2011 (3) TMI 1525 - HC - VAT and Sales Tax

Whether the refusal to grant exemption from payment of sales tax to the petitioners unit for various periods, is justified in law? Held that - If the interpretation suggested by the learned Government Pleader is accepted, then the exemption mentioned in the latter portion of the provision becomes redundant and it would result in an absurd situation. The suggestion made by the learned Government Pleader that the exemption may be ignored as draftsman s folly, cannot be easily accepted. One cannot omit to note that in the former portion, the word or is used and in the latter portion, and is used. It is very clear that the delegatee was very cautious about the words used in the notification and if that be so, the word and can be read only conjunctively. The learned counsel for the appellant is well founded in his submission that the word and cannot be read as or . It is also evident that the respondents became conscious of the anomaly and thereafter, by Annexure 27 dated 11.07.2000, they brought out a notification differently worded but, this cannot govern the earlier notifications and Government Orders which have already been referred to. Admittedly, the unit belonging to the appellant obtained registration from the Industrial Department as a medium scale unit for the manufacture of steel rods and bars on 06.09.1991. The suggestion made by the learned Government Pleader that clauses 2 and 3 should be read together, cannot be countenanced. Clauses 2 and 3 deal with two different situations and there is nothing in common. One is not controlled by the other. Since the petitioner s unit is registered earlier to the date mentioned in the notifications, obviously, he is entitled to the benefit. The petitioner succeeds on this ground also. It is well settled that merely because a wrong has been committed, that does not confer any right on others to claim the very same benefit. However, one needs to notice that the definite allegation of the petitioner in the writ petition is that except the unit belonging to the petitioner on other similarly situated units have been granted exemptions and his unit alone has been singled WA 991/03 & connected cases out. True, merely because a mistake might have been committed in one case, does not confer any right on the petitioner to get the very same exemption by repeating the said mistake. But, the fact that all other similarly situated units have been granted exemption, is an indication as to how the statutory authorities have understood the notifications. In favour of assessee.

Issues Involved:
1. Refusal to grant exemption from payment of sales tax.
2. Interpretation of the word "and" in clause 7 of the Government Order.
3. Eligibility for exemption based on registration date.
4. Alleged discrimination in granting exemptions.

Detailed Analysis:

Refusal to Grant Exemption from Payment of Sales Tax:
The primary issue in these writ appeals is whether the refusal to grant exemption from payment of sales tax to the petitioner's unit for various periods is justified in law. The petitioner's unit, registered on September 6, 1991, commenced production on March 31, 1995, and was initially granted tax exemption for seven years. However, subsequent applications for exemption based on additional capital investments were rejected on the grounds that the unit was a power-intensive unit with a load exceeding 2500 KVA, thus falling within the negative list.

Interpretation of "and" in Clause 7 of the Government Order:
The crux of the legal argument revolves around the interpretation of clause 7 of the Government Order dated November 26, 1993, which excludes units with total power requirements exceeding 2500 KVA and where the cost of power exceeds 25% of the cost of production. The petitioner argued that the word "and" should be read conjunctively, meaning both conditions must be met for exclusion. The State contended that "and" should be read as "or," thus either condition would suffice for exclusion. The court held that "and" should be read conjunctively to avoid redundancy and absurdity, thereby supporting the petitioner's interpretation.

Eligibility for Exemption Based on Registration Date:
The petitioner argued that since the unit was registered before December 31, 1993, it should be eligible for exemption as per the Government Order dated April 19, 1994. The court agreed, stating that units registered before the cutoff date are entitled to the benefits, and clauses 2 and 3 of the Government Order, which deal with different situations, should not be conflated.

Alleged Discrimination in Granting Exemptions:
The petitioner claimed that other similarly situated units were granted exemptions while his unit was singled out. The court acknowledged that while a mistake in one case does not confer a right to repeat the mistake, the fact that other units received exemptions indicates how the statutory authorities understood the notifications. This understanding should apply uniformly, including to the petitioner's unit.

Conclusion:
The court allowed all the writ appeals and directed the respondents to reconsider the petitioner's claims for exemption in light of the observations made in the judgment. The specific directions included:

1. WA No. 991/03: Judgment in OP No. 32947/00 was set aside, and the respondents were directed to reconsider the claim for exemption for the period sought by the petitioner.
2. WA No. 1316/03: Judgment in OP No. 32807/00 was set aside, and the respondents were directed to reconsider the claim for exemption for the period 01.07.1995 to 31.03.1996.
3. WA No. 1561/03: Judgment in OP No. 23472/01 was set aside, and the respondents were directed to consider Ext. P6 application in accordance with the judgment.
4. WP(C) No. 19516/09: The impugned order was set aside, and the respondents were directed to reconsider the claim made by the petitioner.

The court emphasized the need for a consistent application of the statutory provisions and the importance of adhering to the clear legislative intent.

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