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TMI Blog2007 (1) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... y No. 5) to rectify/ correct the eligibility certificate for exemption of sales tax indicating the actual "installed capacity" of the petitioner-company's factory in terms of the Industrial Policy Resolution, 1989 (hereinafter referred to as "IPR 1989") and as a consequence thereto, to quash the notice issued under section 12(8) of the Orissa Sales Tax Act, 1947, vide annexure 2. Mr. Ganesh, learned Senior Advocate appearing on behalf of the petitioner-company, advanced the following contentions: i. The benefit of sales tax exemption under S.R.O. No. 790/1990 is available to 100 per cent Export Oriented Units (E.O.U.) and also to Units which do not make any export at all. In other words, the availability of exemption under S.R.O. No. 790/1990 is not at all dependent on whether the assessee has made exports or not. ii. The conditions laid down in the E.O.U. resolution issued by the Central Government cannot be imported into or made a part of the sales tax notification (S.R.O. No. 790/1990) issued by the State Government of Orissa. iii. The benefit of sales tax exemption under S.R.O. No. 790/1990 is available to an assessee in respect of sales of any produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e certificate of eligibility for sales tax exemption indicating the actual "installed capacity". He submits that the deciding criterion for determination of the quantum/ extent of exemption as stipulated in the notification is limited to only the transaction of sales of goods by an assessee under the Orissa Sales Tax Act. Therefore, no exemption is available nor can be claimed in respect of transactions, which are not so admitted. He submits that the petitionercompany has already availed exemption in respect of transactions, which have been admitted by it as sales under the Orissa Sales Tax Act, 1947 (in short "OST") or the Central Sales Tax Act, 1956 (in short "CST"). He further submits that although the main prayer is for issuing amended eligibility certificate by the Director of industries, the petitioner actually seeks exemption for transactions which the petitioner has not admitted to be OST transactions in its returns filed before the assessing authorities and therefore, exemption in respect thereof is not admissible. Learned counsel for the opposite parties submits that under the 1990 IPR, exemption is not available simpliciter of the goods up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered under the transactions of sale exempt under the S.R.O. is the quantity permitted to be sold in the DTA in terms of the EOU resolution is only incidental. The Director of Industries in declining to issue the certificate of eligibility based on licensed capacity in his letter No. 2439 dated 15/22 February, 1996 is in total conformity with the S.R.O. The opposite parties further submit that the petitioner in its applications submitted from time to time admitting the transactions of sales to be made referred to the letter of permission or the quantity permitted to be sold within the DTA does not, at all in law, supply any connection to the issue of the certificate of eligibility to exemption under the S.R.O. A reference to the permission granted under the EOU Resolution, in the context of the quantity of goods, is only incidental. The opposite parties submit that in respect of the petitioner contention that the benefit of sales tax exemption are available to 100 per cent export oriented units and also to units which do not make any export at all, the availability of exemption under S.R.O. No. 790/1990 is not at all dependent on whether the assessee has made exports or not. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, require no exemption. (c) The stipulation in form III is that "maximum quantity that can be produced by the industrial unit as per installed capacity" is to be stated. It is not always the case that full production is always possible of being made. Generally, the actual production is less than the installed capacity. The aforesaid stipulation serves the vital purpose in administering the incentives in its proper perspective and preventing abuse of the incentives allowed at substantial cost to the public revenue and thus is most important for successful implementation of the policy. (d) Besides, the case of the petitioner is that although its installed capacity is 50,000 metric tonnes, the actual production as stated in its application dated the 20th January, 1996 in the years 1992-93 to 1994-95 is much less. In the face of these facts, the application seek certification for entitlement to exemption for the installed capacity of 50,000 metric tonnes. Assuming for the sake of argument, that the petitioner is entitled to exemption in respect of actual production, the certification of the exemption in respect of sales of goods of the quantity equal to total installed ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application in the prescribed form. Apart from the "operational guidelines" the learned counsel for the petitioner-company, placed reliance on the "instructions" issued by the Director of Industries dated May 5, 1988, regarding capacity of assessment of Industrial Unit and in terms of such instructions, it would be clear that the statutory form for capacity assessment does not provide for any distinction between the "domestic sales" and "export sales". On the contrary the "capacity assessment" has to be made basing on the "installed capacity" of an industrial unit. The certificate regarding quantum of exemption has been essentially stipulated obviously with an object to prevent the misuse of the exemption and to ensure that the industrial unit claiming and seeking such incentives alone gets the benefit. In other words he submits that such "capacity assessment" was required to certify the extent of raw materials/finished products to which the industry would be entitled for exemption. Learned counsel on behalf of the petitioner-company further placed reliance upon a judgment rendered by the Orissa High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rward on behalf of the respondents as correct. On a true construction of the language of the notifications dated July 31,1959 and April 30,1960 it is clear that all that is required for claiming exemption is that the cotton fabrics must be produced on power-looms owned by the co-operative society. There is no further requirement under the two notifications that the cotton fabrics must be produced by the co-operative society on the power looms for itself. It is well-established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax-payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority. If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different but that is not the case here. Their Lordships refer to the observations of Lord Watson in Salomon v. Salomon and Co. 1897 AC 22 at page 38: 'Intention of the Legislature is a common but very slippery phr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner by the Director of Industries at annexures 4 and 4/A should be suitably rectified/ corrected in terms of the submissions advanced by the petitioner-company and the opposite parties. In this respect it would be imperative to consider the stipulation contained in IPR 1989 itself. The contention raised by the State is that the exemption contemplated under IPR 1989 is inextricably linked to or inseparable from sales under the O.S.T. Act or under the C.S.T. Act or taken together sales within the country or in the Domestic Tariff Area (DTA) requires serious consideration. It is further averred that sales outside the country or sales in course of export are outside the power of taxation under the O.S.T. Act or the C.S.T. Act in accordance with the provisions of the Constitution under article 286(1) of the Constitution of India. The aforesaid contention require to be considered in the light of article 286: "286. Restrictions as to imposition of tax on the sale or purchase of goods.--(1) No law of a State shall impose or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place-- (a) outside the State; or (b) in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan under the Orissa Sales Tax Loan Scheme Rules, 1980. Therefore, in terms of IPR 1989 the petitioner-company would be entitled to claim sales tax incentive under the IPR 1989, which includes thereunder, the right for deferment/ exemption of sales tax on finished product for a stipulated period. Nowhere in the IPR 1989 any distinction is sought to be made on the basis/manner of sale of such manufactured product. There apparently exists no stipulation as to whether the sale on which exemption is sought has to be within the State of Orissa or in course inter-State or in the course of import or export. After the issuance of IPR 1989, an "operational guideline" has been issued by the State declaring therein that sales tax benefit available under the said IPR, would be available to those which are "eligible units" on the basis of a "certificate granted" to them by the Director of Industries. Under the said "operational guidelines" all eligible units are required to submit application in statutory forms to the Director of Industries for issue of necessary eligibility certificate. The operational guidelines do not contain any stipulation nor does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e produced by industrial units as per installed capacity". The installed capacity of the petitioner-company is claimed to be 50,000 metric tonnes as would be evident from the application filed by the petitionercompany. In this view of the matter, the eligibility certificate issued while claiming to be indicating the "installed capacity", has not done so and instead 1506.8 metric tonnes/and 2338.4 M.T. has been indicated under the said heading, purportedly on the basis of the Government of India letter referred to therein. We fail to understand as to how the aforesaid tonnage indicated in the certificate under the heading, "maximum quantity that can be produced by the industrial unit" as per the "installed capacity" can be described as such. The "capacity assessment" ought to have been carried out by the appropriate authority on the basis of the circular of the Director of Industries dated May 5, 1988 and the guidelines for assessment of capacity of the industrial unit. No such "capacity assessment" has been brought on record by either party to the proceeding. On the basis of our findings arrived at herein above we are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acity of 50,000 metric tonnes, but in the absence of any available documents in the present proceeding, establishing such a fact, we are of the considered opinion that the "capacity assessment" needs to be undertaken by the appropriate authorities for such purpose. (b) Upon the "capacity assessment" being determined, we direct that the "eligibility certificate" for sales tax exemption under IPR 1989 be issued on the basis of such determination and in the manner contemplated under the circular as well as guidelines for assessment of capacity of industrial unit issued by the Director of Industries. (c) The exercise of determination of "installed capacity" be completed within a period of two months and as a consequence thereof the "eligibility certificate" for sales tax exemption be issued within one month therefrom. (d) The connected sales tax proceedings may remain in abeyance for a period of four months for compliance with the direction made hereinabove and shall thereafter be disposed of by the appropriate authorities in terms of the certification that will be issued by the Director of Industries in compliance the directions con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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