F.4(35) FD/ Gr.IV/87-38, dated 06.07.1989 and was made operative/effective with effect from 05.03.1987 and to remain in force upto 31.03.1995. Yet another amendment was introduced by the State Government by issuing notification No.763:

17. Reverting to state the facts, the respondent-assessee had applied to the State Level Screening Committee for claiming benefit of exemption at 75% under the Scheme. The Committee rejected the claim of the respondent- assessee and observed that since the respondent-assessee is a large scale unit covered under the specific provision of Item 1E of Annexure ‘C’, it is entitled to 25% exemption, by its order dated 15.01.1998.

18. Being aggrieved by the said order, the respondent-assessee filed appeal before Rajasthan Tax Board, Ajmer (for short, ‘the Board’) in respect of the calculation of eligible FCI as well as the exemption under the Scheme. The Board while remanding the matter to the State Level Screening Committee held that the respondent-assessee is entitled to 75% tax exemption by holding the respondent-unit as Prestigious Unit under the Scheme.

19. The revenue being aggrieved by the decision of the Board, filed Tax Revision Petition before the High Court under Section 86(2) of the Act. The High Court dismissed the revision petition filed by the revenue and upheld the decision of the Board by holding that the respondent-unit is a Prestigious Unit and therefore, entitled to 75% tax exemption under the Scheme.

24. The facts which are not in dispute are that the respondent-assessee (hereinafter referred to as ‘the Company’) established a new cement unit within Panchayat Samiti, Pindwara and commenced commercial production some time in the year 1997. It engaged itself in the manufacture of cement. The total capital investment – (FCI) in the new industrial unit claimed by the Company was Rupees 53252.87 Lakhs (Rs.532.52/- crores)

16. As we have observed earlier, Annexure-C has five columns. The second column speaks of type of units, the third column speaks of the extent of percentage of exemption from tax, the fourth column provides for the maximum exemption in terms of percentage of FCI and the fifth and the last column provides the maximum time limit for availing exemption from tax. Prior to issuance of notification dated 13.12.1996, Annexure ‘C’ was primarily confined to ‘New Units’. After the introduction of notification dated 13.12.1996, the exclusion is made to the expression ‘New Units’ by specifically including certain type of industrial units by inserting items 1A to 1F. Item 1E specifically talks of New Cement Units except in Tribal Sub-Plan area. The extent of percentage of exemption from tax under Item 1E depends on the type of unit or the industry. If it is a small scale unit, the extent of exemption is 75%, if it is medium scale, the extent of exemption is 50%, and if it is large scale unit, the extent of percentage of exemption from tax is 25%. The maximum time limit for availing exemption from tax is restricted to seven years. Item 4 speaks of New Units producing pollution control equipments, pioneering units and prestigious units. The extent of the percentage of exemption from tax is 75% of total liability and the maximum time limit for availing exemption from tax is 9 years from the date of commercial production. Item 5 relates to New Very Prestigious Units other than cement units except in Tribal Sub-plan Area and the total percentage of exemption from tax is 90% of total tax liability and the maximum time limit for availing exemption from tax is eleven years.

29. It is well established that when a general law and a special law dealing with some aspect dealt with by the general law are in question, the rule adopted and applied is one of harmonious construction whereby the general law, to the extent dealt with by the special law, is impliedly repealed. This principle finds its origins in the latin maxim of generalia specialibus non derogant, i.e., general law yields to special law should they operate in the same field on same subject. (Vepa P. Sarathi, Interpretation of Statutes, 5th Ed., Eastern Book Company; N. S. Bindra’s Interpretation of Statutes, 8th Ed., The Law Book Company; Craies on Statute Law, S.G.G.Edkar, 7th Ed., Sweet & Maxwell; Justice G.P. Singh, Principles of Statutory Interpretation, 13th Ed., LexisNexis; Craies on Legislation, Daniel Greenberg, 9th Ed., Thomson Sweet & Maxwell, Maxwell on Interpretation of Statutes, 12th Ed., Lexis Nexis)

matter coupled with a particular perspective with reference to the intendment of the Act. With this basic principle in mind, the provisions must be examined to find out whether it is possible to construe harmoniously the two provisions. If it is not possible then an effort will have to be made to ascertain whether the legislature had intended to accord a special treatment vis-à-vis the general entries and a further endeavour will have to be made to find out whether the specific provision excludes the applicability of the general ones. Once we come to the conclusion that intention of the legislation is to exclude the general provision then the rule “general provision should yield to special provision” is squarely attracted.

44. It leaves no doubt that what is specific has to be seen in contradistinction with the other items/entries. The provision more specific than the other on the same subject would prevail. Here it is subject specific item and therefore as against items 1, 4, 6 and 7, which deal with units of all industries and not only cement, item 1E restricted to only cement units would be a specific and special entry and thus would override the general provision.

46. Therefore, in our considered view the respondent-Company would only be eligible for grant of exemption under Item 1E as a large new cement unit in accordance with its FCI being above Rs.5/- crores. In light of the aforesaid, we are of the considered opinion that the judgment and order passed by the High Court ought to be set aside and the appeals of the Revenue requires to be allowed.

47. In the result, the appeal is allowed and the judgment and order passed by the High Court is set aside. No order as to costs.