2006 (8) TMI 306 - SC - VAT and Sales Tax

Whether the assessee is entitled to avail of the exemption on the basis of the turnover of sale of goods in an assessment year minus the base production or on the sale of goods after achieving the base production? Held that - Appeal dismissed. Intention of the Legislature is clear and unambiguous. Exemption is to be given on the turnover of sale of goods in an assessment year in excess of the base production. We do not find any substance in the submission advanced on behalf of the appellants.

Summary

Issues:
1. Interpretation of statutory provisions of the U.P. Trade Tax Act, 1948 and Notification No. 1093 dated July 27, 1991.
2. Entitlement to exemption on turnover of sale of goods in an assessment year.
3. Consideration of base production for granting tax exemption.
4. Harmonious interpretation of statutory provisions and notifications.
5. Assessment of turnover for exemption purposes.

Detailed Analysis:
1. The judgment revolves around the interpretation of the statutory provisions of the U.P. Trade Tax Act, 1948, and Notification No. 1093 dated July 27, 1991. The State Government issued the notification under Section 4-A of the Act to grant exemptions or reduce tax rates for the development of certain industries. The notification specified conditions for new units and those undertaking expansion, diversification, or modernization to avail of tax benefits.

2. The core issue was the entitlement to exemption on the turnover of sale of goods in an assessment year. The notification allowed exemption on the turnover of goods manufactured in excess of the base production. The question arose whether the exemption should be based on turnover after achieving base production or on the entire assessment year's turnover.

3. The consideration of base production for granting tax exemption was crucial. The appellant argued that base production must be achieved before considering exemption on the turnover of goods. However, the respondent contended that exemption should be granted based on turnover exceeding the base production for the entire assessment year.

4. The judgment emphasized the harmonious interpretation of statutory provisions and notifications. It highlighted the purpose of the notification to promote industrial development and clarified that exemption should be based on turnover exceeding the base production for the assessment year. The court analyzed the relevant clauses of the notification to support its interpretation.

5. The assessment of turnover for exemption purposes was a key aspect of the case. The court clarified that the entitlement to exemption depended on the sale of goods in the assessment year minus the base production determined under the Act. It rejected the appellant's argument that exemption should only be considered after achieving base production, emphasizing the clear legislative intent behind the exemption provisions.

In conclusion, the Supreme Court dismissed the appeals, upholding the entitlement to exemption on the turnover of sale of goods in excess of the base production for the assessment year. The judgment provided a detailed analysis of the statutory provisions and notifications, emphasizing the legislative intent behind granting tax benefits for industrial development.