1985 (8) TMI 361 - HC - VAT and Sales Tax

Issues Involved
1. Interpretation of Notification No. S.O. 1145 dated 31st December, 1980.
2. Interpretation of Notification No. S.O. 639 dated 16th April, 1982.
3. Eligibility of industrial units for tax adjustment benefits.
4. Application of principles of statutory interpretation.
5. Specific cases of industrial units and their eligibility under the notifications.

Issue-Wise Detailed Analysis

1. Interpretation of Notification No. S.O. 1145 dated 31st December, 1980
The notification allows registered dealers who are manufacturers to adjust the amount of tax paid on the purchase of raw materials used in the manufacture of goods for sale within Bihar against the tax payable on the sale of finished products in Bihar. The benefit is available from 1st October, 1979, to 31st March, 1984. The notification specifies that industrial units should not be availing any concession of tax-free purchase of raw materials under any notification issued under the Industrial Incentive Scheme of the State Government. The court interpreted "should not be availing" to mean that an industrial unit must not simultaneously enjoy two benefits: one under the Industrial Incentive Scheme and the other under the impugned notification.

2. Interpretation of Notification No. S.O. 639 dated 16th April, 1982
This notification allows industrial units to adjust the amount of tax paid on the purchase of raw materials in the State and used in the manufacture of goods for sale in the course of inter-State trade and commerce against the tax payable under the Central Sales Tax Act. The procedure for adjustment is the same as laid down in Notification No. S.O. 1145. The interpretation of this notification follows the same principles as Notification No. S.O. 1145.

3. Eligibility of Industrial Units for Tax Adjustment Benefits
The court held that industrial units are entitled to the benefits provided they meet specific conditions. For units in the small sector that went into production prior to 1st October, 1979, they must not be availing any other concession of tax-free purchase of raw materials. For units that went into production on or after 1st October, 1979, they should not have opted for the concession of tax-free purchase of raw materials. The court emphasized that the ordinary, natural, and grammatical meaning of "should not be availing" indicates that the unit must not be currently enjoying the benefits under any other notification.

4. Application of Principles of Statutory Interpretation
The court applied several principles of statutory interpretation, emphasizing the need to read the statute literally, giving words their ordinary, natural, and grammatical meaning unless such reading leads to absurdity. The court rejected the Revenue's argument to interpret the earlier notifications in light of the later Notification No. S.O. 614 dated 14th May, 1984, which supports the view that units should not have availed any concession of tax-free purchase of raw materials. The court held that it is not the function of the court to attribute an intention to the legislature that is not justified by the language used.

5. Specific Cases of Industrial Units and Their Eligibility Under the Notifications
The court directed the revenue authorities to reconsider the demands raised and the notices issued in light of the interpretation given in the judgment. If the petitioners meet all the requirements of the notifications, they are entitled to the adjustment of purchase tax paid against the liability accruing for the sale of those products within the State or in the course of inter-State trade and commerce. However, for units that started production after 31st December, 1980, the court noted that there was no averment that the petitioners never "opted" for tax-free purchase of raw materials, making it impossible to grant relief without such an averment.

Conclusion
The court allowed all the writ petitions except C.W.J.C. No. 753 of 1984 (R) and C.W.J.C. No. 756 of 1984 (R), which were dismissed due to lack of necessary averments. The penalty imposed in C.W.J.C. No. 155 of 1984 (R) was set aside. The respondents were directed to consider the cases of the petitioners and give effect to the two notifications as interpreted by the judgment, provided the petitioners fulfill the factual requirements of those notifications. There was no order for costs.

← Previous Next →