2000 (5) TMI 1057 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for tax deferment under the Rajasthan Sales Tax New Deferment Scheme, 1989.
2. Classification of the respondent-assessee's industrial unit.
3. Interpretation of the Scheme of 1989 and its amendments.
4. Application of the principles of liberal and strict construction in tax exemption cases.

Detailed Analysis:

1. Eligibility for Tax Deferment:
The respondent-assessee established a new industrial unit for manufacturing cement with a fixed capital investment over Rs. 100 crores, qualifying it as a "new very prestigious unit" under the Scheme of 1989. Initially, the State Level Screening Committee sanctioned a deferment of 50% of its tax liability. However, the Rajasthan Tax Board later held that the respondent-assessee was entitled to a 90% deferment.

2. Classification of the Industrial Unit:
The respondent-assessee's unit was initially classified as a large-scale unit, limiting its tax deferment to 50%. The respondent-assessee argued that it should be classified as a "new very prestigious unit," which would entitle it to a 90% deferment under item 5 of annexure C of the Scheme of 1989. The Rajasthan Tax Board agreed with this classification.

3. Interpretation of the Scheme of 1989 and Its Amendments:
The Scheme of 1989, along with its amendments, provided specific classifications for industrial units based on fixed capital investment. The second proviso to clause 2(j) and clause 4(a) of the Scheme were crucial in determining the eligibility and extent of tax deferment for large-scale cement plants. The court examined whether the term "large scale industry" should be interpreted differently in these clauses.

4. Application of Liberal and Strict Construction Principles:
The court discussed the principles of liberal and strict construction in the context of tax exemption statutes. The principle is that taxing statutes should be strictly construed, and any ambiguity should be resolved in favor of the taxpayer. However, once a taxpayer qualifies for an exemption, the provisions should be liberally construed to effectuate the purpose of the exemption.

Judgment Analysis:

Eligibility and Classification:
The court held that the respondent-assessee's unit, with an investment exceeding Rs. 100 crores, qualifies as a "new very prestigious unit." However, the court concluded that the deferment benefit should be limited to 50% of the tax liability, as per the second proviso to clause 4(a) of the Scheme of 1989, which applies to large-scale cement plants established outside the tribal sub-plan area.

Interpretation of the Scheme:
The court emphasized that the same term used in different parts of a statute should generally be interpreted consistently unless the context indicates otherwise. The court found no reason to interpret "large scale cement plants" differently in the second provisos to clause 2(j) and clause 4(a).

Principles of Construction:
The court reiterated that tax statutes should be strictly construed, and any ambiguity in exemption provisions should be resolved in favor of the taxpayer. However, in this case, the court found no ambiguity in the provisions of the Scheme of 1989.

Conclusion:
The court set aside the order of the Rajasthan Tax Board and held that the respondent-assessee is entitled to a tax deferment of 50% of its tax liability, subject to other conditions mentioned in annexure C of the Scheme of 1989. The petition was allowed, and each party was directed to bear its own costs.