1997 (9) TMI 589 - AT - VAT and Sales Tax

Issues Involved:
1. Interpretation of the term "expansion" in the context of the Incentive/Deferment Schemes.
2. Jurisdiction of the Board to modify the provisions of the Schemes.
3. Impact of the delicensing policy on the definition of "licensed capacity/registered capacity."
4. Whether the term "licensed capacity/registered capacity" has become obsolete.
5. Eligibility of the industrial units for benefits under the Schemes based on the definition of "expansion."

Detailed Analysis:

1. Interpretation of the term "expansion" in the context of the Incentive/Deferment Schemes:
The term "expansion" is defined in sub-clause (f) of clause 2 of the Schemes as an increase in the value of fixed capital investment by not less than 25% of the net fixed assets of the existing project, accompanied by an increase in production by at least 25% of the original licensed/registered capacity. The central issue is whether the term "original licensed/registered capacity" should be interpreted as "original installed capacity" due to the dismantling of the compulsory industrial licensing system in 1991.

2. Jurisdiction of the Board to modify the provisions of the Schemes:
The Board's decision to interpret "original licensed/registered capacity" as "original installed capacity" was challenged on the grounds that it amounted to reading down specific, explicit, and unambiguous provisions of the law, which is not permissible. The Board, however, held that it was necessary to harmonize the provisions of the Schemes with the changed liberalized context to avoid discriminatory treatment between units established before and after delicensing.

3. Impact of the delicensing policy on the definition of "licensed capacity/registered capacity":
With the announcement of the new industrial policy in July 1991, the system of compulsory industrial licensing was practically dismantled. The definition of "expansion" in the Schemes continued to reference the original licensed/registered capacity, which became irrelevant in the changed context. The Board held that the term should be interpreted in light of the current industrial policy, which emphasizes unfettered industrial growth.

4. Whether the term "licensed capacity/registered capacity" has become obsolete:
The Board concluded that the term "licensed capacity/registered capacity" had indeed become obsolete due to the delicensing policy. The Board noted that interpreting the term strictly would create an invidious distinction between units established before and after delicensing, thereby defeating the purpose of the Incentive/Deferment Schemes.

5. Eligibility of the industrial units for benefits under the Schemes based on the definition of "expansion":
The Board examined the cases of M/s. Hindustan Electrographics Ltd. (HEG) and M/s. Super Syncotex Ltd., both of which had applied for benefits under the Schemes based on expansion. The Board allowed the appeals, holding that the units qualified for expansion by interpreting "original licensed/registered capacity" as "original installed capacity." The Board directed the State Level Screening Committee (SLSC) to verify the statistics provided by the units and extend the benefits accordingly.

Conclusion:
The applications for revision were dismissed, and the Board's interpretation of "original licensed/registered capacity" as "original installed capacity" was upheld. The judgment emphasized the need to harmonize the provisions of the Incentive/Deferment Schemes with the changed liberalized context to ensure that the benefits of the Schemes are not denied due to the obsolescence of the licensing regime.

Separate Judgments:
The judgment was delivered by a common bench, and no separate judgments were mentioned.

Final Order:
The applications for revision were dismissed with no order as to costs. The judgment in original was kept on the file of Petition No. 15 of 1997 with an authenticated copy being kept on the file of Petition No. 17 of 1997.

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