11.In CIT v. Straw Board Mfg. Co. Ltd. this Court held that in taxing statutes, provision for concessional rate of tax should be liberally construed. So also in Bajaj Tempo Ltd. v. CIT it was held that provision granting incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision.
12.We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. If the test laid down in Bajaj Tempo Ltd. case is applied, there is no doubt whatever that the exemption granted to the respondent from 9-8-1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted.....................”
17.The aforesaid object of the relevant provision in the light of other provisions of the Act, makes it crystal clear that the value of investment for equipments, apparatus and components for running the factory and workshop has also to be considered as investment and such value is required to be included within the ambit of fixed capital investment. The wordings of the provision of law which call for our interpretation are not identical and similar which were considered and interpreted by this court in the decision in State of Bihar and Others (supra).
18.This Court in the case of State of Bihar v. Steel City Beverages Ltd., reported as (1999) 1 SCC 10, observed that as under: - “8. It is also relevant to refer to the two notifications of the Government of India in the Ministry of Industry (Department of Industrial Development) dated 2-4- 1991 and 1-1-1993 issued under Section 11-B of the Industries (Development & Regulation) Act, 1951. Notification No. 232 dated 2-4-1991 while stating what has to be included under fixed assets while ascertaining whether a small-scale industrial unit’s investment has exceeded the limit of Rs 60 lakhs has clarified that the cost of storage tanks which store raw material or finished products is to be excluded. The 1993 notification has amended the notification of 2-4-1991 and clarified by adding Note 2 that in calculating the value of plant and machinery, the cost of storage tanks which store raw materials/finished products only and which are not linked with the manufacturing process shall be excluded. On 8-5-1995, the Government of India again issued a circular, after having received representations from the industry seeking clarification whether bottles and crates are to be taken into account for determining the SSI status of the units engaged in manufacture of soft drinks/concentrates, clarifying that investment in bottles and crates in such units is in the nature of storage of finished products and, therefore, such investment has to be excluded while computing the value of plant and machinery.
9.As pointed out in the affidavit-in-rejoinder, the Company had applied for an Eligibility Certificate claiming the status of a small-scale industry. It is, in fact, registered as a small-scale industrial unit. While declaring its investment at the time of seeking registration as a small-scale industrial unit, it did not include investment in bottles and crates under the head “Plant and Machinery”. The investment in bottles and crates was shown under a separate head. It is further pointed out in the said affidavit that if the investment of the Company in bottles and crates is included under the head “Plant” then its total fixed capital investment will reach the level of 137.36 lakhs and it can no longer be regarded as a small-scale industrial unit. As the Company had applied as a SSI unit, the District Level Committee had to verify the status of the Company as SSI unit and, therefore, it was bound to take into account the above-referred two notifications of the years 1991 and 1993. If under these circumstances, the District Level Committee came to the conclusion that the Company is not entitled to the benefit of deferment in respect of its investment in bottles and crates, it cannot be said that it has acted contrary to law.” 19.A careful reading of the ratio of the aforesaid decision would reveal that expression plant and machinery in the said case was intended to take such articles which are required for the purpose of manufacture and not for storage. Besides, the said decision was rendered in the context of the two notifications which specifically excluded value of bottles and crates to be included in the expression “plant and machinery” as the same are used for the purpose of storage of finished products and not used for the purpose of manufacture of finished products. 20.However, in this case, not only the wordings of the Act are wider but there is also no such notification issued by the State Government giving a restricted meaning to the expression “fixed capital investment” which as per provision enacted also includes all such investment made for equipment, apparatus, components and machinery which are necessary for running of the factory or workshop.
21.In that view of the matter and considering the wording of the provision itself, it is quite necessary to give full and complete effect to the provision in a purposive manner so as to advance the objective of the provision. So in the instant case all those apparatus, equipments and components which are necessary for running of the factory would also be considered as investment and would therefore be part of the definition of fixed capital investment. Besides, as laid down in the decision of this Court in CIT v. Straw Board Mfg. Co. Ltd. reported as 1989 Suppl. (2) SCC 523, in taxing statutes, provisions for concessional rate of tax should be liberally construed.
22.The respondents are engaged in the manufacture of soft drink and beverages which are required to be bottled and thereafter sealed, which are essential part of running of the factory and therefore the same will have to be included within the aforesaid extended meaning of the word ‘investment’ as appearing from the words ‘fixed capital investment’. To that extent, facts of the present case are distinguishable from the facts of State of Bihar and Others (supra) on which reliance was placed by the counsel appearing for the appellant.
23.Considering the facts and circumstances, we hold that so far bottles are concerned, they are essential part of components and equipments necessary for the running of the factory and therefore such value of the investment would form part of the fixed capital investment and would be entitled to exemption as provided for. But so far crates are concerned they are used by the respondent only for the purpose of marketing. Use of crates is necessary for taking out the bottled beverages out of the factory and while doing the marketing of the sealed bottled beverages. The aforesaid view taken by us also receives support from the contents of the eligibility certificate given by the appellant and therefore crates have no user so far as running of the factory of the respondent. Therefore, the value of crates in our considered opinion cannot be deemed to be investment for the purpose of including it within the meaning of expression “Fixed Capital Investment” as per sub-section (4) of Section 4-A of the Act.
24.Having held thus, we allow this appeal partly to the aforesaid extent. We uphold the order passed by the High Court so far bottles are concerned but set aside the same so far crates are concerned. In terms of the aforesaid order and observations, this appeal stands disposed of but there will be no order as to costs.
...............………………………J. [Dr. Mukundakam Sharma] ...…................………………..J. [Anil R. Dave]
New Delhi, April 11, 2011