STATE OF ORISSA AND ORS. versus M/S. TATA SPONGE IRON LTD.

Citation: [2007] 10 S.C.R. 29 · Decided: 18-09-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Dismissed
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Judgment (excerpt)

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I 
STATE OF ORISSA AND ORS. 
V. 
MIS. TATA SPONGE IRON LTD. 
SEPTEMBER 18, 2007 
[S.B. SINHA AND H.S. BEDI, JJ.] 
Orissa Sales Tax Act-s. 6-Sales Tax-Exemption from-
Provided under Industrial Policy Resolution (IPR) 199 2-ln the IPR 
A . 
B 
as well as in consequent Notification no period provided, limiting the C 
exemption-Claim of exemption by Industry-Denied by Authorities-
In Writ Petition allowed by High Court-On appeal, held: The industry 
was entitled to the exemption to the extent of 75% of the amount 
invested in Plant and Machinery-In view of the legal provisions and 
the Notification, no period of /imitation for seeking exemption D 
prescribed 
Interpretation of Statutes-Taxing statutes-Exemption 
Notification-Interpretation of-Held: Such Notification must be 
liberally construed. 
Respondent was declared a large scale industry in terms of 
Industrial Policy Resolution (IPR), 1980. By IPR, 1989 benefits of 
exemption from payment of sales tax on finished products were 
granted to the industries classified under IPR, 1980. Before availing 
E 
of benefits by the respondent, IPR, 1992 was announced whereby F 
the existin~ industrial units could obtain exemption or deferment of 
sales tax on finished products and capital investment subsidy subject 
to the condition that it had undergone an expansion/modernization/ 
diversification in its unit. According to Para 7.4 of the IPR, period 
of the exemption benefit was provided for 5 years. However, in Para G 
7.5 no period was mentioned. The limitation thereunder was that only 
75% of the additional capital investment in Zone B would be allowed. 
In furtherance ofIPR, 1992, Orissa Sales Tax Act was amended. 
Consequently, Notification SRO No.1091 of1992 dated 23.9.1992 
29 
H 
30 
SUPREME COURT REPORTS 
[2007] 10 S.C.R. 
A was passed and therein also no period was specified. Respondent 
made expansion of its undertaking in the year 1997. It claimed 
exemption relying on Para 7.5 oflPR, 1992. The same was denied. 
Writ Petition challenging the denial was allowed by High Court. 
B 
c 
D 
Hence the present appeal. 
Revenue interalia contended that the respondent was not 
entitled to the exemption as the same was only for a period of 5 years 
for new industries. 
Dismissing the appeal, the Court 
HELD: l. In terms of Clause 5 oflndustrial Policy Resolution 
(IPR) 1992, the respondent became entitled to exemption from 
payment of sales tax on finished products for an amount to the extent 
of75% of the amount invested in plant and machinery. 
[Para 12] (39-E-F] 
2. A bare perusal of the Notification bearing SRO No.1091 of 
1992 dated 23.9.1992 would clearly show that whenever the period 
upto which the exemption, could be obtained was required to be 
stated had specifically been done therein. Against the Entry 44, 
E however, what is mentioned is the extent to which such exemption 
would be granted. No period during which such exemption is to be 
obtained was stated. In other words, no period of limitation was fixed 
· thereby. [Para 13] (39-F-H; 40-A] 
3. In view of the clear legal provision as also the Notification 
p dated 23.09.1992, there cannot be any doubt whatsoever that the 
exemption in respect of deferment of sales tax having been provided 
for under the Orissa Sales Tax Act as also the Notification issued 
thereunder, the High Court, is correct in taking its view. It is 
furthermore a well settled principle of law that an Exemption 
G Notification must be liberally construed. 
· 
· 
[Paras14 and 15] .(40-A-C] 
Commissioner of Customs (Imports), Mumbai v. Tullow India 
Operations Ltd., [2005] 13 SCC 789; Tata lronand Steel Co. Ltd. v. 
State of Jharkhand and Ors., [2005] 4 SCC 272; Government of India 
H and Ors. v. Indian Tobacco Association, (2005] 7 SCC 396; Commnr. 
,
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STATEv. MIS. TATASPONGEIRONLTD. [SINHA,J.] 
31 
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of Central Excise, Raipur v. Hira Cement, JT (2006) 2 SC 369 and A 
P.R. Prabhakar v. Commnr. of Income Tax, Coimbatore, (2006) 7 
SCALE 191, referred to. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4342 of 
2007. 
B 
From the Judgment and Order dated 09.08.2006 of the High Court 
ofOrissa, Cuttack in O.J.C. 2213 of2001. 
j 
Vikas Singh, ASG., Nischal Kumar, S.S. Mishra and Sibo Sankar 
Mishra for the Appellants. 
c 
A.K. Ganguli, Sunil Kumar Jain, Bibek Mohanti and S. Borthakur 
for the Respondent. 
The Judgment of the Court was delivered by 
S.B. SINHA, J. 1. Leave granted. 
D: 
2. Interpretation of an exemption n
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