IMPORTANT POINT
Before granting exemption an exemption notification is to be construed strictly, but once the entrepreneur fulfils the conditions laid down the notification, it should be construed liberally.

JUDGMENT

H.L. Dattu, J. —

1) This appeal is directed against the Judgment and Order passed by the High Court of Calcutta in W.P.T.T. No. 102 of 2000 dated 14.09.2001.

2) The issues which require our consideration and decision in this appeal are: the meaning of the expression ‘Investment’ for the purpose of notification issued by the State of West Bengal under West Bengal Sales Tax Act and the corresponding Rules; the construction and interpretation of an exemption notification; and whether the interest is payable on tax only on quantification of tax by way of assessment under the Act or for any period prior to that.

3) The material facts are :-

The assessee is M/s Tulip Products Co., a partnership firm having a fruit processing unit at 37, Imjad Ali Lane, Calcutta. It is a small scale industrial unit. The Unit is engaged in manufacturing juice, jelly, jam etc. The unit was registered as a dealer under the Bengal Finance (Sales Tax) Act, 1941 (hereinafter to be referred as “the Act, 1941”), the West Bengal Sales Tax Act, 1954 (hereinafter to be referred as “the Act, 1954”), and was later registered under the West Bengal Sales Tax Act, 1994 (hereinafter to be referred as “the Act, 1994”).

4) The relevant assessment periods are 01.04.1995 to 30.04.1995 and 01.05.1995 to 31.03.1996. In the returns filed for the aforesaid period, the assessee claimed exemption from payment of sales tax mainly relying on the exemption notification issued by the State Government bearing No. 1428-F.T. dated 26.05.1994 and Rule 41 of West Bengal Sales Tax Rules, 1995 (hereinafter to be referred as “the 1995 Rules”). According to the assessee, its investment in plant and machinery in its unit during the period from 01.04.1995 to30.04.1995 and from 01.05.1995 to 31.03.1996 was less than `5 lakhs and accordingly, it was entitled to get the tax exemption under Rule 3(116) of the Bengal Sales Tax Rules, 1941 (hereinafter to be referred as “the 1941 Rules”) for the first period and by virtue of the notification dated 26.05.1994 and Rule 41 of the 1995 Rules for the second period. The Asst. Commissioner of Commercial Taxes passed an order of assessment for both the periods disallowing the assessee’s claim for exemption from payment of sales tax and also levied interest as provided under Section 10A of the Act, 1941 and Section 31 of the Act, 1994. In the view of the Tax Officer, the benefit of exemption from payment of sales tax cannot be granted since the assessee does not fulfill all the conditions prescribed in the notification granting exemption from payment of sales tax and also the conditions specified in Rule 41 of the 1995 Rules. The Assessing Officer took the book value of the plant and machinery as on 31st March, 1980 at `2,27,148.78/- and after the addition made from 1981 to 1986-1987, took the value of investment of plant and machinery for the assessment year 01.05.1995 to 31 st March, 1996 as `6,58,587/- for the purpose of assessment under the Act 1994 along with an assessment for the broken period between 01.04.1995 to 30.04.1995.

In appeal, the assessment order passed by the Tax Officer was confirmed by the Deputy Commissioner, Commercial Taxes. The assessee filed Second Appeal before the West Bengal Sales Tax Tribunal. The Tribunal has confirmed the order passed by the First Appellate Authority. In the writ petition filed, the High Court of Calcutta confirmed the order passed by the Tribunal in exercise of its writ jurisdiction.

5) The learned senior counsel Sri A. K. Ganguli for the assessee submits that the term “investment” used in the Notification refers to the actual value of the machinery after allowing depreciation as distinct from the cost of acquisition of such machinery. Alternatively, it is submitted that though the initial value of the plant and machinery was more than `5 lakhs, on account of successive yearly depreciation in their value, the total value of plant and machinery was less than `5 lakhs during the relevant assessment pe