2004 Supreme(SC) 1554

2005(2) Supreme 37
Supreme Court of India
(From Allahabad High Court)
S.N. Variava & Dr. AR. Lakshmanan, JJ.
Commissioner Trade Tax, U.P. —Appellant
versus
M/s. D.S.M. Group of Industries —Respondent
Civil Appeal No. 6635 of 2003
Decided on 9-12-2004
Counsel for the Parties :
For the Appellant : Sunil Gupta, Sr. Advocate (Additional Advocate General for State of U.P.), Punit Dutt Tyagi, Vivek Vishnoi, Mukesh Verma, Ram Kishore Singh Yadav, Advocates.
For the Respondent : Sudhir Chandra, Sr. Advocate, Ashok Sagar, Achintya Dvivedi and Rajesh Kumar, Advocates.

Important point
Even where the investment is made by the Company in more than one units, so long as the total investment is Rs fifty crore or more, the benefit of the Exemption Notification dated 21-2-1997 issued under U.P. Trade Tax Act, would be available.

Headnote:U.P. Trade Tax Act, 1948—Sections 4A, 8A and 25—U.P. Trade Tax Rules—Rule 6A—Exemption from trade tax—Company styling itself as Dhampur Sugar Mills Group of Industries claimed exemptions under the ­Notification dated 21-2-1997 on grounds of expansion, diversification and modernization—Company carries on business of manufacturing sugar—It opened units at different places—By a Notification dated 21-2-1997 certain exemptions were granted to an undertaking which made a fixed capital investment of Rs. 50 crores or more in expansion, modernization or diversification or backward integration—­Exemption Application filed by Company rejected—Trade Tax Tribunal held that every unit was a separate unit and that a joint application could not be made—Company filed a Trade Tax ­Revision—High Court ­allowed the ­Revision and set aside the orders passed by the Tribunal—High Court directed the concerned ­authority to ­issue an Eligibility Certificate u/s 4A for the benefit of tax rebate on all goods manufactured as well as on waste products—High Court further directed reimbursement of amounts paid earlier with interest—Whether one application can be filed or each unit of an industrial undertaking needs to file an application—A joint application is permissible—Whether the application filed on 17-5-2000 can be said to be time barred—(No)—Whether the company was in arrears of tax—(No).

       Held : The Preamble shows that the capital investment of Rs. fifty crore or more has to be in a new unit or in expansion, modernization and diversification. To be noted that to the words “expansion, modernization and diversification”, there are no qualifying words. It is not stated that these must be in one unit of the Industrial Undertaking. The Preamble, therefore, clearly supports the case of the Respondents that the expansion, diversification and modernization need not be only in one of the units of the Industrial Undertaking. This becomes further clear that if one looks at Clause (1) of the Notification. Under sub-clause (a) the benefit is in respect of a new unit but under sub-clause (b) it is in respect in a unit which has undertaken expansion, modernization or diversification between 1st December 1994 and 31st March 2000. As seen above, the term `Unit’ has the meaning as defined in Section 4-A. As we have already seen, Section 4-A defines the term `Unit’ to mean an industrial undertaking, which has undertaken expansion, modernization and diversification. Even under the General Clauses Act, where the context so requires the singular can include the plural. A plain reading of the Notification shows that for “expansion, modernization and diversification” it is the industrial undertaking which is considered to be the “Unit”. This is also clear from fact that in the Notification wherever the words “expansion, modernization or diversification” are used, there is no qualifying words to the effect “in any one Unit”. In none of the clauses is there any requirement of the investment being in one unit of the Industrial Undertaking. Words to the effect “in a particular unit” or “in one unit” are missing. (Para 25)

       Even otherwise, the purpose of Notification being to encourage increased production and to give benefit to industries which have invested Rs. fifty crore or more in the State and whose production has thus increased, an interpretation must be given which would extend benefit to such industries. There would be no purpose in denying, an industry which has invested Rs. fifty crore or more and whose production in the State has as a result increased, the benefit of the exemption granted by this Notification merely because the whole of the investment is not in any particular unit. Thus even where the investment is made by the Company in more than one units, so long as the total investment is Rs. fifty crore or more, the benefit of the Notification would be available. Such benefit would then be distributed in the manner set out in the Schedule depending on where a unit in which expansion, diversification or modernization has taken place, is situated. Thus, for example, in respect of the units situated in Barabanki and Moradabad, the benefit would be to the extent of 200 of the fixed capital investment in those units, whereas in respect of units in Bijnore the benefit would be to the extent of 150 of the fixed capital investment in that unit. Similarly, the base production and the starting date of production could be in respect of those units. However, it is the Company which has made the investment. It is the Company which is paying the tax. It is the Company which would be getting the benefit of the exemption. The manner in which the Company gets the benefit would be as set out hereinabove. (Para 26)

       Thus, even if an application is made at a later date it does not preclude the dealer from getting the benefit of the exemption. If an application is made at a later date the benefit of exemption will be limited. It will be computed from the date of the application till the end of the period of facility. This, therefore, was no ground for rejecting the application. (Para 27)

       Neither side could enlighten us, whether for any period when there were no stay orders the Respondents were still in arrears of tax. During the period the stay orders were in operation the Respondents cannot be said to be in arrears of tax. During the period of the stay the Respondents were not bound to pay. Therefore, they cannot be said to be in arrears. These are matters of fact which need to be looked into by the Assessing ­Authority. (Para 28)