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SUPREME COURT OF INDIA
H.L. DATTU, S.A. BOBDE, JJ.
COMMERCIAL TAX OFFICER, RAJASTHAN – Appellants
Versus
M/S. BINANI CEMENTS LTD. & ANR. – Respondents
CIVIL APPEAL NO.336 OF 2003
Decided On : 19-02-2014
(b) Interpretation of statute – Contextual interpretation – Every word in a provision should be examined in its context. (Para 28)
1987 SCR (2) 1 – Relied upon
(c) Interpretation of statute – Harmonious interpretation – General and special laws should be interpreted harmoniously – Rule of statutory construction that the specific governs the general is not absolute. (Para 29, 42)
520 U.S. 651; 417 U.S. 653; (1884) 10 App Cas 59; (1992) 1 SCC 558; (1968) 1 SCR 661; 1963 Supp (2) SCR 812; (2011) 8 SCC 539; (1988) 2 SCC 271; (1964) 4 SCR 280; (1984) 4 SCC 27; (1961) 3 SCR 185; [1998] AC 605; (1963) 3 SCR 209; AIR 1966 SC 35; (1989) 3 SCC 343; (2008) 2 SCC 417; (1966) 3 SCR 379; (1981) 1 SCC 315; (1990) 4 SCC 406; (1978) 4 SCC 16; (1999) 7 SCC 76 – Relied upon
(d) Sales Tax New Incentive Scheme for Industries, 1989 – Exemption from payment of sales tax – Item 1E restricted to only cement units is specific and special entry – Shall prevail over and override items 1,4,6 and 7 dealing with all industries – 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. (Para 44, 46)
Facts of the case:
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.
Being aggrieved by the said order, the respondent-assessee filed appeal before Rajasthan Tax Board, Ajmer 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.
The revenue being aggrieved by the decision of the Board, filed Tax Revision Petition before the High Court. The High Court dismissed the revision petition 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.
Finding of the Court:
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.
Result: Appeal allowed.
Based on the provided legal document, the key points are as follows:
Interpretation of statutes containing both general and specific provisions should favor the specific provisions when there is a conflict, but this rule is not absolute. The entire scheme and object of the statute must be considered to determine legislative intent (!) (!) .
Every word in a statute should be examined in its context, and the context must be given broad consideration to accurately interpret the provision (!) .
When a statute contains both general and specific provisions dealing with the same subject matter, the principle of harmonious construction applies, which generally implies that the specific provision prevails over the general one. However, this is subject to the clear intention of the legislature, and the specific provisions should be read as an exception or qualification to the general provisions (!) (!) .
In the context of tax exemption schemes, specific and detailed provisions, such as those related to particular industries or units (e.g., cement units), take precedence over broader, more general entries. The legislative intent appears to be to confine benefits within clearly defined categories, avoiding ambiguity (!) (!) .
The introduction of subject-specific entries into a scheme indicates a legislative intent to restrict benefits to those categories, especially when such entries are mutually exclusive and systematically arranged. This suggests that units falling within these specific categories are entitled to benefits only under the relevant specific provisions (!) (!) .
The interpretation of fiscal statutes related to exemptions should favor the most beneficial reading for the subject. Nonetheless, the specific classifications and amendments made by the legislature reflect a deliberate intention to limit benefits to certain categories, which must be respected (!) (!) .
Overall, the court emphasizes that statutory interpretation must be holistic, considering the entire legislative scheme, object, and context, rather than isolated words or provisions. This approach ensures that legislative intent is accurately discerned and applied (!) (!) .
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JUDGMENT
H.L. DATTU, J. –
1. The Revenue is in appeal before us against the impugned judgment and order passed by the High Court of Rajasthan at Jodhpur in S.B. Sales Tax Revision Petition No.582 of 1999, dated 02.07.2001 whereby and whereunder the High Court has dismissed the revision petition filed by the Revenue and upheld the case of the respondent-assessee.
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.
3. The core issue arises out of the respondent-assessee's application for grant of eligibility certificate for exemption from payment of Central Sales Tax and Rajasthan Sales Tax to the State Level Screening Committee, Jaipur under the "Sales Tax New Incentive Scheme for Industries, 1989" (for short "the Scheme").
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: F.4(35)FD/Gr.IV/87-38 dated 06.07.1989. Once again by introducing a deeming clause, the notification was made operative with effect from 05.03.1987 and to remain in force upto 31.03.1997.
The State Government has issued another subsequent notification amending the earlier notification in exercise of its power under Section 4(2) of the Act in 763: F.4(35)FD/Gr.IV/87-38, dated 06.07.1989 which is deemed to have come into operation with effect from 05.03.1987 and to remain in force upto 31.03.1998. Clause 1 of the scheme notification provides for its operation. Clause 2 is the dictionary clause which provides for meaning of the expressions like "New Industrial Unit", "Sick Industrial Unit", "Eligible Fixed Capital Investment" etc. For the purpose of this case, we require to notice the definitions of New Industrial Unit, Eligible Fixed Capital Investment, Prestigious Unit and Very Prestigious Unit.
5. Clause 2(a) defines the meaning of the expression 'New Industrial Unit' to mean an industrial unit which commences commercial production during the operative period of the scheme. The definition provides an exclusion of certain industries from the purview of New Industrial Unit. They are industrial units established by transferring or shifting or dismantling an existing industry and an industrial unit established on the site of an existing unit manufacturing similar goods. Explanation I and II appended to the notification need not be noticed by us, since the same is not necessary for the purpose of disposal of this appeal.
6. It is neither in dispute nor could be disputed by the r
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