9911796707
TMI Blog2003 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... from electricity duty. From the facts and circumstances of the case we are clearly of the view that the respondent is not entitled to exemption from electricity duty. The High Court failed to apply the real test which emerges from the judgment of this court in Textile Machinery Corporation's case [1977 (1) TMI 3 - SUPREME Court] which was affirmed in a subsequent decision in Bajaj Tempo Ltd. v. CIT [1992 (4) TMI 4 - SUPREME Court]. Accordingly, this appeal is allowed. The judgment of the High Court under appeal is set aside. The respondent is held not entitled to exemption from electricity duty. - - - - - Dated:- 29-1-2003 - Judge(s) : M. B. SHAH., ARUN KUMAR JUDGMENT The judgment of the court was delivered by ARUN KUMAR J.--This appeal is directed against a judgment dated November 29, 1990, of the Gujarat High Court allowing a writ petition filed by the respondent seeking exemption from levy of electricity duty and for quashing the orders of the authorities under the Bombay Electricity Duty Act, 1958 (hereinafter referred to as "the Act"), whereby exemption had been denied to the respondent. The High Court held that the respondent had set up a new industrial undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears from the commencement date or the date on which the industrial undertaking commences for the first time manufacture or production of goods, whichever is later; Provided that no industrial undertaking shall be entitled to exemption from payment of electricity duty under this clause, unless it has obtained a certificate regarding eligibility for such exemption in the prescribed form by making an application therefore in the prescribed form and within the prescribed period to such officer as the State Government may, by notification in the Official Gazette, specify. Explanation 1.--For the purpose of clause (vii)- (i) 'an industrial undertaking' means an industrial undertaking which manufactures or produces for sale or use in the manufacture or production of other goods but does not include an undertaking which manufactures or produces any kind of food and drinks, meant ordinarily for consumption on the premises of the undertaking ; and (ii) 'a new industrial undertaking' means any such industrial undertaking which- (a) is not formed by the splitting up or the reconstruction of a business or undertaking already in existence in the State; or (b) is not formed by transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exemption from duty. The object was to encourage industrial activity in the new State of Gujarat. The High Court noted the fact that in the beginning and towards the end of the process of manufacture of cement, the respondent was making use of old machinery. Yet it was of the view that this was not decisive of the matter. The High Court accordingly set aside the findings of fact recorded by both the statutory authorities and granted relief to the respondent by holding that the respondent was entitled to exemption from electricity duty. Learned counsel appearing for the appellant, State of Gujarat, laid emphasis on the relevant provisions of the statute particularly clause (ii)(c) of Explanation 1 and submitted that in view of the restrictive definition of a new industrial undertaking contained in the said provision, the respondent is not entitled to exemption from payment of electricity duty, The crucial question for consideration in this case is the meaning of the word "new industrial undertaking" contained in sub-clause (b) of section 3(2)(vii). Only if a unit can be described as a new industrial undertaking, it will qualify for the exemption. According to clause (ii)(c) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of an existing unit? The case of expansion of an industrial undertaking would qualify for exemption under section 15C of the Income-tax Act while in view of clause (ii)(c) of Explanation 1 contained in the Bombay Electricity Duty Act, 1958, an expansion of an existing business undertaking would not qualify for exemption from electricity duty. Para. 18 of the judgment in Textile Machinery Corporation's case [1977] 107 ITR 195 (SC) throws considerable light on the controversy before us. Para. 18 reads as below: "18. The assessee continues to be the same for the purpose of assessment. It has its existing business already liable to tax. It produced in the two concerned undertakings commodities different from those which it has been manufacturing or producing in its existing business. Manufacture or production of articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter, to earn benefit from the exemption of tax liability under section 15C. Sub-section (6) of the section also points to the same effect, namely, production of articles. The answer, in every particular case depends upon the peculiar facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To appreciate the exception contained in Explanation I to clause (ii)(c) of section 3(2)(vii)(b) it is necessary to understand the meaning of the word "expansion". The word "expansion" is a noun derived from the word "expand", which is a verb. The word "expand" means to become greater or bigger in size, to spread out. As per the New Shorter Oxford English Dictionary, the word "expand" means 1. v. t. 'spread or stretch (a thing) out 2. become extended, spread out, unfold 3. v. t give full expression to 4. v. t. widen the boundaries of, increase the area, scope, etc. of ; enlarge, dilate 5. v. t. become greater in area, bulk, capacity, etc. ; become larger; increase the scope of one's activity or the scale of operations of something, take in or go into a new area of activity. This meaning is to be applied to the facts on record. The respondent-company when it initially started had a production capacity of 660 metric tonnes which was subsequently increased to 1,000 metric tonnes. In 1969-70 by setting up the alleged new unit, production capacity of the company more than doubled. But as already seen this unit is not self-contained. It is not an independently viable unit. It is depe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
