2002 (2) TMI 1307 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of the term "expansion" under various Rajasthan Sales Tax Incentive and Deferment Schemes.
2. Conditions to be fulfilled by applicants for eligibility under these schemes.
3. The relevance of "licensed and registered capacity" in determining eligibility.

Detailed Analysis:

1. Interpretation of "Expansion":
The primary issue revolves around the definition of "expansion" under the Rajasthan Sales Tax Incentive Scheme, 1987, and the Rajasthan Sales Tax New Incentive Scheme, 1989, as well as the corresponding deferment schemes. The definition remains consistent across these schemes and involves an increase in the value of fixed capital investment by at least 25% of the net fixed assets of the existing projects, coupled with an increase in production by at least 25% of the original licensed/registered capacity.

2. Conditions for Eligibility:
The State Level Screening Committee rejected the applicants' claims on the grounds that they had not achieved a 25% increase in production based on the original "licensed and registered capacity" of their units. However, the applicants contended that they had increased their fixed capital investment by at least 25% and achieved a 25% increase in production based on their existing installed capacity.

3. Relevance of "Licensed and Registered Capacity":
The court examined whether the term "licensed and registered capacity" should refer to the capacity stated in the original industrial licenses or the actual installed capacity. The applicants argued that after the abolition of the licensing system in 1991, the licensed capacity became irrelevant, and the increase should be measured against the existing installed capacity. The court agreed with this interpretation, noting that the licensing and registration requirements under the Industries (Development and Regulation) Act, 1951, had become redundant.

Chronology and Evolution of Schemes:
The court provided a detailed history of the incentive and deferment schemes, starting with the 1985 Dispensations, which offered interest-free loans against tax burdens. The 1987 schemes introduced incentives and deferments for new industrial units and expansions. The 1989 schemes continued these benefits with some variations and improvements. The schemes were extended periodically until the introduction of the 1998 schemes, which explicitly referred to "installed capacity" rather than "licensed/registered capacity."

Legal Interpretation and Judicial Precedents:
The court applied principles of statutory interpretation, emphasizing that the language of a statute should be interpreted to avoid absurdity, inconvenience, or injustice. The court referred to precedents where judges have supplemented statutory language to align with legislative intent, such as the cases of Seaford Court Estates v. Asher and M. Pentiah v. Muddala Veeramallappa.

Conclusion:
The court concluded that the term "licensed/registered capacity" in the 1987 and 1989 schemes should be interpreted as referring to the existing installed capacity. This interpretation aligns with the legislative intent to encourage substantial expansions and avoids excluding industries that no longer required licensing post-1991. Consequently, the court upheld the decisions of the Tax Board and the Rajasthan Taxation Tribunal, which had directed the issuance of eligibility certificates to the applicants.

Judgment:
The writ petitions filed by the Commercial Taxes Department and Industries Department were dismissed, affirming that the applicants had met the eligibility criteria under the respective schemes based on their increased fixed capital investment and production capacity. No orders as to costs were issued.