Commissioner, Commercial Taxes and anr. Vs. Super Syncotex (India) Ltd. and ors. - Court Judgment

Excerpt:
rajasthan sales tax incentive scheme, 1987 and rajasthan new sales tax incentive scheme, 1989 - clause 2(f)--expansion--meaning--expansion means 25% increase in fixed capital and increase in production to that extent--licensed capacity under the idra act, 1951, has no relevance.; writ petitions dismissed - - in the aforesaid circumstances, the further fact, which is of relevance and about which there is no dispute, is that under the 1991 industrial policy statement of the union of india, the industries in question are no more required to be licenced under the act of 1951. in other words, since the adoption of the new industrial policy as per the policy statement in 1991, the industries like the respondents were not required to obtain the licence since 1991 at all. 17. after promulgating the tax incentive scheme, 1987, the rajasthan sales tax deferment scheme for industries, 1987 was notified by notification dated 29th september, 1987 which also was made operative retrospectively with effect from 5th march, 1987 and dealt with in the like manner with the new industrial unit covered by 1985 dispensations, new industrial unit's expansions and diversification set up during operative period of the deferment scheme was co-extensive with incentive scheme. it may be noticed that byextending the period of its operation from time to time the incentive scheme, 1987 as well as the deferment scheme, 1987 continued to operate until 31st march, 1997. 18. during the continuance of the rajasthan sales tax incentive/deferment schemes of 1987 under the rajasthan sales tax act as well as central sales tax act, the government of rajasthan brought into effect a new scheme called the rajasthan sales tax new incentive scheme for industries, 1989 as well as the new deferment scheme, 1989 vide notifications dated july 6, 1987 and these schemes were also made operative retrospectively with effect from the date from which the incentive scheme, 1987/deferment scheme was operative that is to say 5th march, 1987. the operative period of these new incentive schemes of 1989 was finally extended up to 31st march, 1998. the new scheme provided certain variations and improvements from the 1987 schemes. when 1998 scheme has come into existence, the provision of establishing an industry and its functioning under the industries (development and regulation) act, 1951 had already been given the go-by in 1991 and it was clearly reflected in the definition of 'expansion',which reads as under :2(g) 'expansion' means the increase in the value of fixed capital investment by not less than 25 per cent of the net fixed assets of the original project and accompanied by an increase in the production to the extent of at least 25 per cent of the installed capacity. ' 20. it is true that ordinarily a subsequent enactment whether of a parent legislature or subordinate legislature cannot control and be of any aid in interpreting the provisions of a statute which has come into existence earlier thereto but the well-known exception to the rule is that where the subsequent enactment is not on a different field but is rather in continuation of the repealed or earlier provisions to operate on the same field and what was latent or absurdity in the earlier statute becomes clearer, the aid can be taken to find out the true meaning of language used in earlier provisions and to give it a meaning which is in consonance with the object sought to be achieved through such legislative document and make such provisions workable in furtherance of such object. 21. even otherwise, the principle is well-established that where the language of a statute in its ordinary meaning and grammatical construction leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship orinjustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. nevertheless, the courts are very reluctant to substitute words in a statute, or to add words to it, and it has been said that they will only do so where there is a repugnancy to good sense.1.these three writ petitions raise a common question about the interpretation of term 'expansion' and the conditions to be fulfilled by the applicants thereunder for seeking benefits under the rajasthan sales tax incentive scheme, 1987 or the rajasthan sales tax new incentive scheme, 1989.2. all the three applicants-respondents in the aforesaid petitions had applied for the sanction for issuing eligibility certificate before the state level screening committee in respect of their expansions carried on by them in the respective existing industrial units engaged in the manufacture of yarn.3. m/s. h.e.g. ltd. has applied for the benefit under the rajasthan sales tax deferment scheme, 1987 (deferment scheme 1987) whereas m/s. reliance chemotax industries ltd., has sought the benefit under the rajasthan sales tax new deferment scheme, 1989 (for short, 'new deferment scheme'), m/s. super syncotex (india) ltd., has sought the benefit under the rajasthan sales tax new incentive scheme, 1989 (for short, 'new incentive scheme'). the definition of 'expansion' of an industrial unit under the incentive scheme, 1987, or the new incentive scheme, 1989, or the deferment scheme, 1987, or the new deferment scheme, 1989 remains the same. the schemes under which applications have been made in the present facts and circumstances of the case do not alter the character of the question and therefore these cases, we deem it convenient to hear together and decide by this common order. in fact, the rajasthan taxation tribunal has also decided the cases of m/s. super syncotex (india) ltd., and m/s. h.e.g. ltd. by a common order whereas m/s. reliance chemotex industries ltd.'s case has been decided by a separate judgment by the rajasthan taxation tribunal.4. on application being made in this behalf by the respondents in respect of their respective units for grant of eligibility certificate under the schemes in question as an 'expansion', the state level screening committee has rejected their claims on the sole ground that they have not achieved the production to the extent of 25 per cent of the original 'licensed and registered capacity' of the unit. the contention on behalf of the units has been that they have increased capital investment in the fixed capital investment by not less than 25 per cent of the net fixed assets of the existing projects. it is also not in dispute that in each case, the unit has achieved 25 per cent increase in production by at least increasing the production to the extent of at least 25 per cent of the existing production under the installed capacity and each of the unit has also achieved production at least 85 per cent of their existing installed capacity. the respective details in respect of all the three cases relating to fixed capital investment, the increase in production and the achievement in production up to at least 85 per cent of their capacity, stated in the petitions are also undisputed.5. it is further not in dispute that all the three units in question were licenced under the industries (development and regulation) act, 1951 (hereinafter referred to as 'act of 1951') as was required of them under the provisions of act of 1951. since allthe units are engaged in the activity of manufacturing yarn, the installed capacity in each case has been expressed in terms of number of spindles. in terms of the capacity permitted to be installed under the licence, each one of them has achieved installation of 85 per cent spindles of their capacity. in the aforesaid circumstances, the further fact, which is of relevance and about which there is no dispute, is that under the 1991 industrial policy statement of the union of india, the industries in question are no more required to be licenced under the act of 1951. in other words, since the adoption of the new industrial policy as per the policy statement in 1991, the industries like the respondents were not required to obtain the licence since 1991 at all. the existing licences became redundant for any future action.6. in the aforesaid scenario, the contention of the petitioners--the commercial taxes department and industries department is that none of the industrial units has installed new spindles to the extent so as to increase in 25 per cent spindles more than the maximum permissible capacity stated in their licences, they cannot be considered eligible for the benefit under the respective schemes. on the other hand, it has been the case on behalf of the units claiming benefit of the scheme that since the abolition of licence system, the licenced capacity or the registered capacity no more exist with reference to which the required increase in the installed capacity and the actual production can be measured. it must necessarily relate to the existing production under the existing installed capacity and increase in the production with increase in the capacity to be installed/expanded.7. while the state level screening committee has rejected the claim of the respondents, the tax board allowed the applications of the respective respondents and directed issuance of eligibility certificate. on revision, the rajasthan taxation tribunal agreed with the conclusions reached by the rajasthan tax board and dismissed the revisions filed by the revenue. hence these writ petitions are before us.8. it is now common ground between the parties that in pursuance of the orders under challenge, the eligibility certificate has in fact been issued to the respective applicants and they are availing of the benefit under the scheme.9. in writ petition no. 1632 of 1998 the respondent m/s. supersyncotex ltd., made an application for availing of the benefit underthe new incentive scheme, 1989 on 25th august, 1995 as an expansion unit.10. in writ petition no. 1631 of 1998, respondent m/s. h.e.g. ltd., applied for eligibility certificate as an expansion unit on 28th may, 1994 under the sales tax deferment scheme, 1987.11. in writ petition no. 4107 of 1999, respondent m/s. reliance chemotex industries ltd. made its application for availing of benefit under the new deferment scheme, 1989 as an expansion unit on 28th august, 1996.12. it may be noticed that all applications for availing of the benefit under different schemes have been made long after the licensing system was abolished in 1991 as was prevalent under the industries (development and regulation) act, 1951 and licensing of industries in each case has long been dispensed with.13. another feature which is to be noticed is that in each case the applicant had increased in their value of fixed capital investment in excess of 25 per cent of the net assets of their existing project and also achieved an increase in production exceeding 25 per cent of their installed capacity before filing of the application.14. the bone of contention centres around the expression used in the definition of 'expansion' which is uniform so far as present purpose is concerned in all the three schemes, referred to above, and also under the rajasthan incentive scheme, 1987. therefore, for convenience sake, we will reproduce only one definition from rajasthan sales tax deferment scheme for industries, 1987, which is provided in clause 2(f) of the deferment scheme, 1987. we may notice that the definition of 'expansion unit' in rajasthan sales tax incentive scheme for industries, 1987, or rajasthan sales tax deferment scheme for industries, 1987, or rajasthan sales tax new incentive scheme for industries, 1989 or the rajasthan sales tax new deferment scheme, 1989 is contained in respective clause 2(f) of the schemes. the relevant provision reads as under :'expansion' means increase in the value of fixed capital investment by not less than 25 per cent of the net fixed assets of the existing projects, and accompanied by an increase in the production to the extent of at least 25 per cent of the original licensed/registered capacity. explanation.--the benefits of deferment scheme for expansion projects will be admissible to the eligible units only after they have achieved at least 85 per cent of their licensed/registered capacity before expansion.'15. before proceeding further, it would be relevant to notice the chronology of the incentive schemes operating in the field of granting exemption/deferment benefits to the new installed capacities within the state whether by way of installing a new industry or by installing additional capacity over and above the existing capacity by way of expansion or by installing new capacity in different goods by diversification by an existing industrial unit.16. in the first instance, the government provided the incentive under 1985 dispensations by making available to the new industrial units interest-free loans against the tax burden. by issuing a notification under section 4(2) of the rajasthan sales tax act on 23rd may, 1987, the rajasthan sales tax incentive scheme for industries, 1987 was brought into effect with effect from 5th march, 1987. while bringing into force this incentive scheme, the industrial unit, which had commenced commercial production on or after april 1, 1985 and was entitled for interest-free loan under the 1985 dispensation scheme, was included in the category of industrial units to whom the benefit of incentive was extended. otherwise, the incentive was confined to the industrial units which commenced commercial production during the operative period of the incentive scheme. such benefit was also made available to the expansions and diversifications brought into existence during the operative period of the scheme. thus, continuity of the benefit made available to the units under the 1985 dispensations under the new incentive scheme to avail of the benefit thereunder was continued. in addition to industries set up under 1985 dispensations and new production capacities coupled with new capital investments in fixed assets set up during the operative period of the scheme, certain concessions were also extended to sick industrial units.17. after promulgating the tax incentive scheme, 1987, the rajasthan sales tax deferment scheme for industries, 1987 was notified by notification dated 29th september, 1987 which also was made operative retrospectively with effect from 5th march, 1987 and dealt with in the like manner with the new industrial unit covered by 1985 dispensations, new industrial unit's expansions and diversification set up during operative period of the deferment scheme was co-extensive with incentive scheme. it may be noticed that byextending the period of its operation from time to time the incentive scheme, 1987 as well as the deferment scheme, 1987 continued to operate until 31st march, 1997.18. during the continuance of the rajasthan sales tax incentive/deferment schemes of 1987 under the rajasthan sales tax act as well as central sales tax act, the government of rajasthan brought into effect a new scheme called the rajasthan sales tax new incentive scheme for industries, 1989 as well as the new deferment scheme, 1989 vide notifications dated july 6, 1987 and these schemes were also made operative retrospectively with effect from the date from which the incentive scheme, 1987/deferment scheme was operative that is to say 5th march, 1987. the operative period of these new incentive schemes of 1989 was finally extended up to 31st march, 1998. the new scheme provided certain variations and improvements from the 1987 schemes. nonetheless, with the commencement of the new scheme 1989, the schemes of 1987, whether of incentive or deferment, were not repealed but both continued to operate simultaneously. under the 1989 scheme, the benefit of the 1989 scheme was not extended to the 1985 dispensations but other industrial units if covered by sales tax incentive scheme for industries, 1987 or under the deferment scheme of 1987 were given option to seek the benefit under the new incentive scheme. even applicants, whose applications under the incentive/ deferment scheme had been rejected on the ground of limitation or were pending before the screening committee, were given the option to opt for either of the schemes under which they wanted to avail of the benefit. the industrial units which had been granted sanction for availing of the benefit under the old incentive/deferment scheme, were also given the option to switch over to the new scheme. this only goes to show that the new incentive scheme, 1989 was in continuation of the schemes of 1987 with the same object and purpose for extending benefit of tax concession/benefits to the new installed capacity within the state.19. in the context of the present controversy, it is relevant to notice that on coming into close the period of operation of 1987 schemes and new incentive scheme, 1989 on 31st march 1998, finally the two schemes, namely, the rajasthan sales tax/central sales tax exemption scheme, 1998 and the rajasthan sales tax/ central sales tax deferment scheme, 1998 were promulgated to become operative with effect from april 1, 1998. the 'expansion unit'under the scheme of 1998 was also included in the category of the units which could avail the benefit under those schemes. the definition of 'expansion' under the two schemes of 1998 was given in clause 2(g) of the respective schemes. when 1998 scheme has come into existence, the provision of establishing an industry and its functioning under the industries (development and regulation) act, 1951 had already been given the go-by in 1991 and it was clearly reflected in the definition of 'expansion', which reads as under :-- '2(g) 'expansion' means the increase in the value of fixed capital investment by not less than 25 per cent of the net fixed assets of the original project and accompanied by an increase in the production to the extent of at least 25 per cent of the installed capacity. however, for second or subsequent expansion, the fixed capital investment in the original project together with the investment(s) up to the immediate preceding expansion, shall be considered as the basis for the purpose of the proposed expansion.explanations.--i. the benefits of expansion under this scheme shall be admissible to the eligible units only after they have achieved and actually utilised at least 80 per cent of their installed capacity in an immediately preceding one completed year before making investment on expansion.ii. the benefits for expansion under this scheme shall be available only on the production in excess of 80 per cent of the installed capacity.'20. it is true that ordinarily a subsequent enactment whether of a parent legislature or subordinate legislature cannot control and be of any aid in interpreting the provisions of a statute which has come into existence earlier thereto but the well-known exception to the rule is that where the subsequent enactment is not on a different field but is rather in continuation of the repealed or earlier provisions to operate on the same field and what was latent or absurdity in the earlier statute becomes clearer, the aid can be taken to find out the true meaning of language used in earlier provisions and to give it a meaning which is in consonance with the object sought to be achieved through such legislative document and make such provisions workable in furtherance of such object.21. even otherwise, the principle is well-established that where the language of a statute in its ordinary meaning and grammatical construction leads to a manifest contradiction of the apparent purpose of the enactment, or to some inconvenience or absurdity, hardship orinjustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. where the main object and intention of a statute are clear, it may be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, of the absolute intractability of the language used. nevertheless, the courts are very reluctant to substitute words in a statute, or to add words to it, and it has been said that they will only do so where there is a repugnancy to good sense. the principle was stated by lord denning in seaford court estates v. asher (1949) 2 all er 155 spelling out the task of a judge in interpreting a statute which is ambiguous or leading to a result which is in conflict with the object of the statute :'when a defect appears, a judge cannot simply fold his hands and blame the draftsman. he must set to work on the constructive task of finding the intention of parliament.......and then he mustsupplement the written word so as to give 'force and life' to the intention of the legislature...... a judge should ask himself thequestion how, if the makers of the act had themselves come across this ruck in the texture of it, they would have straightened it out he must then do as they would have done. a judge must not alter the material of which the act is wowen, but he can and should iron out the creases.'22. the principle though was not accepted by the house of lords in england, found approval by the supreme court of india when sarkar, j. speaking for constitution bench in m. pentiah v. muddala veeramallappa air 1961 sc 1107 adopted the aforesaid reasoning of lord denning. the principle was again reiterated and approved by beg, c.j. in bangalore water supply and sewerage board v. a. rajappa air 1978 sc 548.101111-a1313(1)13(l)(d)