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TMI Blog1991 (4) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ealer under the Bengal Finance (Sales Tax) Act, 1941. It manufactures and sells industrial coke briquettes by setting up this new project with the technical know-how developed by the Central Fuel Research Institute, Dhanbad. The company was registered with the Directorate of Cottage and Small Industries of the State Government on August 8, 1979. The date of first sale was (vide page 56, annexure "C") October 26, 1978. Subsequent to the original application dated April 28, 1980, applicant filed a fresh application on December 2, 1980 for eligibility certificate under rule 3(66) together with supporting documents (vide pages 54 and 55, etc. of annexure "C"). By an order dated June 20, 1981 the appropriate Assistant Commissioner rejected that application on the ground that investment on plant and machinery up to June 30, 1980, exceeded the limit of Rs. 10 (ten) lakhs prescribed by rule 3(66) at the relevant time. Applicant has challenged the said rejection order and the two other orders confirming the same. Its case is that if the estimated loss suffered due to flood in the year 1978 and also due to fire, the cost of erection and installation, the cost of wiring for supply of electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infructuous expenditure (loss, etc.), (b) Rs. 2,67,839 being cost of structural, staging and installation (the amount is really Rs. 2,49,089 as per paragraph 9 and also annexure pages 61 and 63 of the writ petition), (c) Rs. 1,94,306, being cost for electrical equipments and special 440 voltage line, and (d) Rs. 51,000, being cost of bulk bitumen storage tank. Reference is made to Reserve Bank's circular dated February 14, 1981 by which investment limit was raised to Rs. 20 (twenty) lakhs. Circulars of Reserve Bank are said to be binding on respondents. Applicant has relied on the meanings of "plant" and "machinery" as found in Chambers and Oxford dictionaries. 5.. There is no controversy that at the relevant period, namely, up to June 30, 1980 the limit of investment on plant and machinery, excluding the value of land and building, was Rs. 10,00,000 in terms of clause (i) of the explanation to rule 3(66) of the Bengal Sales Tax Rules, 1941. According to respondents, the total investment was Rs. 13,36,796.61, whereas according to the applicant, the total investment was Rs. 13,33,735 (vide pages 49 to 51 of the writ petition, being annexure "A"). Applicant claims a deduction of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idently to allow exemption to a well-defined class of smallscale industrial units. For that reason a limit on the investment on plant and machinery has been imposed in Explanation (i) of rule 3(66). Unless the rule contemplates any such deduction, no provision can be imported thereto for holding that such deduction is permissible. The terms of rule 3(66) are clear enough in this respect. There is nothing to indicate therein that any deduction from the invested amount on plant and machinery can be allowed for loss incurred due to flood or fire or technological gap. Thus, we are of the view that rule 3(66) does not contemplate deduction of this nature from the amount already invested on plant and machinery. 8.. If we consider the factual side of the claim for deduction of Rs. 5,44,938 from the invested amount, we see that admittedly there was an additional investment of Rs. 66,833 for modification of the "curing oven" due to deficiency in the know-how initially available to the applicant. Thus, the question of loss in this respect does not arise in the context of rule 3(66). Rather the further investment should be added to the total investment for the purpose of rule 3(66). Of cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have already held that such circulars of the Reserve Bank are not binding on the sales tax authorities and, therefore, no complaint can be made for not following the circular. Another circular dated February 14, 1981 of the Reserve Bank is found mentioned in a letter dated February 27, 1981 of the United Bank (see page 58, annexure "D"). The learned advocate for applicant referred to that circular by which the investment limit was raised to Rs. 20,00,000. Apart from the fact that the circular has no binding effect on the sales tax authorities, it was issued subsequent to the relevant period ending June 30, 1980. Therefore, the above two circulars are not applicable to this case in the context of rule 3(66). Applicant-company itself quoted from dictionaries in his affidavit-in-reply and relied on those meanings of the term "plant" as equipment, machinery, apparatus, etc., used for industrial and/or manufacturing activity or process. Applicant also claimed deduction of Rs. 51,000 being the cost of the storage tank for the first time in the writ petition and never before. It did not claim before any of the authorities below that the amount should be deducted from total investment. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or should not be included in the investment on plant and machinery. In that case, it was held by this Tribunal that for the purpose of rule 3(66), cost of generator and moulds should be excluded from the cost of plant and machinery for computation of the investment limit. We like to follow that decision in the instant case and to refer to the said guidelines for the same purpose. Items (vi) and (viii) of those guidelines are relevant and are reproduced below: "(vi) The cost of equipment such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores will be excluded in computing the value of plant and machinery. Similarly the cost of installation of plant and machinery will also be excluded. (viii) The cost of generating sets if any installed will be excluded. Similarly, the cost of extra transformers, etc., which have to be installed by a unit as per the regulations of State Electricity Boards would also be excluded." 11.. Explanation (i) to rule 3(66) itself excludes the cost of land and building. Therefore, having regard to that provision and item (vi) of the guidelines just quoted, and following the decision in the case of Sima Banerjee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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