http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

CASE NO.: Appeal (civil)  7559 of 2005

PETITIONER: Tata Cummins Ltd

RESPONDENT: State of Jharkhand & Ors.

DATE OF JUDGMENT: 01/08/2006

BENCH: Ashok Bhan & Markandey Katju

JUDGMENT: J U D G M E N T

MARKANDEY KATJU, J.

       This 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..   

       We have heard learned counsel for the parties.

       The 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.

To 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.

The 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.

The 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 allowed.

In the 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

within the Territorial Jurisdiction of the State of Jharkhand.   The 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.

After 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.

The 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 31.3.2005".

The Industrial Policy mentions the Commercial Tax  Reforms in Clause 28 on the said Policy.  Clause 28.1 reads  as under :

"28.1 \026 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."

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

            The question in this case is whether the appellant is  entitled to the benefit of Clause 28.1.

Admittedly, 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.

Thus, 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.

Learned 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.

We are 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.

In Hiralal Ratan Lal vs. Sales Tax Officer, Section  III, Kanpur & Anr. (AIR 1973 SC 1034), the Supreme  Court observed :

"In 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4  

dismissed.