2019 (12) TMI 426 - HC - VAT and Sales Tax

Exemption under N/N. G.O.Ms.No.53/99/F2 dated 10.08.1999 - time limit for period of exemption - case of Revenue is that the Assessee was entitled to exemption under the Notification only for a period of five years from the commencement of its production with effect from 25.05.1996 and it could not get the extended period of exemption from 06.11.1997 when it commenced production of another type of product viz., 'Toilet Soaps', whereas the commencement of production of 'Detergent Cakes' by the Assessee was started on 25.05.1996 itself. HELD THAT - Notification of exemption grants exemption to all industries in respect of goods manufactured by them for a period of 5 years if the location of the industry is in Pondicherry and Yanam regions - There is no dispute that the industry of the petitioner was set up within the Union Territory of Pondicherry and therefore that was entitled to the exemption as per the Notification, for a period of five years. However, it is not exemption 'commodity wise', but it is to 'all goods manufactured by the industry set up in Pondicherry' for a period of 5 years. Admittedly, the petitioner had availed exemption in respect of 'Detergent Cakes' for a period of five years from 1996 to 2001, but merely because it commenced production of 'Toilet Soaps' in the year 1997, it cannot get 5 years exemption for 'Toilet Soaps' for the next five years upto the year 2002. After 2001, the Assessee was not entitled to avail any exemption in respect of any of the goods manufactured by it. The learned Tribunal has rightly held that it can become a never ending story if production of different type of goods for which production was commenced by the Assessee is entitled to exemption for different periods of five years from the commencement of production of those products. There are no question of law much less a substantial question of law to be framed in this revision - revision dismissed.

Summary

Issues:
Interpretation of tax exemption notification for industries in Pondicherry region; Entitlement to exemption for different products manufactured by the same industry for varying periods.

Analysis:
1. The case involves a tax revision by M/s. Hindustan Unilever Limited against the Sales Tax Appellate Tribunal's order. The Tribunal held that the Assessee was only entitled to exemption under a specific notification for five years from the commencement of production of a particular product, and not for subsequent products.

2. The Tribunal's decision was based on the interpretation of the exemption notification, which granted a five-year tax exemption to industries in Pondicherry and Yanam regions for goods manufactured by them. The Assessee had availed exemption for 'Detergent Cakes' from 1996 to 2001. However, the Assessee argued for an extension of exemption for 'Toilet Soaps' produced later, which the Tribunal rejected, stating that the exemption was not commodity-specific but applied to all goods manufactured by the industry for five years.

3. The High Court concurred with the Tribunal's interpretation, emphasizing that the exemption was not for specific products but for all goods manufactured by the industry in Pondicherry. Therefore, the Assessee was not entitled to a separate five-year exemption for 'Toilet Soaps' produced after 'Detergent Cakes'. The Court upheld the Tribunal's decision, stating that allowing exemptions for different products produced at different times would lead to a perpetual cycle of exemptions.

4. The Court concluded that the Tribunal's interpretation of the exemption notification was reasonable and did not warrant interference. No substantial question of law was found, leading to the dismissal of the revision petition by the Assessee. The judgment highlighted the importance of adhering to the original intent of tax exemption notifications and the need for clarity in interpreting such provisions to prevent abuse of exemptions.