2009 (1) TMI 800 - HC - VAT and Sales Tax

Entitlement to sales tax relaxation both on the raw material as well as of finished goods denied - Held that - Keeping in mind the object for which such industrial policies are formulated, this court finds the posture adopted by the State Government, specially its officials to be unpalatable. Such hyper technicality and nit picking in the applications while interpreting the policy will surely kill all the initiatives, enthusiasm and the goodwill, which may be generated by the political leadership of this State. The confidence building at the highest level will not percolate down in actual implementation of such policies, if the mindset of the Government officials does not change. The negative mindset must change lest it deter even future entrepreneurs from embarking from investment in the State. The court comes to a considered opinion that the reasonings assigned by the concerned authority in passing of the order dated May 8, 2004 contained in annexure 16 series are arbitrary on the face of its and deserves interference.The writ application is allowed. Annexure 16 series are quashed. Matter is remanded back to the competent authority to consider the case of the petitioner afresh. The court expects an early decision in the matter to settle the dispute one way or the other.

Summary

Issues:
1. Rejection of exemption claim under industrial policy by Assistant Commissioner of Commercial Taxes.
2. Interpretation of industrial policy provisions regarding registration date.
3. Application of principles of liberal interpretation of exemption notifications.
4. Consideration of evidence regarding registration application date.
5. Challenge to the reasoning of the concerned authority.
6. Impact of hyper-technical approach on industrial policy objectives.

Detailed Analysis:
1. The petitioner, a partnership firm engaged in iron and steel manufacturing, challenged the rejection of their exemption claim under the Bihar Industrial Policy of 1995 by the Assistant Commissioner of Commercial Taxes. The rejection was based on a technicality related to the registration date, despite the unit going into production within the stipulated time frame.

2. The rejection was primarily due to the registration being completed after the specified date, as per the provisions of the industrial policy. The petitioner argued that such a narrow interpretation defeats the policy's purpose and cited a Supreme Court decision emphasizing liberal interpretation of exemption notifications to promote industrial growth and employment.

3. The petitioner highlighted the need for a contextual interpretation of industrial policies to achieve their objectives effectively. They argued that the delay in issuing the registration certificate should not penalize them, especially when the application was submitted on time. Reference was made to a legal precedent supporting this argument.

4. The evidence presented by the petitioner, showing the timely submission of the registration application, indicated that any delay in processing by the State Government should not prejudice their claim for exemption. This evidence supported the contention that the rejection was unjustified based on a technicality.

5. The court criticized the hyper-technical approach taken by the concerned authority, stating that such rigid interpretations could undermine the confidence of entrepreneurs and deter future investments in the state. The court found the reasoning behind the rejection to be arbitrary and intervened to quash the orders, remanding the matter for reconsideration.

6. The judgment emphasized the importance of officials adopting a more pragmatic and supportive approach towards implementing industrial policies to encourage investment and economic growth. The court's decision aimed to rectify the negative impact of overly technical interpretations on the policy's objectives and restore confidence in the investment climate within the state.