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TMI Blog1989 (6) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... le she claims to be entitled to exemption and consequently eligibility certificate therefor up to August 14, 1985, i.e., for five years from the first date of sale. She had applied for renewal for the period from April 1, 1983 to March 31, 1984, on August 21, 1983, and had fulfilled all the conditions for being granted the eligibility certificate (hereafter called "the E.C."). The prayer was rejected with effect from December 7, 1983 to March 31, 1984, but granted for the period from April 1, 1983 to December 6, 1983. The E.C. was rejected for the said period on the ground that on and from December 7, 1983, she had exceeded the investment limit under rule 3(66), which was at the time Rs. 20 lakhs. The cost of generator set and moulds purchased by the applicant was taken into account while calculating the investment limit. (The investment limit was, however, raised to Rs. 35 lakhs with effect from March 18, 1985). Against the aforesaid rejection the applicant moved the Calcutta High Court in an application under article 226 of the Constitution of India, which was disposed of on June 1, 1988, by Bhagawati Prasad Banerjee, J., a xerox copy of whose order is made annexure C to the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit on "plant and machinery" under rule 3(66), but the prayer in that writ petition was confined to the rejected period from December 7, 1983 to March 31, 1984, with a prayer for direction for disposal of the applications for renewal for the periods which are under our consideration in the present application. The order dated June 1, 1988, of the High Court is brief and quoted below: "1-6-1988: In this case, the petitioner was enjoying tax holiday/ exemption and was praying for eligibility certificate which was being allowed to her from year to year. For the said purpose, respondent authority disallowed the prayer of the petitioner, by order dated April 11, 1986, for the period from December 7, 1983 to March 31, 1984. As a result thereof, petitioner could not and did not realise sales tax for the said period, but such point of law is fully covered by the judgment dated July 16, 1987*, passed by Suhas Chandra Sen, J., in C.O. No. 11048(W) of 1986 which was followed by me in the case of Satyabrata v. State of West Bengal in judgment dated March 18, 1988. There I held that the petitioner is entitled to get all the reliefs of tax holiday/exemption and eligibility certificate. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent (Aditya v. Principal, Rajendra Medical College AIR 1971 SC 1005 at page 1010) ; and where there has been a decision on merits, the rule of constructive res judicata will be applicable to bar a second application founded on the same cause of action (Devilal v. Sales Tax Officer [1965] 16 STC 303 (SC); AIR 1965 SC 1150, Gulabchand v. State of Gujarat AIR 1965 SC 1153 at page 1166). In this case, the reliefs sought for in the former and present proceedings are different, causes of action are different (the instant application challenges the second rejection order for a different period), there was no decision on the issue (except delay) on merits, and the material issue, namely, computation of investment limit after excluding or including the cost of generator and moulds was not decided or even discussed at all. In the absence of a decision on that issue, the respondents could not appeal therefrom. Hence, from all points of view the order of B.P. Banerjee, J., dated June 1, 1988, does not operate as res judicata in any form as against the present respondents. On the other hand, the order of B.P. Banerjee, J., is silent about the prayer for a direction (in the former application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, which application was disposed of by B.P. Banerjee, J., on June 1, 1988. Moreover, in view of section 8(3)(c) of the West Bengal Taxation Tribunal Act, 1987, this application is maintainable, as interpretation of a statutory rule is involved. 6.. Rule 3(66) of the BST Rules undoubtedly grants certain "benefits" (this word having been used in the first proviso) to "a newly set up small-scale industry" mentioned in clause (i) and defined in the explanation to that clause. Admittedly, the first pre-requisite was the limit of investment on "plant and machinery". Such limit was initially Rs. 20 lakhs when the grant of the E.C. to the applicant commenced. That limit was raised to Rs. 35 lakhs with effect from March 18, 1985. That being the admitted position, the Assistant Commissioner of Commercial Taxes certainly fell into an error in refusing the E.C. for the period from March 18, 1985 to March 31, 1985, by his order dated March 8, 1989. Thus, even if the cost of generator and moulds is considered a part of investment on plant and machinery for the purpose of the explanation to rule 3(66)(i), the E.C. could not have been refused on that account for the period from March 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial Taxes), the prayer for renewal was made on March 2, 1983, which was prior to the commencement of the period for which renewal was sought. Mr. Bose appearing for the applicants tried to explain the delay in making the applications by arguing that the delay occurred because it was realised from the decision reported in [1987] 65 STC 37 (Cal) (Dwarkesh Engineering Works v. Assistant Commissioner, Commercial Taxes), that renewal applications ought to be made for every year. But such an explanation is not at all acceptable to us because of the clear provision to the same effect in rule 3(66)(iv). Having committed delay in filing the applications, the applicants cannot in equity contend that the Assistant Commissioner's order of rejection should be set aside on the ground of delay on his part. Although we feel that the Assistant Commissioner ought not to have committed such delay in disposing of the first application dated January 2, 1987, we do not feel inclined to set aside the order of rejection dated March 8, 1989, on this ground alone, because the applicants themselves are guilty of the identical lapse. 8.. The most important question is the limit of investment. Mr. Bose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............. Provided further that...................... Provided also that........................... Explanation.-For the purpose of this clause 'newly set up small-scale industry' means a new industrial unit,- (i) with an investment up to rupees thirty-five lakhs on plant and machinery, excluding the value of land and building, (ii) which is registered with the Cottage and Small-scale Industries Department of the Government of West Bengal on or before the 14th March, 1983, (iii) to (v)........................." 10.. In Commissioner of Sales Tax v. Auraiya Chamber of Commerce [1986] 62 STC 327; [1987] 167 ITR 458, the Supreme Court took the view that even in a fiscal statute, equity should prevail wherever the language permits. In Petron Engineering Construction P. Ltd. v. Central Board of Direct Taxes [1989] 175 ITR 523, the Supreme Court observed that it is true that an exemption provision should be liberally construed, but this does not mean that such liberal construction should be made even by doing violence to the plain meaning of such exemption provision. Liberal construction will be made wherever it is possible to be made without impairing the legislative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of installation should be included in the computation of cost of plant and machinery. It was held that cost of installation should be excluded from the cost of plant and machinery. G.N. Ray, J., came to this finding on the basis of the criteria for getting a small-scale industry registered with the State Government and having regard to the Government of India guidelines in this connection. In the absence of any definition or indication in rule 3(66) of the BST Rules, 1941, and in the absence of anything else to the contrary and in the background of the overall scheme of offering a package of incentives for setting up small-scale industrial units, we are inclined to agree with the aforesaid decisions of G.N. Ray, J., and give a practical and liberal construction to explanation (i) to rule 3(66)(i) and we hold that the cost of generator and moulds should be excluded from the cost of plant and machinery. We have noted that the Government of India's relevant guidelines are to the above effect and that the amounts of investment limit in explanation (i) to rule 3(66)(i) as also in the relevant guidelines issued by the State Government's Directorate of Small-scale Industries (ibid) have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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