STATE OF JHARKHAND & ORS. versus TATA STEEL LTD. & ORS.

Citation: [2016] 1 S.C.R. 931 · Decided: 12-02-2016 · Supreme Court of India · Bench: DIPAK MISRA · Disposal: Disposed off
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Judgment (excerpt)

[2016] 1 S.C.R. 931 
STATE OF JHARKHAND & ORS. 
v. 
TATA STEEL LTD. & ORS. 
(Civil Appeal No. 4285 of2007) 
FEBRUARY 12, 2016 
[DIPAK MISRA AND N.V. RAMANA, JJ.] 
Jharkhand Value Added Tax Act, 2005 - s. 95(3)(ii) -
Deferment/Exemption of tax - Benefit of - For industrial units -
Units of I" responde/1/ granted benefit of exemption from payment 
of sales tax for 8 years - Units availed tax exemption from 
01.08.2000 to 31.03.2006. for 6 years - Thereafter. JVAT Act 
withdrew exemption but allowed deferment of tax for the remaining 
period from 01.04.2006 to 31.07.2008 - Application by ]" 
respondent for conversion from exemption of tax to deferment of 
A 
B 
c 
tax for the remaining period as also challenging the withdrawal of D 
exemption - Application rejected - In appeal, the High Court 
granted deferment of tax, however. upheld the withdrawal of 
exemption - On appeal, held: Notifica(ion lays a clear postulate 
that repayment of total deferred amount shall have to be done in 
ten equal six monthly instalments in such a manner so as to be 
completed within 13 years from the date of start of deferment -
Words "from the date of start of deferment" have to have nexus 
with the policy stated in the beginning'_ In the instant case. period 
of exemption has been converted to period of deferment of tax - It 
is for 8 years - Repayme/1/ schedule is 5 years from the expiry of 
eligibility period of deferment - Period of 5 years has to be so 
arranged that it does not go beyond 13 years from the date of 
deferment- Thus, the repayment schedule has to end on 31.08.2013 
within a span of 5 years from the expiration of the eligibility period 
- Owing to special features, no penalty imposed - Assessee had 
· already deposited the amount in pursuance of the order of this Court 
- As such the assessee to pay 12% inrerest per annum - Bihar 
Finance Act, 1981 - s. 23A - Jharkhand Value Added Tax Rules. 
2006 - rr. 64, 66. 
Disposing of the appeal, the Court 
E 
F 
G 
HELD: 1.1 Section 95(3)(ii) of the Jharkhand Value Added 
H 
931 
-
932 
A 
B 
c 
D 
E 
F 
G 
H 
SUPREME COURT REPORTS 
[2016] I S.C.R. 
Tax Act, 2005 envisages that a registered dealer who was enjoying 
the benefit of exemption of tax is allowed to convert the facility 
of exemption from payment of tax under the JVAT Act into the 
facility of deferment of payment of tax for the unexpired period. 
The assessee-company has availed the deferment and paid the 
amount of tax. [Para 15][943-F] 
1.2 Benefit of deferment of tax is granted under certain 
terms and conditions. One of the terms and conditions pertains 
to repayment of deferment of tax amount by the industrial unit. 
The first part of sub-para (1) of para 5 stipulates that the repayment 
of deferred tax amount shall have to be done after the completion 
of eligibility period of deferment or the prescribed percentage 
limit of fixed capital investment, whichever reaches earlier. In 
the instant case, the period of exemption has been converted to 
period of deferment of tax. It is for 8 years. The assessee had 
availed the exemption for a period of 6 years and he is entitled to 
deferment of tax for the rest of the period which commenced in 
2006. [Para 27][949-E-F] 
1.3 The notification lays a clear postulate that repayment 
of total deferred amount shall have to be done in ten equal six 
monthly instalments in such a manner so as to be completed within 
13 years from the date of start of deferment. The words "from 
the date of start of deferment" have to have nexus with the policy 
stated in the beginning. The policy would apply if the unit has 
commenced between 01.09.1995 and 31.08.2000; that it has a 
registration certification from the prescribed authority and that, 
most importantly, it has been given an eligibility certificate for 
the said purpose. The policy would come into play only if these 
conditions are satisfied and then the assessee will be allowed to 
have the benefit of deferment of sales tax on the sale of 
manufactured finished goods for a prescribed period. Therefore, 
the authority has been given the power to lay down the prescribed 
period for grant of deferment. In the beginning, the l" respondent 
was granted exemptioP. The concept of exemption is distinct from 
the concept of deferment of tax. After the JVAT Act came into 
force, under the statutory provisions, there was no exemption 
and beneficiaries were entitled to convert to the scheme of 
deferment. The period remains intact, that i
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