Cummins Ltd Vs. State of Jharkhand & Ors  Insc 466 (1 August 2006)
Bhan & Markandey Katju Markandey Katju, J.
Appeal has been filed against the impugned judgment of the Jharkhand High Court
dated 08.8.2005 passed in Writ Petition (Tax) No.3037 of 2004 in Tata Cummins
Ltd. vs. State of Jharkhand & Ors..
have heard learned counsel for the parties.
writ petition was filed by the petitioner-appellant seeking a declaration that
the petitioner is entitled to avail the benefit of set-off of Sales Tax w.e.f.
1.1.2004 in terms of the Jharkhand Industrial Policy, 2001 read with S.O.
Nos.65, 66 and 67 all dated 12.1.2002 issued under the Bihar Finance Act, 1981
with other consequential benefits.
determine the issue, it is necessary to notice the relevant facts, laws, Jharkhand
Industrial Policy, 2001 and Circulars/guidelines issued by the respondents from
time to time which are as under.
then State of Bihar issued an Industrial Policy in the year 1995, known as
"Bihar Industrial Policy, 1995", where under provision was made to
grant benefit of exemption of sales tax on purchase of raw materials and on
sale of finished goods to industrial units. Two Notifications bearing S.O.
No.478 and 479, both dated 22.12.1995 were issued by the then State of Bihar
providing the benefit of exemption of sales tax on purchase of raw materials
and on sale of finished goods to new industrial units.
petitioner company, which is a manufacturer of diesel engines and components,
started its commercial production since 1.1.1996. On 22.1.1996 it applied for
exemption of sales tax on purchase of raw materials and on sale of finished
goods for a period of eight years i.e. upto 31.12.2003, which was ultimately
meantime, the State of Bihar was reorganized under the Bihar
Reorganization Act, 2000 and two successor States of Bihar and Jharkhand were created. The petitioner - Tata
Cummins Ltd. having its office at Jamshedpur, fell within the Territorial Jurisdiction of the State of Jharkhand.
State of Jharkhand announced its first Industrial
Policy on 25.8.2001, known as "Jharkhand Industrial Policy, 2001"
making it applicable from the "effective date", which was 15.11.2000,
for a period of about five years i.e. upto 31.3.2005. Under the Jharkhand
Industrial Policy, 2001, the benefit of exemption of sales tax on purchase of
raw materials and on sale of finished goods has not been provided, but the
benefit of 'set-off' of sales tax has been provided to "new" as well
as "existing industrial units". The State of Jharkhand, thereafter, issued Notifications
being S.O.No.65, 66 and 67 all dated 12.1.2002 in exercise of power under
Section 22 of Bihar Finance Act, 1981, (Bihar Act of 1981) and allowed the
benefits in terms of the provisions of the Jharkhand Industrial Policy, 2001.
the first Jharkhand Industrial Policy, 2001 was given effect to vide
Notification being S.O. Nos.65, 66 and 67 all dated 12.1.2002, the petitioner
applied for and requested to 'set-off' the sales tax w.e.f. 1.1.2004. When no
reply was received, the petitioner of its own approached the authority and
filed its detailed submission explaining to the authority as to how it is
entitled to such benefit, but no decision having been taken by the respondent
and the benefit of 'set-off of sales tax' having not allowed for the period
from 1.1.2004 to 31.3.2005, the petitioner preferred the writ petition, out of
which this appeal arises.
writ petition was filed in the Jharkhand High Court, which was dismissed. Hence
this appeal. The copy of the Jharkhand Industrial Policy, 2001, which was
announced on 5.8.2001, has been annexed as Annexure-P1 to the Special Leave
Petition. In this Industrial Policy the effective date has been defined to mean
15.11.200 from which date the new State of Jharkhand was created, and it is also the date on which this policy came into
force. The Industrial Policy defines an existing Industrial Unit to mean an
industrial unit which has gone into industrial production before the effective
date. The Policy also defines a New Industrial Unit to mean an Industrial Unit
which has come into commercial production between 15.11.2000 and
Industrial Policy mentions the Commercial Tax Reforms in Clause 28 on the said
Policy. Clause 28.1 reads as under :
" New Industrial
Units as well as existing units which are not availing any facility of
Tax-deferment or Tax free purchases of tax free sales under any notification
announced earlier, shall be allowed to opt for set off, of Jharkhand Sales Tax
paid on the purchases of raw materials within the State of Jharkhand only
against Sales Tax payable either JST or CST on the sale, excluding stock
transfer or consignment sale outside the state, of finished products made out
from such raw materials subject to limitation of six months or the same
financial year from the date of purchase of such raw materials." The question in
this case is whether the appellant is entitled to the benefit of Clause 28.1.
the appellant had been granted the benefit of Sales Tax-deferment for a period
of eight years from 1995 to 31.12.2003 under the Old Bihar Industrial Policy,
1995 read with Notification S.O. No.478 and 479 both dated 22.12.1995.
it is an admitted case that on the effective date i.e. 15.11.2000 the appellant
was actually availing the facility of Tax-deferment under the Notification
announced earlier. Hence in our opinion on a plain reading of Clause 28.1 of
the Industrial Policy, which was introduced on 15.11.2000 in the State of Jharkhand, the appellant is not entitled to
the benefit under Clause 28.1.
counsel for the appellant contends that if we hold that Units which were
actually availing the facility of Tax-deferment on 15.11.2000, will not be
given the benefit under the Clause 28.1, the consequence will be that hardly
any unit will get the benefit of Clause 28.1 because almost all the units of
State of Jharkhand were enjoying the Sales Tax-deferment on 15.11.2000. Hence
he submitted that such an interpretation should be avoided.
afraid we cannot accept this plea. It is well settled that when the plain and
grammatical meaning of the provisions in an Act or Notification are clear then
the literal rule of interpretation has to be applied. In the present case, in
our opinion, Clause 28.1 is clear. The word used there are "not availing
any facility of Tax-deferment". Thus the present continuous tense has been
used in Clause 28.1. In our opinion, Clause 28.1 means that the benefit therein
will be available only if the facility of Tax-deferment is not actually being
availed of on the date of the Notification of the Industrial Policy, which is
15.11.2000. It is well settled when the meaning of a provision is clear, we
cannot depart from the literal rule of construction.
Ratan Lal vs. Sales Tax Officer, Section III, Kanpur & Anr. (AIR 1973 SC
1034), the Supreme Court observed :
construing a statutory provision the first and foremost rule of construction is
the literary construction. All that the Court has to see at the very outset is
what does the provision say. If the provision is unambiguous and if from the
provision the legislative intent is clear, the Court need not call into aid the
other rules of construction of statutes. The other rules of construction are
called into aid only when the legislative intent is not clear." Since the
appellant was availing the facility of Tax- deferment on 15.11.2000, in our
opinion, he was not entitled to the benefit under Clause 28.1. Hence we agree
with the view taken by the High Court. The appeal is dismissed.