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CASE NO.: Appeal (civil)  1912 of 2004

PETITIONER: M/s. Tata Iron & Steel Co. Ltd.                                  

RESPONDENT: State of Jharkhand & Ors.                                        

DATE OF JUDGMENT: 30/03/2005

BENCH: B.P. Singh & S.B. Sinha  

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 2269 OF 2005 (@ SLP (C) No. 15419 OF 2004)

S.B. SINHA, J:

       Leave granted in S.L.P. (C) No. 15419 of 2004.

                Interpretation and application of the notifications bearing Nos. 65, 66  & 67 dated 12th January, 2002 issued by the State of Jharkhand  pursuant to  the Jharkhand Industrial Policy, 2001 falls for our consideration in these  appeals which arise out of judgments and orders dated 12.8.2003 and  16.3.2004 passed by a Division Bench of the Jharkhand High Court whereby  and whereunder the writ petition filed by the Appellants herein was disposed  of with certain directions.

BACKGROUND FACTS :         The fact of the matter is being noticed from Civil Appeal No. 1912 of  2004.

       The Appellant, an existing company within the meaning of   Companies Act, 1956, is a producer of saleable steel and other alloy  products having a production capacity of  17.4 lakh tons.  It at all material  times was and still is producing steel through its Hot Rolled Mill (HRM).  It  is registered as a dealer both under the Central Sales Tax Act, 1956 and the  Bihar Finance Act, 1981 (1981 Act).  It was granted an industrial licence for  expansion of its existing industrial unit located at Jamshedpur for production  of steel to the extent of 21 lakh tons per annum.   

EXEMPTION CLAIMED FOR NEW INDUSTRIAL UNIT :         The Government  of Bihar issued an Industrial Policy in the year  1995.  With a view to give effect thereto it issued two notifications bearing  Nos. 478 and 479 dated 22.12.1995 granting exemption to dealers in terms  of Section 7(3)(b) of the 1981 Act in respect of tax on purchase or sale of  certain goods manufactured by new/ expanded/ diversified/ modernized  units.  Pursuant to or in furtherance of the said Industrial Policy as also the  notifications issued pursuant thereto, the Appellant herein undertook  diversification of its product \026 saleable steel by establishing a cold rolling  mill.  On or about 10.1.1998, the Government of Bihar acknowledged that  the Appellant was ’going to diversify its plant’.  In terms of the Bihar  Reorganisation Act, 2000, the State of Jharkhand was created with effect  from 15.11.2000, as a result whereof, inter alia, the 1981 Act was extended  to the State of Jharkhand.

       The Appellant claimed benefits of the aforementioned notification

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Nos. 478 and 479 dated 22.12.1995 whereupon by an order dated  16.12.2000 the benefit of exemption in respect of its Cold Rolled Product  (CRP) was granted treating the ’diversified capacity’ as a new unit.  Such  grant of exemption, however, was withdrawn by the Commissioner of  Commercial tax in exercise of its suo motu power of revision holding that as  both Cold Rolled Product and Hot Rolled Product find mention in the same  entry issued in terms of Section 14 of the Central Sales Tax Act, 1957, they  are not entitled to the benefits claimed.   

       Aggrieved, the Appellant filed a writ petition before the Jharkhand  High Court which was marked as CWJC 1426 of 2001.  The Division Bench  of the High Court disposed of the said writ petition upon setting aside the  order of the Commissioner of Commercial Tax dated 3.4.2001 and remitting  the matter back to the Commissioner of Commercial Taxes for   reconsideration of the question as to whether the cold rolled product is a new  and distinct product vis-‘-vis hot rolled product.

       An application for grant of Special Leave from the said order was  filed before this Court by the Appellant herein and leave having been  granted in the appeal, the matter was marked as C.A. No. 2188 of 2002.   This Court by judgment and order dated 25th August, 2004 [since reported in  (2004) 7 SCC 242] held that the product manufactured by the Appellant in  its new unit is a cold rolled mill (CRM) product and not hot rolled mill  product.  It was opined:

"21\005Based on a promise made in the industrial policy of  the State of Bihar, at every stage the appellants tried to  verify and confirm whether they are entitled to the  benefit of exemption or not and they were assured of that  exemption.  It is based on these assurances that the  appellant invested a huge sum of money which according  to the appellant is to the tune of Rs. 2000 crores but the  State says it may be to the tune of Rs. 1400 crores.   Whatever may be the figure, the fact still remains that the  appellants have invested huge sums of money in  installing its new industrial unit.  At every stage of the  construction, progress and installation of the machineries,  the Government/ authorities concerned were informed  and at no point of time it was suspected that the new unit  was going to manufacture HRM.  The process of  manufacturing HRM and CRM as could be seem from  the experts’ opinion is totally different and the material  on record also shows that the plant design for a new unit  is for the purpose of manufacturing CRM.  These factors  coupled with the fact that at no stage of the proceedings  which culminated in the judgment of the High Court, the  respondent State had questioned this fact except for the  technical ground taken by the Commissioner which is  found to be erroneous, we find the ends of justice would  not be served by remanding the matter for further  inquiry."

EXEMPTION CLAIMED FOR EXISTING INDUSTRIAL UNIT :         In the meanwhile the State of Jharkhand declared its Industrial Policy  on or about 25.8.2001 for the period 15th November, 2000 to 31st March,  2005;  para 28.1 whereof inter alia provided for set off / adjustment to  dealers in respect of new industrial units as well as the existing units.  Para  28.2 provided for a uniform rate of tax @ 2% in view of the provision of set  off.

       Three notifications bearing Nos. 65, 66 and 67 dated 12th January,  2002 were issued thereafter in terms of Sections 22, 23 and 13(1)(b)  respectively.  S.O. 65 refers to facility of set off and adjustment on intra- State sales.  S.O. 66 refers to inter-state sales whereas S.O. 67 provides for  concessional rate of sales tax on purchase of raw material and other items at

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the rate of 2%. Such facility is to be allowed to those industrial units who  come under the purview of set off of tax.

       The Appellant as regards its existing unit, viz., HRM applied for  eligibility certificate before the Deputy Commissioner of Commercial Tax  stating that it had been ’engaged in manufacture and sale activities of  various iron & steel products and other materials’.  The said application of  the Appellant was rejected by the Deputy Commissioner of Commercial Tax  by an order dated 13.3.2002 opining that it being a dealer with one  registration under Sales Tax Laws, was not entitled thereto.  The said order  came to be affirmed by the Commissioner of Commercial Tax by an order  dated 25.3.2003.   

       A writ petition thereagainst was filed which was marked as WP(T)  No. 2003 of 2003.  By reason of the impugned judgment, while setting aside  the aforementioned orders dated 13.3.2002 and 25.3.2003 passed by the  Deputy Commissioner of Commercial Taxes and the Commissioner of  Commercial Taxes respectively, the High Court held (although not finally)  that the Appellant as a whole, including its diversification into CRP, is one  existing unit, but as the litigation in relation to CRP was pending before this  Court, the matter was remitted granting leave to the Appellant to make a  fresh claim under the Industrial Policy, 2001 on the premise that if it is  found not entitled to the benefit of 1995 Policy in respect of CRP, it would  be able to claim the benefit under the 2001 Policy of the State of Jharkhand.

CONTENTIONS  :         Mr. Dushyant A. Dave and Mr. Gaurav Banerjee, learned senior  counsel appearing on behalf of the Appellant took us through the Industrial  Policy of the State of Jharkhand as also the aforementioned notification Nos.  65, 66 and 67 dated 12th January, 2002 and would submit:

(i)     The Industrial Policy covers both new unit as well as existing units  and CRM having been treated to be a new unit, the High Court committed an  error in not directing grant of benefits to its HRM as an existing unit. (ii)    Such Industrial Policy as also the notifications having  not referred to   ’company’, ’assessee’ or ’dealer’,  each unit of the Appellant was entitled to  the benefit of the notifications irrespective of the fact as to whether they are  new or existing units. (iii)   The notifications should be given a liberal construction having regard  to the object of the policy, viz. to optimally utilize the available resources of  the State in a planned manner and to accelerate the industrial development of  the State.  CRM having a separate industrial licence having been set up for  manufacturing separate goods by going into commercial production which  may not be multiple ones, the High Court should not have laid too much  emphasis on Clause (6) of the notification as it was a machinery provision  and, thus, not a part of the policy.

       Mr. Punit Dutt Tyagi, learned counsel appearing on behalf of the  Appellant in S.L.P. (C) No. 15419 of 2004, would contend that the  Appellant supplied gas to TISCO wherefor sales tax at the rate of 2% was  charged on the premise that it had already filed application for grant of set  off and/ or adjustment although the rate of tax was 3%.  A writ petition was   filed as the State of Jharkhand stopped issuance of the concession forms on  the premise that it did not deposit the tax at the rate of 3%.  It is accepted  that the fate of this appeal would depend upon the result of the first matter.

       Mr. Sunil Gupta, learned senior counsel appearing on behalf of the  Respondents, would submit that : (a)     All the aforementioned three notifications dated 12th January, 2002  having been issued under Sections 22, 23 and 13(1)(b) of the 1981 Act; are  required to be construed in terms thereof. (b)  As the provisions of the 1981 Act envisage the company as an assessee,  exemptions can be claimed only by it as a whole and not in relation to each  of its units. (c) Industrial Policy being a multi-faceted policy, although a diversified

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activity of the Appellant in terms thereof will be treated as a new unit, but  having regard to the statutory scheme and  on proper reading of the  notifications, it has rightly been held by the High Court that the benefits of  adjustment and set off were available only to a dealer/ assessee as the State  exercised its jurisdiction only in terms of Sections 22 and 23 of the Act in  respect of entirety of its activities and the units belonging to it.  (d) Effective date in terms of the notification and Industrial Policy being  same in respect of both existing as well as new unit, the Appellant having  obtained the benefit in respect of its cold rolled mill was not entitled to any  further benefit by way of adjustment or set off in respect of its hot rolled mill  which was an existing unit.

(e)    Eligibility clause contained in the Industrial Policy  must receive strict  construction.

STATUTORY PROVISIONS 1981 Act         Section 2(e) defines ’dealer’ to mean any person who carries on the  business of buying, selling, supplying or distributing goods, directly or  indirectly, for cash, or for deferred payment, or for commission,  remuneration or valuable consideration which inter alia includes a company  which carries on such business.

       Section 3 provides for charge of tax in terms whereof sales or the  purchase tax, as the case may be, is required to be paid by every dealer.   Such tax is payable to a dealer to whom clause (a) of sub-section (1) applies  on sales and purchases made inside Bihar on and from the date of  commencement of the 1981 Act and by a dealer to whom clause (b) of the  said sub-section applies on such sales or purchases made on or from the date  immediately following the day mentioned in the said clause (b).  Sub-section  (9) of Section 3 provides that the provisions of the Central Sales Tax Act,  1956 shall apply for determination when a sale shall be deemed to have  taken place inside Bihar.

       Section 7 provides for exemption.  Section 7(3)(b) empowers the State  Government to exempt any dealer from payment of sales tax or purchase tax  by issuing an appropriate notification and subject to such conditions or  restrictions, as the case may be, inter alia sales of any goods or class or  description of goods to or by any class of dealers.   

Section 12 provides for rate of tax whereas Section 13 provides for  special rate of tax on certain sales or purchases.  Section 13(1)(b) of the  1981 Act reads as under:

"13. SPECIAL RATE OF TAX ON CERTAIN  SALES OR PURCHASES.  (1) Notwithstanding anything contained in this part  but subject to such conditions and restrictions as  may be prescribed -  (b) sales to or purchases by a registered dealer of  goods required by him directly for use in the  manufacture or processing of any goods for sale;"

       Section 14 provides for registration of dealers.  Section 16 mandates  filing of return by a dealer. Section 22 empowers the State Government to  permit any dealer, or class or description of dealers who are running  manufacturing units in the State of Bihar to adjust the amount of tax paid on  the purchases of raw materials which has been used for manufacture of  goods for inter-State sale against the tax payable on sale of finished product  within the State in such manner as may be laid down in the order allowing  permission, if it is satisfied that it is necessary to do so in the interest of  industrial growth.

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       Section 23 similarly empowers the State Government to permit  adjustment or set off of tax in respect of inter-State sales.

Bihar Industrial Policy, 1995         The Industrial Policy of 1995 was issued by the State of Bihar with a  view to create an environment conducive to growth of industries in the State.

       Clause 16.2 deals with sales tax on sale of finished goods for new  units, in terms whereof new units, in addition to the benefit of exemption /  set off of Sales Tax on purchases, will also have the option to choose  deferment or exemption of Sales Tax [both Bihar Sales Tax and Central  Sales Tax] on sale of finished goods for a period of 10 years for category ’A’  and 8 years for category ’B’ Districts from the date of production of the unit  with a ceiling of 100% of the fixed investment made by it.

       Clause 16.3 of the said Policy reads as under:

"16.3 Units Undertaking Expansion / Diversification \026  Such units should be given identical treatment as new  units for their expanded/ diversified capacity and  incremental both in purchase of raw materials and for  sales tax on finished goods.  All such incentives will be  admissible to such units which are covered by the  definition of expansion/ diversification as given in the  Annexure.  Incremental production means:

"The incremental production shall mean the excess of  actual production over 2/3 of the originally installed  capacity or the highest production in 3 years immediately  preceding the year in which such expansion /  diversification commenced whichever of the two is  higher".

       The said policy was to remain in force for a period of  5 years with  effect from September 1, 1995.

       The following definitions mentioned in Annexure appended to the  said Policy and which are relevant for our purpose read  as under:

"1. Effective Date: Effective date means the date of  which the provision of this Policy come into force i.e.  September 1, 1995.  This policy will remain in force for 5  years from September 1, 1995. 2. Industrial Units/ Industrial Concern: Industrial Units/  concern means any unit/ concern or to be engaged in  manufacturing/ processing/ servicing industry belonging  to the following categories: (a) Industries listed under the First Schedule of the  Industries (Development and Regulation) Act, 1951 and  amended from time to time. (b) Thrust industries listed in para 15 of the Policy  Statement. (c) Industries falling within the purview of the following  Boards/ Agencies: (i)     Small Scale Industries Board (ii)    Coir Board (iii)   Silk Board (iv)    All India Handloom and Handicrafts Board  (v)     Khadi and Village Industries Commission (vi)    Any other agency constituted by the GOI or GOB  for industrial development\005.

3. Existing Industrial Unit: Existing Industrial Unit  means an industrial unit which has gone into production

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before the effective date.

4. New Industrial Unit: New Industrial Unit means an  industrial units which has come into production between  1st September, 1995 and 31st August, 2000.

7. Expansion/ Modernization / Diversification:  Expansion/ Modernization/ Diversification of an existing  industrial unit would mean additional fixed capital  investment in plant and machinery of 50% or more of the  undepreciated value of fixed capital investment in the  existing unit leading to incremental production capacity  which would not be less than 50% of the initial installed  capacity.  In order to qualify for the sales tax incentives a  unit undertaking expansion/ modernization/  diversification should send intimation to the General  Manager, District Industries Centres or the Managing  Director, Industrial Area Development Authorities &  Deputy Commissioner Commercial Taxes as the case  may be in respect of Small Scale Industry or the Director  of Industries/ Director, Technical Development and  Commissioner Commercial Taxes in case of medium and  large industries before undertaking expansion/  modernization programme.  Such intimation should be  accompanied by detailed expansion / modernization /  diversification proposal giving the specific period of  proposed investment."

       S.O. 479 dated 2nd December, 1995 was issued by the State of Bihar  in exercise of its power under Clause (b) of Sub-section (3) of Section 7 of  the 1981 Act whereby and whereunder exemption was granted to those new  industrial units which started production from 1st September, 1995 to 31st  August, 2000 on the sales of finished goods produced by them under the  terms and conditions specified therein, clause (c) whereof reads thus:

"(c) For exemption from sales tax, industrial unit means  such unit which manufactures goods for sale and for the  purpose of it the meaning of "manufacture" shall be the  same as defined in part 1 of the Bihar Finance act, 1981  (Bihar Act No. 5 of 1981)"

Jharkhand Industrial Policy, 2001         We may, at this juncture notice certain provisions of Jharkhand  Industrial Policy.     "28.1 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 out side the  state, of finished products made out from such raw  materials subject to a limitation of six months or the  same financial year from the date of purchase of such  raw materials.

28.2 Clause 13(i)(b) of the Adopted Bihar Finance Act,  1981 provides for two (2) rates of concessional sales tax  on purchases of raw materials and other inputs.  These  are 2% and 3% against Form IX.  Both these rates will be  reduced to 2% in view of the provision for set off as  aforesaid."

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Definitions Effective Date: Effective date means 15th November  2000 from which date the new State of Jharkhand has  been created, the date on which the provision of this  Policy come into force, i.e. November 15, 2000.  This  Policy will remain in force till 31st March, 2005.

"Unit" means any industrial project in large and medium  scale having approval in the form of letter of intent,  industrial license or registration certificate, as the case  may be, under the Industries (Development and  Regulation) Act, 1951 (65 of 1951) or an  acknowledgement in the form of Secretariat for Industrial  Assistance reference number from Central Government  excluding those mentioned in the negative list of  industries at Annexure \026 III."

Explanations: (i) For the purpose of concessions/ benefits relating to  sales tax, only such units shall be deemed to be industrial  units which carry on the business of manufacturing goods  for sale.

(ii) If any doubt arises as to whether a unit/ concern is an  industrial unit / industrial concern or not for the purposes  of this policy, the same shall be referred to a committee  headed by the Finance Commissioner with Industrial  Development Commissioner/ Secretary Industry and  Commercial Taxes Commissioner as its members and the  decision of the Committee shall be final.

Existing Industrial Unit: Existing industrial Unit means  an industrial unit which has gone into commercial  production before the effective date.

New Industrial Unit: New Industrial Unit means an  industrial unit which has come into commercial  production between 15th November, 2000 and 31st March,  2005."   

Notifications:         We have noticed hereinbefore that the notifications No. S.Os. 65 and  66 dated 12th January, 2002 were issued respectively under Sections 22 and  23 of the Bihar Finance Act.  As they are identically worded, we shall refer  only to S.O. 65, the relevant clauses whereof are as under:

"In exercise of powers conferred under section 22 of  Bihar Finance Act, 1981 (Bihar Act 5, 1981) (Adopted),  State Governments provides facility of set off to new  industrial units and existing units subject to the following  conditions and restrictions:

1. For permission of this:-  Industrial unit means such unit which \026  "Unit" means any industrial project of large and medium  scale having approval in the form of letter of intent,  industrial license or registration certificate, as the case  may be, under the Industries (Development and  Regulation) Act, 1951 (65 of 1951) or an  acknowledgement in the form of Secretariat for Industrial  Assistance reference number from Central Government  excluding those mentioned in the negative list of  industries at Annexure \026 III."

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Explanations:  (i) For the purposes of concessions/ benefits relating to  sales tax, only such units shall be deemed to be industrial  units which carry on the business of manufacturing goods  for sale.

(ii) If any doubt arises as to whether a unit/ concern is an  industrial unit/ industrial concern or not for the purposes  of this policy, the same shall be referred to a committee  headed by the Finance Commissioner with Industrial  Development Commissioner/ Secretary Industry and  Commercial Taxes Commissioner as its members and the  decision of the Committee shall be final.

2 Existing Industrial Unit \026 Existing Industrial Unit  means an industrial unit which has gone into commercial  production before the effective date.

3. New Industrial Unit \026 New Industrial Unit means an  industrial unit which has come into commercial  production between 15th November, 2000 and 31st March,  2005.

4. Meaning of Date of Production shall be:- The date of  start of production of an industrial unit shall mean the  date on which the unit actually starts commercial  production of the item for which the unit has been  registered.  As regards the date of production of a SSI  unit, the certificate issued by the General Manager,  District Industries Centre or Managing Director,  Industrial Area Development Authority will be accepted.   In case of any dispute in the date of production the  decision of the Director or Industries in this regard shall  be final.

5. Meaning of Effective Date shall be \026 Effective date  means 15th November 2000 from which date the new  State of Jharkhand has been created.  From this date  provision of this Policy shall be made effective.  This  Policy shall remain in force till 31st March, 2005.

2. The facility of set off to the existing units shall be  available only to those units which are not availing any  facility like deferment of tax or tax free purchases or tax  free sales under any notifications announced earlier  before the effective date.

3. The Benefit of this facility shall be available only on  Jharkhand Sales Tax paid on Raw Material (for direct use  in Manufacturing Activities) purchased within the State  of Jharkhand under Section 13(1) (b) of Bihar Finance  Act, 1981 (adopted) against the Jharkhand Sales Tax  payable on sale excluding stock transfer or consignment  sale out side the state.

4. This set off shall be available on the finished products  manufactured from such Raw Material subject to  purchases within six month or the same financial year  from the date of purchaser of such Raw Material.

5. The benefit of set off under this notification shall be  available to only those Industrial Units which have been  issued eligibility certificate by the circle in charge  (commercial taxes) of that area.

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6(a) The verification of Monthly/ Quarterly return filed  by each of the Industrial Units shall be done by the  concerned Commercial Tax Officer.  Every unit shall  enclose the photocopy of the purchase invoices along  with the return.  After verification of returns and  purchase invoices, Commercial Tax Officers shall inform  the Industrial Unit as to how much amount of set off they  will adjust against the next returns.

(b) The competent Commercial Tax Officer after  verification of file shall inform the industrial unit in  writing within 15 days as to how much less or more  amount of set off has been done by them and how much  amount of set off they will adjust in the next return.

(c) Each of the Industrial Units along with its monthly/  Quarterly returns, they will file the following statements  in duplicate along with a declaration certifying there in  that the items shown in the purchase invoices have been  purchased by them and the same have been directly used  for production of products for sale."

ADMITTED FACT:         The Appellant started its cold rolled mill in terms of a fresh industrial  licence.  It was granted a new industrial licence by the Ministry of Industry  of the Central Government on or about 9.11.1998 for manufacture of cold  rolled/ galvanized/ coated/ corrugated/ painted/ varnished steel sheets/ strips/  coils in the integrated steel plant for a proposed capacity of 1200000.00 ton.   It, in view of the judgment of this Court, as referred to hereinbefore, became  entitled to the benefit of set off and/ or adjustment from the tax paid on  purchase of raw materials in terms of Bihar Industrial Policy which was in  force for 5 years from September 1, 1995.

       The Government of Jharkhand has declared its Industrial Policy on or  about 25.8.2001, the effective date therefor being 15th November, 2000.  The  said Policy was put in force from 15th November, 2000.  The Appellant’s  cold rolled mill as also hot rolled mill, thus, are existing units within the  meaning of the Jharkhand State Policy, in terms whereof if a benefit is  granted under one policy, no other benefit would be available.

INDUSTRIAL POLICY \026 RESTRICTED NEW UNITS ALONE :

       The Industrial Policy of State of Jharkhand is a multi-faceted one.  As  many as 20 strategies have been laid down therein.  Emphasis therein has  been laid on the infrastructure inter alia having regard to the United Nations  Development Programme Co-operation Framework for India Report.  The  mining and mineral base industries are in the forefront of the identification  of thrust areas.  With that in view, under the heading "Commercial Tax  Reforms", clause 28.1 seeks to grant tax benefits both to new industrial units  as also existing units.  Even under its notifications dated 12th January, 2002  issued under the provisions of the Bihar Finance Act, facilities of set off  both in relation to inter-State and intra-State sale are to be given to new  industrial units as also existing units.  Thus, despite the fact that the  Appellant, as a juristic person is an assessee or a dealer within the meaning  of the 1981 Act;  and, thus, was required  not only to get itself registered as  such but also file one single return in respect whereof there may be one  order of assessment;  but the same, in our opinion, does not prevent an  assessee from claiming separate tax exemptions and/ or other tax benefits  both in respect of its new industrial units as also its existing units.  The  Industrial Policy permits the same.

HIGH COURT JUDGMENT :          The High Court in its impugned judgment held that the cold rolling  mill is an independent unit established by the company.  The company

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sought the benefit of Industrial Policy, 2001 in respect of its units other than  cold rolling mill although all are existing units having gone into production  before 15th November, 2000.

       Referring to the dictionary meaning of "Project" and "unit", it was  opined: "So any industrial enterprise that is carefully planned and  designed to achieve a particular aim will be an industrial  project.  Clause 6 of the Notification, SO 65 relates to the  verification of the returns filed by an industrial unit.   Sub-clause (c) thereof seems to suggest that an industrial  unit contemplated therein is a unit which files monthly/  quarterly returns, for, it provides that each of the  industrial units along with its monthly/ quarterly returns,  will file certain documents in duplicate regarding  purchases made and that they have been directly used for  production of the products for sale.  It can be said that  clause 6 of the policy tends to support the submission of  the learned counsel for the Department that the industrial  unit referred to in the notification is the assessee or in this  case the company as a whole and not each of its  individual lines or components."

"No doubt, under the Industrial Policy, 1995, even a  diversification was treated as a new industry for the  purpose of benefit under that Policy.  But here, there is  no such fiction.  Here, what is contemplated is a new  industry that has come into existence or an existing  industry which has not claimed benefit under any of the  earlier notifications granting benefit pursuant to the  Industrial Policy.  Merely because a unit is defined as  meaning any industrial project, it is not possible without  anything more, to accept the argument that the Cold  Rolling Mill of the Company should be treated as a  separate industrial project and the rest of the production  units of the company should be treated as different  individual industrial projects within the meaning of the  Notification, SO No. 65."

       It was further held:

"Different lines of production or manufacture can in a  given circumstance be an industrial project, but if the  different lines are for achieving creation of the ultimate  marketable product of the Company, (the different  products may themselves be used as raw materials for the  ultimate product), then, can it be said that each branch or  line of production is an independent industrial unit?"

DETERMINATION :         The provisions of the statute must be assigned a meaning having  regard to the text and context thereof.  In a given situation, it is possible to  hold that the cold rolling mill of the Appellant as well as its hot rolling mill  should be treated as separate industrial projects.  It may also be possible for  an assessee to claim different exemptions under different heads if such a  situation exists or different fiscal benefits are granted to different units under  the same or different notifications.  Only because the Appellant is a dealer,  that by itself cannot be a ground for denying to it fiscal benefits if it is  otherwise entitled thereto.   

       We do not agree with the High Court that the expression "industrial  unit" or "existing unit" should be used in a generic sense to indicate the  industry in its entirety and not each of its component.  

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       Despite the fact that Sections 22, 23 as also 13(1)(b) of the 1981 Act  refer to a dealer and Section 14 thereof refers to registration of dealers   mandating filing of  return in respect of its activities, the same would not  mean that the State cannot grant the same or different benefits to different  units producing different products of the same assessee.  The State has the  power not only to grant exemptions, but also direct such grant relating to a  class or description of goods.  If the State has the power to issue a  notification, it has the power to amend, vary or rescind the same and  exercise such power from time to time as and when occasion arises therefor.

       The notifications in question, however, are not exemption  notifications.  They provide for set off or adjustment of tax.  A dealer in  terms of the 1981 Act must be taxed but it may be granted exemption  therefrom in respect of certain items or adjustment or set off thereof in  relation to its particular products manufactured in a new or existing industry.   A notification may be issued under Sections 22 or 23 in respect of one or  more products or in respect of one or more units.  However, whether a dealer  would be entitled to the benefit of set off unit-wise or not will depend upon  the language employed keeping in view the object the notifications seek to  achieve.  It will not be proper for a court of law to prescribe limitations or  restrictions when there is none or vice versa.  

The notification contemplates units which manufacture products for  sale.  The Explanation appended to Clause 1 expressly provides "For the  purposes of concessions/ benefits relating to sales tax, only such units shall  be deemed to be industrial units which carry on the business of  manufacturing goods for sale".  Clause 2 of the Notification  defines  ’existing industrial unit’ to mean "an industrial unit which has gone into  commercial production before the effective date" whereas ’new industrial  unit’ in terms of Clause 3 means "an industrial unit which has come into  commercial production between 15th November, 2000 and 31st March, 2005.   Meaning of "date of production" as contained in Clause 4 refers to actual  commencement of commercial production of the item and for which the  same has been registered.  Clause 5 imposes a restriction while defining the  existing date to say that the facility of set off to the existing units shall be  available only to those units which are not availing any facility like  deferment of tax or tax free purchases or tax free sales under any  notifications announced earlier before the effective date.

       The notification dated 12th January, 2002, although  extends the tax  benefits both to the new units as also the existing units, but thereby it does  not contemplate that grant of benefit should be extended to separate existing  units although they may be producing same but technically different  products.  The manufactured item is saleable steel.  Quality of manufactured  steel from CRM and HRM may have difference but as on the date of coming  into force of the Jharkhand Industrial Policy as also the notifications issued  under the 1981 Act both CRM and HRM were existing units, each one of  them cannot get the benefit thereof.   

       Mr. Gupta in support of its contention that all units of assessee must  be treated in their entirety referred to a recent decision of this Court in  Commissioner, Trade Tax, U.P. Vs. DSM Group of Industries [(2005) 1  SCC 657].  In that case the assessee had different units.  It expanded only  some units by making a fixed capital investment of 50 crores or more in  terms of the Industrial Policy as also the exemptions notifications issued  under the U.P. Trade Tax Act.  The State, however, raised a contention that  such sum of Rs. 50 crores must be spent on each unit of the company and  not on its industrial undertaking as a whole.  The provisions of the  notification dated 21.2.1997 as also Section 4-A(6) of the Uttar Pradesh  Trade Tax Act, 1948, it was held, did not justify the contention that for the  purpose of grant of exemption,  each unit is to be considered to be a separate  unit stating:

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"14. It is an undisputed fact that the principal place of  business of the Company is Dhampur, District Bijnore.   The exemption claimed by the respondent, under the  notification dated 21-2-1997, was for expansion,  modernisation or diversification.  What is a "unit" for  purposes of expansion, diversification or modernization  has been defined in Section 4-A(6) Explanation (5),  which has been set out hereinabove.  Under this, "Unit"  means an "industrial undertaking" of a dealer who is not  a defaulter and who meets the requirements as set out in  clause (b) thereof.  The dealer, indisputably, is the  respondent Company.  The industrial undertaking of the  respondent is the Company.  It is the Company which  will be paying the tax and which will get the benefit of  exemption, if entitled to it."

       This court therein was dealing with a reverse situation. It accepted the  principle of law that the notifications have to be interpreted keeping in view  the object, and the object being to encourage investments and production, it  was held that  a liberal interpretation which advances the object of the  notification should be ascribed.  The Court took recourse to the doctrine of  ’purposive interpretation’ saying:

"25\005As we have already seen, Section 4-A defined the  term "unit" to mean an industrial undertaking, which has  undertaken expansion, modernization and diversification.   Even under the General Clauses Act, where the context  so requires the singular can include the plural.  A plain  reading of the notification shows that for "expansion,  modernization and diversification" it is the industrial  undertaking which is considered to be the "unit".  This is  also clear from the fact that in the notification wherever  the words "expansion, modernization or diversification"  are used, there are no qualifying words to the effect "in  any one unit".  In none of the clauses is there any  requirement of the investment being in one unit of the  industrial undertaking.  Words to the effect "in a  particular unit" or "in one unit" are missing.  To accept  Mr. Sunil Gupta’s submission would require adding  words to a notification which the Government purposely  omitted to add."                  It was further observed:

"26  Even otherwise, the purpose of notification being to  encourage increased production and to give benefit to  industries which have invested rupees fifty crores or  more in the State and whose production has thus  increased, an interpretation must be given which would  extend benefit to such industries.  There would be no  purpose in denying an industry which has invested rupees  fifty crores or more and whose production in the State  has as a result increased, the benefit of the exemption  granted by this notification merely because the whole of  the investment is not in any particular unit.  Thus even  where the investment is made by the Company in more  than one unit, so long as the total investment is rupees  fifty crores or more, the benefit of the notification would  be available.  Such benefit would then be distributed in  the manner set out in the schedule depending on where a  unit in which expansion, diversification or modernization  has taken place, is situated\005"

       The said decision, therefore, was rendered in a different fact situation.

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Eligibility clause, it is well settled, in relation to exemption  notification must be given a strict meaning.

       In Collector of Customs, Bangalore & Anr. Vs. M/s. Maestro Motors  Ltd. & Anr. [2004 (10) SCALE 253], this Court held:

"It is settled law that to avail the benefit of a notification  a party must comply with all the conditions of the  Notification.  Further, a Notification has to be interpreted  in terms of its language."

       The principle that in the event a provision of fiscal statute is obscure  such construction which favours the assessee may be adopted,  but it would  have  no application to construction of an exemption notification, as in such  a case it is for the assessee to show that he comes within the purview of  exemption. [See Novopan India Ltd., Hyderabad Vs. Collector of Central  Excise and Customs, Hyderabad, 1994 Supp (3) SCC 606]

       In State Level Committee and Another Vs. Morgardshammar India  Ltd. [(1996) 1 SCC 108],  referring to a large number of decisions, this  Court held:

"10\005It must be remembered that no unit has a right to  claim exemption from tax as a matter of right.  His right  is only insofar as it is provided by Section 4-A.  While  providing for exemption, the Legislature has hedged it  with certain conditions.  It is not open to the Court to  ignore those conditions and extend the exemption."

                Mr. Banerjee has relied upon a large number of decisions for the  proposition that such notifications must receive a liberal construction.

       We may now notice them.

       In Textile Machinery Corporation Limited, Calcutta Vs. The  Commissioner of Income Tax, West Bengal, Calcutta [(1977) 2 SCC 368],  this Court while construing Section 15C of the Income Tax Act held: "20. Section 15C partially exempts from tax a new  industrial unit which is separate physically from the old  one, the capital of which and the profits thereon are  ascertainable. There is no difficulty to hold that Section  15C is applicable to an absolutely new undertaking for  the first time started by an assessee. The cases which  gave rise to controversy are those where the old business  is being carried on by the assessee and a new activity is  launched by him by establishing new plants and  machinery by investing substantial funds. The new  activity may produce the same commodities of the old  business or it may produce some other distinct  marketable products, even commodities which may feed  the old business. These products may be consumed by  the assessee in his old business or may be sold in the  open market. One thing is certain that the new  undertaking must be an integrated unit by itself wherein  articles are produced and at least a minimum of ten  persons with the aid of power and a minimum of twenty  persons without the aid of power have been employed.  Such a new industrially recognisable unit of an assessee  cannot be said to be reconstruction of his old business  since there is no transfer on any assets of the old business  to the new undertaking which takes place when there is  reconstruction of the old business. For the purpose of  Section 15C the industrial units set up must be new in the

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sense that new plants and machinery are erected for  producing either the same commodities or some distinct  commodities. In order to deny the benefit of Section 15C  the new undertaking must be formed by reconstruction of  the old business. Now in the instant case there is no  formation of any industrial undertaking out of the  existing business since that can take place only when the  assets of the old business are transferred substantially to  the new undertaking. There is no such transfer of assets  in the two cases with which we are concerned."

       The said decision was, therefore, rendered on interpretation of Section  15C of the Income Tax Act, 1961 and on the factual matrix obtaining  therein.

       Section 15C of the Income Tax Act is not in pari materia with the  provision of Section 13(2)(b) of the 1981 Act.  

       In Municipal Commissioner, Chinchwad New Township Municipal  Council Vs. Century Enka Ltd. [(1995) 6 SCC 152], a finding of fact was  arrived at by this Court that Unit No. 2 had been set up to effect substantial  expansion of the existing business.  

       In Commissioner of Income Tax, Amritsar Vs. Straw Board  Manufacturing Co. Ltd. [(1989 Supp (2) SCC 523], it was held that the  expression ’paper and pulp’ includes paperboard and strawboard having  regard to the provisions of the Industrial (Development and Regulation) Act,  1951.  The said decision has been followed in Bajaj Tempo Ltd., Bombay  Vs. Commissioner of Income Tax, Bombay City \026 III, Bombay [(1992) 3  SCC 78] and Commissioner of Sales Tax Vs. Industrial Coal Enterprises  [(1999) 2 SCC 607].

       These decisions again were rendered in the fact situation obtaining  therein and have no application herein.            In Pappu Sweets and Biscuits and Another Vs. Commissioner of  Trade Tax, U.P., Lucknow [(1998) 7 SCC 228], the Court noticed that  although the State declared exemptions from payment of sales tax with a  view to increase industrial activity within the State by encouraging setting  up of new industrial units or expansion/ diversification or modernization by  the existing industrial units, it did not desire to extend that benefit to all such  industries.  This decision, therefore, runs counter to the submission of Mr.  Banerjee.

       In Commissioner of Central Excise Vs. M.P.V. & Engg. Industries  [(2003) 5 SCC 333], a Division Bench of this Court of which one of us (B.P.  Singh, J.) is a member, has clearly held:

"11\005In dealing with the submission the Tribunal noticed  the decision of this Court in CCE v. Parle Exports (P)  Ltd. wherein this Court held that exemption should be  strictly construed although the exemption clause in the  notification may be construed liberally.  In other words,  eligibility criteria should be construed strictly but a  liberal approach may be adopted in construing other  conditions\005"

       We are concerned in this case with the eligibility criteria.  

This is also not a case where the Appellant altered its position  pursuant to or in furtherance of a promise made to it by the State.  The  doctrine of promissory estoppel, therefore, is not applicable.  It is not even a  case where the doctrine of legitimate expectation could be invoked.  [See  Hira Tikkoo Vs. Union Territory, Chandigarh and Others, (2004) 6 SCC

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765]

       We, however, are not oblivious that the doctrine of promissory  estoppel would be applicable where a representation has been made by the  State in exercise of its power to exempt or abolish a commodity as taxable  commodity.  Such promise, however, must be made by the persons who  have the power to implement the representation.

       The Appellant furthermore had also understood the legal position in  the same manner as would appear from its letter dated 11th February, 2002  wherein it was contended that it is an existing industry prior to 15th  November, 2000 and further stated:

"Tisco is, thus, eligible to avail benefits of set off of sales  tax paid on purchases of raw materials within the state of  Jharkhand from the admitted sales tax payable on sales of  products within the state of Jharkhand as well as on sales  in course of inter state sales Ex State of Jharkhand in  terms of Notification Nos. S.O. 65 & 66 both dated  12.01.2002\005.

We would, therefore, request you to kindly issue to us the  Eligibility Certificates w.e.f. 15.11.2000 as required  under these Notifications to enable us to avail the benefit  of ’set off’ of sales tax which we are entitled to."

       We, therefore, conclude that as both  Hot Rolled Mill and the Cold  Rolled Mill are existing units, and one of them having received the benefits  under a different policy, the Appellants are not entitled to any further relief  in terms of the notifications dated 12th January, 2002.   

       For the reasons aforementioned, these Appeals are dismissed.  No  costs.