- (1.) Leave granted.
(2.) Interpretation of an exemption notification in regard to payment of sales tax is involved in this appeal which arises out of a judgment and order dated 9.8.2006 passed by the High Court of Orissa in O.J.C. No. 2213 of 2001.
(3.) Before embarking upon the said question, we may notice the basic fact of the matter. Respondent herein which is a large industrial unit had set up a Sponge Iron Factory at Bileipada, Joda in the district of Keonjhar, Orissa. Indisputably, it is classified as a large scale industry in terms of Industrial Policy Resolution (IPR), 1980 adopted by the State. In or about 1989, IPR was adopted for existing industries classified under IPR, 1980 wherein benefits for exemption from payment of sales tax on finished products were to be granted subject to the terms and conditions laid down therein including repayment of loan availed under IPR, 1980. Before the benefits of the said IPR could be obtained by the respondent, the Government of Orissa announced IPR, 1992 in terms whereof the existing industrial units could obtain exemption or deferment of sales tax on finished products and capital investment subsidy provided it had undergone an expansion/ modernization/ diversification of its unit. For our purpose, we may only notice paragraphs 7.4 and 7.5 of IPR, 1992 which are in the following terms: "7.4 Exemption / Deferment of Sales Tax on raw materials, spare parts, and finished products of small, medium large scale and Pioneer Industrial Units. New Small, medium & Large scale industrial units including, pioneer units will be eligible for exemption of sales tax on raw materials, spare parts, & finished products for a period of 5 years subject to a ceiling of 100 per cent of fixed capital investment if the unit is located in zone-A 75 per cent. If located in zone B and 60 per cent if located in zone-C. New medium and large industrial units may also opt to defer payment of sales tax on their finished products for a period of 5 years subject to a maximum of 100 per cent of fixed capital investment if the unit is located in zone-A 75 per cent if located in zone-B and 60 per cent if located in zone-C from the date of commercial production. Deferred amounts in respect of each year will be repaid in full after the expiry of the period of deferment annually. Period of exemption / deferent allowed for different zones shall be extended by two years for Pioneer units. However, defaulters of OSFC/IPI COL dues shall be eligible only after they clear such dues. 7.5 Exemption / Modernization / Diversification. The incentive by way of exemption or deferment of sales tax on finished products shall be available for expansion / modernization / diversification of existing units taken up after the effective date subject to a limit of 60 per cent of the additional capital investment in plant and machinery only in zone-C, 75 per cent in zone-B and 100 per cent in zone-A provided that such expansion / modernization / diversification has been undertaken on the basis of separate project report duly appraised by the financial institutions and provided further that subject to the provisions of the Sales Tax Act, the benefit of exemption / deferment shall not have the effect of reducing the sales tax paid by the unit prior to commencement of the expansion / modernization / diversification programmes. In other words, the benefit shall be applicable to incremental sales.";