2008 (7) TMI 898 - HC - VAT and Sales Tax

Benefit under the Incentive Scheme, 1998 reduced - Held that - This court is of the firm and clear belief that the SLSC and Tax Board have erred in reducing the quantum of benefit under the Incentive Scheme, 1998 available to the petitioner-assessee upon shifting of part of plant and machinery from Tonk to Bhilwara unit of the same assessee. In view of the aforesaid, this revision petition is allowed and the impugned orders of SLSC dated November 17, 2004 and Tax Board dated February 1, 2006 are quashed and set aside.

Issues Involved:
1. Justification of the State Level Screening Committee (SLSC) in reducing the quantum of eligible investment under the Rajasthan Sales Tax Incentive Scheme, 1998.
2. Interpretation of the definition of "new industrial unit" under the Incentive Scheme, 1998.
3. Applicability of judicial discretion and purposive interpretation in statutory provisions.

Detailed Analysis:

1. Justification of the State Level Screening Committee (SLSC) in Reducing the Quantum of Eligible Investment:
The primary issue in this case revolves around the SLSC's decision to reduce the eligible investment for tax incentives by Rs. 84.31 lacs due to the shifting of part of the plant and machinery from Tonk to Bhilwara. The assessee argued that the fixed capital investment remained within the state and the shifting was for business expediency. The court found considerable force in the assessee's argument, noting that the Incentive Scheme does not prohibit such shifting and does not specify particular areas where investment must be made to be eligible for benefits. The court criticized the SLSC's narrow approach, emphasizing that the incentive scheme aims to encourage investment within the state, and such a pedantic interpretation by the SLSC discourages investment.

2. Interpretation of the Definition of "New Industrial Unit" under the Incentive Scheme, 1998:
The court examined the definition of "new industrial unit" under the 1998 scheme and compared it with definitions from the 1987 and 1989 schemes. The 1998 scheme provides a broader definition, including units set up on the site of existing units with separate capital investment. The court highlighted that the 1998 scheme reflects the state government's intention to promote industrial investment and economic development within Rajasthan. The court found that the SLSC's decision to reduce the eligible investment based on the shifting of machinery was inconsistent with the broader and more inclusive definition of "new industrial unit" under the 1998 scheme.

3. Applicability of Judicial Discretion and Purposive Interpretation in Statutory Provisions:
The court emphasized the importance of purposive and meaningful interpretation of statutes, citing several Supreme Court judgments. It noted that the true rule of construction is to interpret provisions to advance the objective of the statute rather than frustrate it. The court referenced the Supreme Court's stance in cases like Mangalore Chemicals & Fertilizers Limited and Bajaj Tempo Ltd., which advocate for a liberal interpretation once the subject falls within the exemption clause. The court also discussed the principles of statutory interpretation, including the "Golden rule" and the need to consider legislative intent and the context of the statute.

Conclusion:
The court concluded that the SLSC and Tax Board erred in reducing the quantum of benefit under the Incentive Scheme, 1998, available to the assessee upon shifting part of the plant and machinery. The court quashed and set aside the impugned orders of the SLSC and Tax Board, allowing the revision petition. This decision underscores the importance of a purposive and broad interpretation of incentive schemes to encourage industrial investment and economic development within the state.

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