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High Court Of Rajasthan
Judgename : Rajesh Balia
Commercial Taxes Officer - Appellant
Versus
Aditya Cement - Respondent
S.B. Sales Tax Revision No. 669 of 1999
Decided On : 05/24/2000
Tax Deferment Scheme - Industrial Unit - Rajasthan Sales Tax Act - Scheme of 1989 - Clause 2(j), Clause 4 - The court discussed the eligibility of the respondent-assessee for deferment of tax under the Rajasthan Sales Tax Act and the Scheme of 1989. The court analyzed the provisions of the Scheme, including the classification of industrial units, the criteria for different levels of exemption, and the applicability of the scheme to new industrial units, expansion, and sick units. The court also examined the amendment introduced in the scheme by the insertion of second proviso to Clause 2(j) and second proviso to Clause 4, and its impact on the eligibility of large scale cement industries for tax deferment.
Fact of the Case:
The respondent-assessee established a new industrial unit for cement manufacturing and sought an increase in its incentive benefit limit from 50% to 90% of its tax liability under the Rajasthan Sales Tax Act. The Assistant Commercial Taxes Officer initially issued an eligibility certificate for 50% deferment, which was challenged by the respondent-assessee. The Rajasthan Tax Board allowed the appeal, holding the respondent-assessee entitled to 90% deferment, leading to the revision petition.
Finding of the Court:
The court analyzed the provisions of the Scheme of 1989, the eligibility criteria for different industrial units, and the impact of the amendment introduced in the scheme. It considered the arguments presented by both parties regarding the eligibility of large scale cement industries for tax deferment and the interpretation of the second proviso to Clause 2(j) and second proviso to Clause 4. The court also discussed the principles of strict and liberal construction in taxation statutes and their application to exemption provisions.
Issues: The key issues revolved around the eligibility of large scale cement industries for tax deferment under the Scheme of 1989, the interpretation of the second proviso to Clause 2(j) and second proviso to Clause 4, and the application of the principles of strict and liberal construction in taxation statutes.
Ratio Decidendi: The court held that the provisions of the tax exemption scheme are to be strictly construed, and the burden of proving tax liability falls on the revenue. It emphasized the need for clear words in taxation statutes and the strict construction of exemption provisions. The court also considered the classification of industrial units, the criteria for different levels of exemption, and the impact of the amendment on the eligibility of large scale cement industries for tax deferment.
Final Decision: The court upheld the decision of the Rajasthan Tax Board, allowing the respondent-assessee to enjoy the benefit of deferment of tax up to the limit of 90% of its tax liability as a new very prestigious unit, instead of 50% as sanctioned by the State Level Screening Committee.
Rajesh Balia, J.-This revision is directed against the Judgment dated May 21, 1998 passed by the Rajasthan Tax Board, Ajmer, whereby the respondent-assessee was held entitled to enjoy the benefit of deferment of payment of tax under the Rajasthan Sales Tax New Deferment Scheme, 1989 (for short “the Scheme of 1989”) up to the limit of 90 per cent of its tax liability as a new very prestigious unit instead of 50 per cent of its tax liability as sanctioned by the State Level Screening Committee.
2. The facts necessary for the purposes of this revision petition briefly stated are: that the respondent-assessee established a new industrial unit for the manufacture of cement at Shambhupura in District Chittorgarh. In this unit, the fixed capital investment is over Rs. 100 crores. It has been established in a Panchayat Samiti area, which is outside tribal sub-plan area. It commenced its commercial production on March 28, 1995. Therefore, it falls in the category of “new very prestigious unit” as defined in paragraph (ii) of Clause 2(i) of the Scheme of 1989.
.3. In the first instance, the State Level Screening Committee, vide its letter dated October 6, 1995, conveyed its decision dated September 1, 1995 that the respondent-assessee is eligible for the benefit of exemption from tax under Sales Tax Incentive Scheme, 1989, in the Central Sales Tax Act and deferment of tax under the Scheme
.of 1989 under the Rajasthan Sales Tax Act on the basis of a new very prestigious industrial unit on the sale of cement. In pursuance of the above finding, the Joint Director of Industries directed the Assistant Commercial Taxes Officer, IInd COR, Chittorgarh, to issue eligibility certificate to the respondent-assessee. It was also informed to the Assistant Commercial Taxes Officer that the eligible fixed capital investment was stated to be, subject to verification, Rs. 1,86,90,47,040.
4. In compliance of the above direction, the Assistant Commercial Taxes Officer issued the eligibility certificate dated October 31, 1995 to the respondent-assessee certifying that the new industrial unit of the respondent-assessee is entitled to enjoy benefit of deferment of tax up to the limit of 50 per cent of its tax liability as per the Scheme of 1989.
5. Thereafter, the respondent-assessee moved a rectification application for increase of its incentive benefit limit from 50 per cent to 90 per cent of its tax liability in terms of the criteria laid down in annexure C appended to the Scheme of 1989. The said application was rejected by the Assistant Commercial Taxes Officer vide its order dated May 21, 1997.
6. Therespondent-assessee challenged the order dated October 31, 1995 as also the order dated May 21, 1997 by way of filing an appeal before the Rajasthan Tax Board, Ajmer. The Rajasthan Tax Board, Ajmer, vide its order dated May 21, 1997 allowed the appeal filed by the respondent-assessee holding that the Assistant Commercial Taxes Officer has erred in restricting the benefit of deferment of tax under the Scheme of 1989 up to the limit of 50 per cent of the tax liability considering the new industrial unit of the respondent-assessee to be a large scale unit and not a “new very prestigious unit”. It directed the Assistant Commercial Taxes Officer to issue a new eligibility certificate by rectifying the quantum of eligible amount of deferment to be 90 per cent of the tax liability under item 5 of annexure C appended to the Scheme of 1989.
7. It is contended by Mr. S.M. Mehta, the learned Advocate-General appearing on behalf of the petitioner, that as per the Scheme of 1989, all large scale industrial units engaged in manufacturing of cement were ineligible for any benefit under the Scheme of 1989 in view of item No. 10 of the annexure B appended to the Scheme of 1989 containing the list of industries not eligible for sales tax deferment under the New Deferment Scheme. By S.O. No. 354/F-4(8) FD/Gr. IV/91-121 dated March 6, 1991, second proviso was inserted
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