COMMERCIAL TAX OFFICER, RAJASTHAN vs. BINANI CEMENT LTD

C.A. No.-000336-000336 - 2003Supreme Court19 February 2014Bench: H.L. DATTU S.A. BOBDE46 pages
For Petitioner: PRATIBHA JAINFor Respondent: AMARJIT SINGH BEDI
AI SummaryAllowed

What were the facts?

The Revenue is in appeal against the Rajasthan High Court's judgment which dismissed its revision petition and upheld the assessee's case. The assessee, M/s. Binani Cements Ltd., is a new industrial unit manufacturing cement, commencing commercial production on May 27, 1997. It has a fixed capital investment exceeding Rs. 500 Crores and employs over 250 people. The dispute concerns the assessee's application for an eligibility certificate for exemption from Central Sales Tax and Rajasthan Sales Tax under the 'Sales Tax New Incentive Scheme for Industries, 1989'. The scheme, notified under Section 4(2) of the Rajasthan Sales Tax Act, 1954, provides for sales tax exemptions to certain industrial units. Various amendments to the scheme extended its operative period up to March 31, 1997, and then to March 31, 1998. The assessee applied for exemption as a 'Very Prestigious Unit'.

What did the Supreme Court hold?

The Supreme Court held that the specific provision, Item 1E, introduced by amendment in 1996 to the Sales Tax New Incentive Scheme, 1989, which specifically categorizes new cement industries for tax exemption based on their Fixed Capital Investment (FCI), overrides the general provisions of the scheme applicable to all industries. The Court reasoned that the rule of statutory construction, 'specific provision yields to a general provision', is applicable here. Item 1E was a subject-specific provision that removed 'new cement industries' from the non-eligible list and placed them into a specific category with defined sub-classifications (small, medium, and large) based on FCI. The Court found that the intention of the legislature was to provide an all-inclusive and specific provision for new cement units to avoid ambiguity. Therefore, the respondent-company was only eligible for exemption under Item 1E as a large new cement unit, with its FCI being above Rs. 5 Crores. The Court set aside the High Court's judgment and allowed the Revenue's appeal.

What were the issues?

1. Whether the specific provision (Item 1E) introduced by amendment in 1996 to the Sales Tax New Incentive Scheme, 1989, which categorizes cement industries, overrides the general provisions of the scheme applicable to all industries, in determining the eligibility of a new cement unit for tax exemption? (Question of law) Assessee's Contention (implied from the High Court's decision and the Supreme Court's reasoning): The assessee likely argued that the general principles of interpretation, particularly the rule that a construction most beneficial to the assessee should be applied in fiscal statutes dealing with exemptions, should prevail. They might have contended that their unit met the criteria for exemption under the general provisions of the scheme, irrespective of the specific classification for cement industries. Revenue's Contention: The Revenue contended that Item 1E, being a subject-specific provision introduced by amendment for cement industries, should prevail over the general provisions of the scheme. They argued that this specific provision comprehensively classified cement units and was intended to exclusively govern their eligibility for tax exemption.

Which sections of the Income-tax Act were involved?

Section 4(2)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
Page 1 JUDGMENT 1 REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO.336 OF 2003 COMMERCIAL TAX OFFICER, RAJASTHAN ..Appellant(s) Versus M/S. BINANI CEMENTS LTD. & ANR. ..Respondent(s)

J U D G M E N T H.L. DATTU, J. 1.The Revenue is in appeal before us against the impugned judgment and order passed by the High Court of Rajasthan at Jodhpur in S.B. Sales Tax Revision Petition No.582 of 1999, dated 02.07.2001 whereby and whereunder the High Court has dismissed the revision petition filed by the Revenue and upheld the case of the respondent-assessee.

Page 2 JUDGMENT 2 2.The respondent-assessee is a new industrial unit manufacturing cement situated within Panchayat Samiti, Pindwara, Rajasthan. It is an admitted fact that it started its commercial production on 27.05.1997. It is also not disputed that the respondent-assessee has fixed capital investment (for short, “the FCI”) exceeding Rs.500/- Crores and employs more than 250 employees. 3.The core issue arises out o

The order continues below.

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