Supreme Court of India
COMMERCIAL TAX OFFICER, RAJASTHANversusM/S BINANI CEMENT LTD. & ANR.
- Citation
- 2014 INSC 112
- Decided
- 19 February 2014
- Disposal
- Appeal(s) allowed
- Bench
- H L DATTU
Holding
The specific provision Item 1E prevails over the general provision Item 4, limiting the respondent’s exemption to 25% as a large new cement unit.
Summary
The respondent, Binani Cement Ltd., set up a new cement plant in Rajasthan and claimed a Fixed Capital Investment (FCI) of Rs.532.52 crores, seeking exemption from sales tax under the "Sales Tax New Incentive Scheme for Industries, 1989". The State Level Screening Committee granted only a 25% exemption, treating the unit as a large scale unit under Item 1E (specific to new cement units). The Revenue appealed, arguing that the unit should be classified as a "Prestigious Unit" under Item 4 and receive a 75% exemption. The Supreme Court examined the scheme’s provisions, applying principles of statutory interpretation, particularly that a specific provision (Item 1E) overrides general provisions (Item 4) when they conflict. It held that the respondent is eligible only under Item 1E as a large new cement unit, entitled to a 25% exemption, and set aside the High Court’s decision. The appeal was allowed, confirming the revenue’s position.
Issues considered
- The applicability of Item 1E (specific to new cement units) versus Item 4 (Prestigious Units) in determining the tax exemption rate.
- Whether the specific provision in the scheme overrides the general provision under principles of statutory interpretation.
- The correct percentage of sales tax exemption to which the respondent is entitled.
Legislation cited
Subjects
statutory interpretationgeneral vs specific provisiontax exemptionsales taxcement industryRajasthan Sales Tax ActSales Tax New Incentive Schemeharmonious construction
Judgment
(2014] 3 S.C.R. 1
COMMERCIAL TAX OFFICER, RAJASTHAN A
V.
M/S BINANI CEMENT LTD. & ANR.
(Civil Appeal No. 3.36 of 2003)
J
FEBRUARY 19, 2014
B
[H.L. DATIU AND S.A.. BOBDE, JJ.]
SALES TAX NEW INCENTIVE SCH'EME FOR
INDUSTRIES, 1989: "
c
Item 1E (Annexure C) - New cement industry -
Entitlement to exemption under the Scheme - Held: Item 1E
classified the cement units f9r eligibility of tax exemption into
three categories; small, medium and large - The said
categories are comprehensive whereby small and medium
0
cement unit~ have been prescribed to have maximum Fixed
Capital Investment (FCI) of Rs.601- lakhs and Rs.51- crores,
respectively and .fCl of large to be over Rs. 51- crores - As
against items 1, , 4, 6 and 7, which deal with units of all
industries and not' only cement, item 1E restricted to only E
cement units and therefore being a special entry override the
general provision - In the instant case, the respondent-
Company would only be eligible for grant of exemption under
Item 1E as a large new cement unit in accordance with its FCI
being above Rs. 51- crores.
F
INTERPRETATION OF STATUTES:
General entry over specific - Held: Where a Statute
contains both a general provision as well as specific provision,
the latter must prevail - In other words, where a general statute G
and a specific statute relating to the same subject matter
cannot be reconciled, the special or specific statute ordinarily
will control - The principle finds its origins in the latin maxim
of generalia specialibus non derogant, i.e., general law yields
1 H
2 SUPREME COURT REPORTS [2014] 3 S.C.R.
A to special law should they operate in the same field on same
subject.
Rule of Harmonious Construction - Conflict between
independent provisions of law - Held: When there is an
8 apparent conflict between two independent provisions of law,
the special provision must prevail - This rule has application
in construction of taxing statutes along with the proposition that
the provisions must be given the most beneficial interpretation
- While determining the question whether a statute is a
general or a special one, focus must be on the principal
C subject-matter coupled with a particular perspective with
reference to the intendment of the Act - With this basic
principle in mind, the provisions must be examined to find out
whether it is possible to construe harmoniously the two
provisions - Once it is held that intention of the legislation is
D to exclude the general provision then the rule "general
provision should yield to special provision" is squarely
attracted - The rule of statutory construction that the specific
governs the general is not an absolute rule but is merely a
strong indication of statutory meaning that can be overcome
E by textual indications that point in the other direction.
The respondent-assessee established a new cement
unit within Panchayat Samiti and commenced
commercial production in 1997. The total Fixed Capital
F Investment (FCI) in the new industrial unit claimed by the
respondent was Rs.532.52 crores. The respondent filed
an application for grant of eligibility certificate for
exemption from payment of central sales tax and
Rajasthan sales tax to the State Level Screening
G Committee under the "Sales Tax New Incentive Scheme
for Industries, 1989". However, the Screening Committee
accepted only Rs.5553.72 Lakhs (Rs.55.32 crores) as FCI
eligible for availing the benefits under the Scheme. On the
said basis the Screening Committee certified that the
respondent company was entitled to avail exemption of
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 3
BINANI CEMENT LTD. & ANR.
tax to the extent of 25% of the tax liability by treating the A
same to be a Large Scale Industry. In the appeal, the
Board took the view that since the respondent has
invested more than Rs.25 crores and has employed more
than 250 workmen, it has the status of 'New Prestigious
Unit' and thus, falls within the definition of a Prestigious B
Unit and should be governed by Item 4 of Annexure ·c·
and entitled to avail 75% of total tax liability. This view was
accepted by the High Court, while dismissing the tax
revision petition filed by the revenue.
In the instant appeal, it was contended for the C
revenue that the respondent-new unit being New Cement
Unit and further being large scale unit is entitled to the
benefit of the incentive scheme under 1E of Annexure 'C'
which provides for exemption upto 25% of total liabilities
and cannot avail the benefit of exemption at the rate of D
75% under Item 4 as Prestigious Unit; that the benefit to
cement industry is confined to the extent envisaged ·
under the Item 1E of Annexure-C as the said item is a
specific provision relating to cement industry and thus
would prevail over other provisions which are general in E
character in terms of reference to new cement unit.
Allowing the appeal, the Court
HELD: 1. The High Court has erred in reaching its
conclusion by holding that (a) the respondent-company F
would fall into all the three categories of industries
referred to in the Scheme, that is to say it is a new unit
which is a 'Large Scale Unit', a "Prestigious New Unit"
and also a "Very Prestigious Unit"; (b) the classification
of a new unit, viz. small scale, medium scale and large , G
scale under item 1E on the basis of scale of investment
does not denude a new industrial unit of any type of the
special status of "Pioneer", "Prestigious" and "Very
Prestigious" unit under items 4 and 5 to also exclude
o~eration of General entry; and (c) the special entry H
4 SUPREME COURT REPORTS [2014] 3 S.C.R.
A would not exclude the applicability of general entry in
context of the Scheme so as to exclude the operation of
items 4, 6 and 7. Thereby wrongly implying that though
there exists an overlap betwe~ the general and special
provision, the general provision would also be sustained
B and the two would co-exist. [para 26] [20-H; 21-A-C]
2.1. The settled legal position in law, that is, if in a
Statutory Rule or Statutory Notification, there are two
expressions used, one in General Terms and the other in
special words, under the rules of interpretation, it has to
C be understood that the special words were not meant to
be included in the general expression. Alternatively, it can
be said that where a Statute contains both a General
Provision as well as specific provision, the latter must
prevail. The Court should examine every word of a statute
D in its context and must use context in its widest sense.
[paras 27, 28] [21-D-F]
Reserve Bank of India v. Peerless General Finance and
Investment Co. Ltd. 1987 SCR (2) 1 - relied on.
E
2.2. It is well established that when a general law and
a special law dealing with some aspect dealt with by the
general law are in question, the rule adopted and applied
is one of harmonious construction whereby the general
law, to the extent dealt with by the special law, is
F impliedly repealed. This principle finds its origins in the
latin maxim of generalia specialibus non derogant, Le.,
general law yields to special la.w should they operate in
the same field on same subject. [Para 29] [22-D-F]
G Vepa P. sa·rathi, Interpretation of Statutes, 5th Ed.,
Eastern Book Company; N. S. Bindra's Interpretation of
Statutes, 8th Ed., The Law Book Company; Craies on
Statute Law, S.G.G.Edkar, 7th Ed., Sweet & Maxwell;
Justice G.P. Singh, Principles of Statutory Interpretation,
H 13th Ed., LexisNexis; Craies on Legislation, Daniel
COMMERCIAL TAX OFFICER, RAJASTHAN v. M/S 5
BINANI CEMENT LTD. & ANR.
Greenberg, 9th Ed., Thomson Sweet & Maxwell, Maxwell A
on Interpretation of Statutes, 12th Ed., Lexis Nexis -
referred to.
2.3. Generally, the principle has found vast
application in cases of there being two statutes: general
8
or specific with the latter treating the common subject
matter more specifically or minutely than the former.
Corpus Juris Secundum, 82 C.J.S. Statutes § 482 states
that when construing a general and a specific statute
pertaining to the same topic, it is necessary to consider
the statutes as consistent with one another and such C
statutes therefore should be harmonized, if possible, with
the objective of giving effect to a consistent legislative
· policy. On the other hand, where a general statute and a
specific statute relating to the same subject matter cannot
be reconciled, the special or specific statute ordinarily will D
control. The provision more specifically directed to the
matter at issue prevails as an exception to or qualification
of the provision which is more general in nature, provided
that the specific or special statute clearly includes the
matter in controversy. [Para 30] [22-H; 23-A-C] E
Edmond v. U.S., 520 U.S. 651, Warden, Lewisburg
Penitentiary v. Marrero, 417 U.S. 653 - referred to.
2.4. When there is an apparent conflict between two
independent provisions of law, the special provision F
must prevail. This rule has application in construction of
taxing statutes along with the proposition that the
provr~ions must be given the most beneficial
interpre~ation. [Para 36, 37] [27-B, DJ
G
0
Sarabjit Rick Singh v. Union of India (2008) 2 SCC
•
417:2007 (13) SCR 321; St. ~tephen's College v. ·University
of Delhi (1992) 1 sec 558: 1'9s1 (3) Suppl. scR 121; J.K.
Cottqn Spinning & Weaving Mills ~ .Ltd. v. State of U. P.
(1961} 3 SCR 185; Waverly Jute Mills Co. Ltd. v. Raymon & H
6 SUPREME COURT REPORTS (2014] 3 S.C.R.
A Co. (India) (P) Ltd., (1963) 3 SCR 209; Union of India v. India
Fisheries (P) Ltd. AIR 1966 SC 35: 1965 SCR 679; CIT v.
Shahzada Nand & Sons (1966) 3 SCR 379; CCE v. Jayant
Oil Mills (P) Ltd. (1989) 3 SCC 343: 1989 (2) SCR 291 - relied
on.
B
Effort Shipping Co Ltd. v. Linden Management, SA
(1998) AC 605; Associated Minerals Consolidated Ltd. v.
Wyong Shire Council [1975) AC 538, 554 - referred to.
Bennion, Statutory Interpretation, 5th ed. (2008) p. 1155
C - referred to.
2.5. While determining the question whether a statute
is a general or a special one, focus must be on the
principal subject-matter coupled with a particular
0 perspective with reference to the intendment of the Act.
With this basic principle in mind, the provisions must be
examined to find out whether it is possible to construe
harmoniously the two provisions. If it is not possible then
an effort will have to be made to ascertain whether the
legislature had intended to accord a special treatment
E vis-a-vis the general entries and a further endeavour will
have to be made to find out whether the specific
provision excludes the applicability of the general ones.
When the intention of the legislation is to exclude the
general provision then the rule "general provision
F should yield to special provision" is squarely attracted.
The rule of statutory construction that the specific
governs the general is not an absolute rule but is merely
a strong indication of statutory meaning that can be
overcome by textual indications that point in the other
G direction. This rule is particularly applicable where the
legislature has enacted comprehensive scheme and has
deliberately targeted specific problems with specific
solutions. A subject specific provision relating to a
specific, defined and descriptable subject is regarded as
H an exception to and would prevail over a general
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 7
BINANI CEMENT LTD. & ANR.
provision relating to a broad subject. [Paras 41-42] [31- A
B-G]
UC v. D.J. Bahadur (1981) 1 SCC 315 : 1981 (1) SCR
1083 ; Ashoka Marketing Ltd. v. Punjab National Bank (1990)
4 SCC 406: 1990 (3) SCR 649; U.P. SEB v. Hari Shankar
Jain (1978) 4 SCC 16: 1979 (2) SCR 355; Gobind Sugar B
Mills Ltd. v. State of Bihar (1999) 7 SCC 76 - relied on.
3. In the instant case, the item 1E is subject specific
provision introduced by an amendment in 1996 to the
Scheme. The said amendment removed "new cement C
industries" from the non-eligible Annexure-B and placed
it into Annexure-C amongst the eligible industries. It
classified the cement units for eligibility of tax exemption
into three categories: small, medium and large. The said
categories are comprehensive whereby small and D
medium cement units have been prescribed to have
maximum FCls of Rs.60/- lakhs and Rs.5/- crores,
respectively and the FCI of large to be over Rs.5/- crores.
The maximum ceiling for large cement units has been
purposefully left open and thereby reflects that the E
intention clearly is to provide for an all-inclusive provision
for new cement units so as to avoid any ambiguity in
determination of appropriate provision for appliCability to .
new cement units to seek exemption. It leaves no doubt
that what is specific has to be seen in contradistinction F
with the other items/entries. The provision more specific
than the other on the same subject would prevail. Here it
is subject specific item and therefore as against items 1,
4, 6 and 7, which deal with units of all industries and not
only cement, item 1E restricted to only cement units G
would be a specific and· special entry and thus. would
override the general provision. [Paras 43, 44] [31-H; 32-
A-E]
4. The proposition put forth by the respondent-
Company that the construction which is most beneficial H
8 SUPREME COURT REPORTS [2014] 3 S.C.R.
A to the assessee must be applied and adopted is not
accepted. Howsoever, it is true that the canons of
· construction must be applied to extract most beneficial
re-conciliation of provisions. In case of fiscal statute
dealing with exemption, it would require interpretation
B benefiting the assessee. But here the introduction of the
subject specific entry vide amendment into general
scheme of exemption speaks volumes in respect of
intention of the legislature to restrict the benefit to cement
industries as available only under Item 1E, which
C categorically classified them into three as per their FCI.
The specific entries being mutually exclusive have been
placed so systematically arranged and classified in the
Scheme. The construction of provisions must not be
divorced from the object of introduction of subject
specific provision while retaining other generalized
D provision that now specifically exclude the new cement
industries, which could otherwise fall into its ambit, lest
such interpretation would be not ab absurdo (i.e.,
interpretation avoiding absurd results). Therefore, the
respondent-Company would only be eligible· for grant of
E exemption under Item 1E as a large new cement unit in
accordance with its FCI being above Rs.5/- crores. [paras
45-46] (32-E-H; 33-A-C]
Case Law Reference:
F 1987 SCR (2) 1 Relied on Para 28
1991 (3) Suppl. SCR 121 Relied on Para 33
(1961) 3 SCR 185 Relied on Para 34
G SA (1998) AC 605 Referred to Para 35
(1975) AC 538, 554 Referred to Para 35
(1963) 3 SCR 209 Relied on Para 36
1965 SCR 679 Relied on Para 36
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 9
BINANI CEMENT LTD. & ANR.
1989 (2) SCR 291 Relied on Para 36 A
2007 (13) SCR 321 Relied on Para 36
(1966) 3 SCR 379 Relied on Para 37
1981 (1) SCR 1083 Relied on Para 38
B
1990 (3) SCR 649 Relied on Para 39
1979 (2) SCR 355 Relied on Para 40
(1999) 1 sec 76 Relied on Para 41
c
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 336
of 2003.
From the Judgment and Order dated 02.07.2001 of the
High Court of Judicature for Rajasthan at Jodhpur in SB Sales
Tax Revision Petition No. 582 of 1999. D
R.F. Nariman, Sushi! Kumar Jain, Puneet Jain, Chhaya
Kirti, Pratibha Jain for the Appellant.
Sudhir Gupta, Amarjit Singh Bedi, Aparajita Sharma, E
Harsha Vinoy for the Respondents.
The Judgment of the Court was delivered by
H.L. DATTU, J. 1. The Revenue is in appeal before us
against the impugned judgment and order passed by the High F
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.
G
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 H
10 SUPREME COURT REPORTS [2014] 3 S.C.R.
A short, "the FCI") exceeding Rs.500/- Crores and employs more
than 250 employees.·
3. The core issue arises out of the respondent-assessee's
application for grant of eligibility certificate for exemption from
payment of Central Sales Tax and Rajasthan Sales Tax to the
8
State Level Screening Committee, Jaipur under the "Sales Tax
New Incentive Scheme for Industries, 1989" (for short "the
Scheme").
4. For convenience of discussion, we would first notice the
C relevant scheme and certain provisions and thereafter proceed
towards analysis of the facts in the instant case. The Scheme
for exemption from payment of sales tax was notified by the
State of Rajasthan in exercise of its powers under sub-
section(2) of Section 4 of the Rajasthan Sales Tax Act, 1954
D (for short, "the Act"). The scheme exempts certain industrial
units from payment of tax on the sale of goods manufactured
by them within the State. It specifies and categorizes the
districts, types of units, the .extent of exemption from tax (in
percentage), the maximum exemption available in terms of
E percentage of fixed capital investment (FCI) and the maximum
time limit for availing such exemption from tax. By introducing
a deeming clause, the scheme is deemed to have come into
operation with effect from 05.03.1987 and to remain in force
upto 31.03.1992. An amendment to the aforesaid notification
F was brought in by issuing notification - S. No. 763: F.4(35) FD/
Gr.IV/87-38, dated 06.07.1989 and was made operative/
effective with effect from 05.03.1987 and to remain in force upto
31.03.1995. Yet another amendment was introduced by the
State Government by issuing notification No.763: F.4(35)FD/
Gr.IV/87-38 dated 06.07.1989. Once again by introducing a
G deeming clause, the notification was made operative with effect
from 05.03.1987 and to remain in force upto 31.03.1997. The
State Government has issued another subsequent notification
amending the earlier notification in exercise of its power under
Section 4(2) of the Act in 763: F.4(35)FD/Gr.l\//87-38, dated
H 06.07.1989 which is deemed to have come into operation with
COMMERCIAL TAX OFFICER, RAJASTHAN v. M/S 11
BINANI CEMENT LTD. & ANR. [H.L. DATTU, J.]
effect from 05.03.1987 and to remain in force upto 31.03.1998. A
Clause 1 of the scheme notification provides for its operation.
Clause 2 is the dictionary clause which provides for meaning
of the expressions like "New Industrial Unit'', "Sick Industrial
Unit", "Eligible Fixed Capital Investment" etc. For the purpose
of this case, we require to notice the definitions of New B
Industrial Unit, Eligible Fixed Capital Investment, Prestigious
Unit and Very Prestigious Unit.
5. Clause 2(a) defines the meaning of the expression
'New Industrial Unit' to mean an industrial unit which commences
commercial production during the operative period of the C
scheme. The definition provides an exclusion of certain
industries from the purview of New Industrial Unit. They are
industrial units established by transferring or shifting or
dismantling an existing industry and an industrial unit
established on the site of an existing unit manufacturing similar D
goods. Explanation I and II appended to the notification need
not be noticed by us, since the same is not necessary for the
purpose of disposal of this appeal.
6. It is neither in dispute nor could be disputed by the E
revenue that the respondent is not a 'New Industrial Unit'.
7. Clause 2(e) defines eligible fixed capital investment
(FCI) to mean investment made in land, new buildings, new
plant and machinety and imported second hand machinery from
outside the country and installation expenditure capitalized for F
plant and machinery and installation capitalized for plant and
machinery's capitalized interest during construction not
exceeding 5% of the total fixed capital investment; and technical
know-how fees or drawing fees paid in lump-sum to foreign
collaborators or foreign suppliers as approved by Government G
of India or paid to laboratories recognized by the State
Government or Central Government and Rail Sidings, rolling
stock, racks and railway engines, owned by the unit.
8. Clause 2(i) defines 'Prestigious Unit'. The same is as
under:- H
12 SUPREME COURT REPORTS [2014] 3 S.C.R.
A "Prestigious Unit" means a "new industrial unit" first
established in any Panchayat Samiti of the State during
the period of this Scheme in which investment in fixed
capital exceeds Rs.10/- cores with a minimum permanent
employment of 250 persons or a "new industrial unit"
B having a fixed capital investment exceeding Rs.25.00
crores and with a minimum permanent employment of 250
persons or a new electronic industrial unit having fixed
capital investment exceeding Rs.25/- cro res'.
9. The definition is in three parts. The first part speaks of
C a 'New Industrial Unit' first established in any Panchayat Samiti
of the State. The establishment is of the unit during the period
of the Scheme. The investment in fixed capital must exceed
Rs.10/- crores and lastly the industrial unit has minimum
pennanent employment of 250 persons. In the second limb, the
D necessity of establishing the 'New Industrial Unit' in Panchayat
Samiti is done away with. The unit should have capital
investment exceeding Rs.25/- crores and should have minimum
permanent employment of 250 persons. The third limb of this
definition applies only to Electronic Industrial Unit having fixed
E capital investment exceeding Rs.25/- crores.
10. Clause 2(ii) defines the expression "Very P,estigious
Unit" as under:
"Very Prestigious Unit" means a new industrial unit
F established in any Panchayat Samiti of the State during
the period of this Scheme in which investment in fixed
capital is Rs.100/- crores or more. However, the
progressive investment of the amount of project cost as
appraised by the financial institutions shall be considered
G as investment made by a new unit, and as soon as such
investment reaches or crosses the point of Rs.100/- crores
during the operative period of the Scheme, the unit shall
acquire the status of a Very Prestigious Unit for the
purpose of claiming enhanced proportionate benefits
H under this Scheme".
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 13
BINANI CEMENT LTD. & ANR. [H.L. OATTU, J.]
· 11. The 'Very Prestigious Unit' means a new industrial unit A
establish·ed in any Panchayat Samiti in the State during the
operative period of the Scheme and the other important
requirement is the investment in such industrial unit must be
Rs.100/- crores or more. The second limb of the definition
clause provides for a new industrial unit to acquire the status B
. of Very Prestigious Unit. The project cost as appraised by the
financial institution shall be considered as investment made by
a new unit. The progressive investment of the amount of project
cost as soon as it reaches or crosses the point of Rs.100/-
crores during the operation of the Scheme, the indt~strial unit c
shall acquire the status of a Very Prestigious Unit in order to
claim enhanced proportionate benefits under the Scheme.
12. Clause 2(k) provides for constitution of Screening
Committee for the purpose of consideration and to grant
Eligibility Certificate under the New Incentive Scheme both for D
small and medium and also large scale industrial units to avail
benefit under the New Incentive Scheme. The note appended
to this sub-clause speaks of Small Scale Units, Medium Scale
Units and Large Scale Units. Small Scale Units means a unit
of which investment in plant and machinery does not exceed E
Rs.60/- Lakhs, a Medium Scale Unit means a unit of which the
project cost does not exceed Rs. Five Crores and Large Scale
Unit means a unit of which the project cost exceeds Rs. Five
Crores.
F
13. Clause 3 of the notification speaks of applicability of ·.
the Scheme. By this clause, the State Government has made
the Scheme applicable to (a) new industrial units, (b) industrial
units going in for expansion or diversification and (c) sick units.
14. Clause 4 of the Scheme provides for exemption from G
Payment of Sales Tax as per parameters mentioned in
Annexure 'C' to the said notification. This clause also envisages
that the industrial unit which is-granted an eligibility certificate
by the Screening Committee is alone exempted to claim benefit
of this notification. H
14 SUPREME COURT REPORTS [2014] 3 S.C.R.
A 15. Annexure 'C' provides for the quantum of sales tax
exemption under the Scheme. Para C therein is relevant for the
purpose of this case, therefore, omitting what is not necessary
is extracted hereunder:-
ANNEXURE 'C'
B
QUANTUM OF SALES TAX EXEMPTION UNDER THE
NEW INCENTIVE SCHEME
Item No. Type of Units Extent of Maximum Maximum
the exemption in time limit
c percentage
of exemption
terms of
percentage
for availing
exemption
from tax of fixed from tax
capital
investment
{FCI)
D
1. New Units 75% of total 100% of FCI Seven
{Other than the tax liability in case of years
units mentioned medium and
at items 1A to 1F) large. scale
units and .
125% of FCI
E in case of
small scale
units
1A Leather based 90% of total 100% of FCI Seven
New Unit tax liability in case of ye,F1rs
F medium and
large scale
units and
125% of FCI
in case of
SSI units
G 18 New Units in 90% of total 100% of FCI Nine years.
Ceramic, Glass, tax liability
Electronics and for first three
Telecommuni- years, 80%
cations industry for next three
having a FCI years and
between Rs.5 75% for the
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 15
BlNANI CEMENT LTD. & ANR. [H.L. DATIU, J.J
crores and remaining A
Rs.25 crores period.
1C. New Units in 100% of total 100% of FCI Eleven
Ceramic, Glass, tax liability years .
.
Electronics, and for the first
Telecommuni- four years,
cations industry 90% for the B
having a FCl of. next four
Rs.25 crores years and
or more 7.5% for the
remaining
period.
10 New labour 75% of total 145% of FCI Seven c
intensive units tax liability in case of years.
as defined in SSI units and
the Capital 120% of FCI
Investment in case of
Subsidy medium and
Scheme, large scale
1990 units. .
D
1E. New Cement 75%, 50% 125% of FCI Seven
units except in & 25% of in case of years.
Tribal Sub-Plan total tax small scale
area. liability in units subject
case of to an overall E
small,· limit of
medium Rs.1.00 crore
and large and 100% of
scale units FCI in case Of
respectively medium and
large scale
units. F
1F. Large scale 25% of total 100% of FCI Seven
granite and tax liability years.
marble units.
2. Units (Other 75% of total 100% of Seven
than (a) tax liability additional years G
cement unit FCI
except in
Tribal Sub-
Plan area
and (b) large
scale granite
.
H
16 SUPREME COURT REPORTS [2014) 3 S.C.R.
A ana maro1e
units going in
for expansion
or diversification.
2A. Leather based 75% of total 100% of Seven
units going in tax liability additional years
B for expansion FCI
01 diversification
3. Sick Units 50% of total 100% of FCI Seven
tax liability in case of years
medium and
large scale
c units & 125%
of FCI in case
of small scale
units.
4. New Units 75% of total 100% of FCI Nine years
producing tax liability
D pollution
control
equipments/
Pioneering
units/
Prestigious
units.
E
5. New Very 90% of total 100% of FCI Eleven
Prestigious tax liability years
units (Other
than cement
units except
F in Tribal Sub-
plan Area)
6. 100% Export 100% of total 100% of FCI Nine years
Oriented tax liability
Prestigious/
Pioneering
G units
7. . 100% Export 100% of total 100% of FCI Eleven
Oriented Very tax liability years
Prestigious
Units
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 17
BINANI CEMENT LTD. & ANR. [H.L. DATIU, J.]
16. As we have observed earlier, Annexure-C has five A
columns. The second column speaks of type of units, the third
column speaks of the extent of percentage of exemption from
tax, the fourth column provides for the maximum exemption in
terms of percentage of FCI and the fifth and the last column
provides the maximum time limit for availing exemption from B
tax. Prior to issuance of notification dated 13.12.1996,
Annexure 'C' was primarily confined to 'New Units'. After the
introduction of notification dated 13.12.1996, the exclusion is
made to the expression 'New Units' by specifically including
certain type of industrial units by inserting items 1A to 1F. Item c
1E specifically talks of New Cement Units except in Tribal Sub-
Plan area. The extent of percentage of exemption from tax under
Item 1E depends on the type of unit or the industry. If it is a small
scale unit, the extent of exemption is 75%, if it is medium scale,
the extent of exemption is 50%, and if it is large scale unit, the 0
extent of percentage of exemption from tax is 25%. The
maximum time limit for availing exemption from tax is restricted
to seven years. Item 4 speaks of New Units producing pollution
control equipments, pioneering units and prestigious units. The
extent of the percentage of exemption from tax is 75% of total E
liability and the maximum time limit for availing exemption from
tax is 9 years from the date of commercial production. Item 5
relates to New Very Prestigious Units other than cement units
except in Tribal Sub-plan Area and the total percentage of
exemption from tax is 90% of total tax liability and the maximum
time limit for availing exemption from tax is eleven years. F
17. Reverting to state the facts, the respondent-assessee
had applied to the State Level Screening Committee for
claiming benefit of exemption at 75% under the Scheme. The
Committee rejected the claim of the respondent-assessee and G
observed that since the respondent-assessee is a large scale
unit covered under the specific provision of Item 1E of Annexure
'C', it is entitled to 25% exemption, by its order dated
15.01.1998.
H
18 SUPREME COURT REPORTS [2014] 3 S.C.R.
A 18. Being aggrieved by the said order, the respondent-
assessee filed appeal before Rajasthan Tax Board, Ajmer (for
short; 'the Board') in respect of the calculation of eligible FCI
as well as the exemption under the Scheme. The Board while
remanding the matter to the State Level Screening Committee
B held that the respondent-assessee is entitled to 75% tax
exemption by holding the respondent-unit as Prestigious Unit
under the Scheme.
19. The revenue being aggrieved by the decision of the
c Board, filed Tax Revision Petition before the High Court under
Section 86(2) of the Act. The High Court dismissed the revision
·petition filed by the revenue and upheld the decision of the
Board by holding that the respondent-unit is a Prestigious Unit
and therefore, entitled to 75% tax exemption under the Scheme.
D 20. Aggrieved by the omer so passed by the High Court,
the Revenue is before us in this appeal.
21. We have heard learned counsel for the parties to the
lis and perused the documents on record as well as the
E order(s) passed by the authorities and the High Court,
respectively.
22. Shri Rohington Nariman, learned senior counsel
appearing for the appellant submits that the case pleaded by
F respondent-unit right from the beginning of filing the application
before the State Level Screening Committee was that the new
unit had made an investment of more than Rs.500/- crores by
way of fixed capital assets and therefore they should be placed
under the category of 'Prestigious Unit' and accordingly be
granted eligibility certificate to claim 75% of exemption from
G tax for the maximum time limit provided under the Scheme. In
aid of this submission, the learned senior counsel would draw
our attention to the appliGation and the accompanying affidavit
filed by the respondent-new unit before the State Level
Screening Committee. He would further contend that the
H respondent-unit before all the authorities below including the
COMMERCIAL TAX OFFICER, RAJASTHAN v. M/S 19
BINANI CEMENT LTD. & ANR. [H.L. DATTU, J.]
High Court had adopted the stand that the fixed capital A
investment excluding investment made before 05.03.1987 wa$
more than Rs.532/- crores and therefore the respondent-unit is
a Prestigious Unit entitled to an exemption of 75% of total tax
liability. It is further contended that the respondent-new unit being
New Cement Unit and further being large scale unit though can B
avail the benefit of the incentive scheme under 1E of Annexure
'C' which provides for exemption upto 25% of total liabilities, it
cannot avail the benefit of exemption at the rate of 75% under
Item 4 as Prestigious Unit. He would further submit that benefit
to cement industry is confined to the extent envisaged under c
the Item 1E of Annexure-C as the said item is a specific
provision relating to cement industry and thus would prevail over
other provisions which are general in character in terms of
reference to new cement unit. Alternatively, it is contended that
the respondent-unit being new cement unit, it may fall under
0
'New Very Prestigious Unit', however Item 5 of Annexure ·c·
.· speaks of the New Very Prestigious Units other than cement
units except those located in Sub-Plan area, respondent-unit
may not be entitled to avail the benefit of the Scheme.
23. Per contra, learned counsel, Shri Sudhir Gupta would E
justify the reasoning and the conclusion reached by the High
Court while rejecting the revenue's revision petition and thereby
confirming the view expressed by the Board. He would, inter
alia, submit that Item 1E is only an exception to the general rule
envisaged in Item 1 and not an exception to the other Items in F
the Annexure-C, i.e., Items 2 to 7 as it is not intended to govern
the entire field of exemptions made available to the cement
industry so as to deny the benefits to a unit even if it falls under
another Item envisaging better incentives. He would further
submit that since new cement unit is specifically excluded from G
application of Item 1 (new units generally), Item 2 (expanding/
diversifying unit) and Item 5 (very prestigious unit) but not Item
4 (prestigious units), Item 6 (export oriented prestigious/
pioneering unit) and Item 7 (export oriented very prestigious
units), it falls that the intention behind such express exclusion H
20 SUPREME COURT REPORTS [2014] 3 S.C.R.
A is such that but for the said exclusion, cement industries would
be included in the said entries. He would strenuously submit
that since the tax exemption clauses are made with a beneficent
object, i.e., to encourage investment in specified rural/semi-
urban areas, their construction must be liberal such as to confer
B the most beneficial meaning to the provisions.
24. The facts which are not in dispute are that the
respondent-assessee (hereinafter referred to as 'the
Company') established a new cement unit within Panchayat
C Samiti, Pindwara and commenced commercial production
some time in the year 1997. It engaged itself in the manufacture
of cement. The total capital investment - (FCI) in the new
industrial unit claimed by the Company was Rupees 53252.87
Lakhs (Rs.532.52/- crores)
r) 25. The Company had applied for grant of Eligibility
Certificate for exemption from payment of Central Sales Tax and
Rajasthan Sales Tax before the State Level Screening
Committee, Jaipur, under the Scheme. However, the Screening
Committee accepted only Rs.5553.72 Lakhs (Rs.55.32 crores)
E as FCI eligible for availing the benefits under the Scheme. On
the aforesaid basis the State Level Screening Committee
certified that the company is entitled to avail exemption of tax
to the extent of 25% of the tax liability by treating the same to
be a Large Scale Industry .. In the appeal, the Board took the
F view since the Company had invested more than Rs.25 crores
and has employed more than 250 workmen, it has the status
of· New Prestigious Unit' and thus, falls within the definition of
a Prestigious Unit and should be governed by Item 4 of
Annexure ·c· being entitled to avail 75% of total tax liability. This
G view, as we have already observed, is accepted by the High
Court, while dismissing the tax revision petition filed by the
revenue.
26. At the outset, we would observe that the High Court
has erred in reaching its conclusion by holding that (a) the
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 21
BINANI CEMENT LTD. & ANR. [H.L. DATTU, J.]
respondent-company would fall into all the three categories of A
industries referred to in the Scheme, that is to say it is a new
unit which is a 'Large Scale Unit', a "Prestigious New Unit" and
also a "Very Prestigious Unit"; (b) the classification of a new
unit, viz. small scale, medium scale and large scale under item
1E on the basis of scale of investment does not denude a new B
industrial unit of any type of the special status of "Pioneer",
"Prestigious" and "Very Prestigious" unit under items 4 and 5
to also exclude operation of General entry; and (c) the special
entry would not exclude the applicability of general entry in
context of the Scheme so as to exclude the operation of items C
4, 6 and 7. Thereby implying that though there exists an overlap
between the general and special provision, the general
provision would also be sustained and the two would co-exist.
27. Before we deal with the fact situation in the present
appeal, we reiterate the settled legal position in law, that is, if D
in a Statutory Rule or Statutory Notification, there are two
expressions used, one in General Terms and the other in
special words, under the rules of interpretation, it has to be
understood that the special words were not meant to be
included in the general expression. Alternatively, it can be said E
that where a Statute contains both a General Provision as well
as specific provision, the later must prevail.
28. We are mindful of the principle that the Court should
examine every word of a statute in its context and must use
F
context in its widest sense. We are also in acquaintance with
observations of this Court in Reserve Bank of India v. Peerless
General Finance and Investment Co.. Ltd., 1987 SCR (2) 1
. where Chinnappa Reddy, J. noting the importance of the
context in which every word is used in the matter of G
interpretation of statutes held thus:
"Interpretation must depend on the text and the context.
They are the basis of interpretation. One may well say if
the text is the texture, context is what gives the colour.
Neither can be ignored. Both are important. That H
22 SUPREME COURT REPORTS [2014) 3 S.C.R.
A interpretation is best which makes the textual interpretation
match the contextual. A statute is best interpreted when we
know why it was enacted. With this knowledge, the statute
must be read, first as a whole and then section by section,
clause by clause, phrase by phrase and word by word. If
B a statute is looked at, in the context of its enactment, with
the glasses of the statute-maker, provided by such context,
its scheme, the sections, clauses, phrases and words may
take colour and appear different than when the statute is
looked at without the glasses provided by the context. With
c these glasses we must look at the Act as a whole and
discover what each section, each clause, each phrase and
each word is meant and designed to say as to fit into the
scheme of the entire Act. No part of a statute and no word
of a statute can be construed in isolation. Statutes have
to be construed so that every word has a place and
D
everything is in its place."
29. It is well established that when a general law and a
special law dealing with some aspect dealt with by the general
law are in question, the rule adopted and applied is one of
E harmonious construction whereby the general law, to the extent
dealt with _by the special law, is impliedly repealed. This principle
finds its origins in the latin maxim of generalia specialibus non
derogant, i.e., general law yields to special law should they
operate in the same field on same subject.
F
(Vepa P. Sarathi, Interpretation of Statutes, 5th Ed.,
Eastern Book Company; N. S. Bindra's Interpretation of
Statutes, 8th Ed., The Law Book Company; Craies on Statute
Law, S.G.G.Edkar, 7th Ed., Sweet & Maxwell; Justice G.P.
Singh, Principles of Statutory Interpretation, 13th Ed.,
G LexisNexis; Craies on Legislation, Daniel Greenberg, 9th Ed.,
Thomson Sweet & Maxwell, Maxwell on Interpretation of
Statutes, 12th Ed., Lexis Nexis)
30. Generally, the principle has found vast application in
H cases of there being two statutes: general or specific with the
COMMERCIAL TAX OFFICER, RAJASTHAN v. M/S 23
BINANI CEMENT LTD. & ANR. [H.L. DATIU, J.]
latter treating the common subject matter more specifically or A
minutely than the former. Corpus Juris Secundum, 82 C.J.S.
Statutes § 482 states that when construing a general and a
specific statute pertaining to the same topic, it is necessary to
consider the statutes as consistent with one another and such
statutes therefore should be harmonized, if possible, with the B
objective of giving effect to a consistent legislative policy. On
the other hand, where a general statute and a specific statute
relating to the same subject matter cannot be reconciled; the
special or specific statute ordinarily will control. The provision
more specifically directed to the matter at issue prevails as an c
exception to or qualification of the provision which is more
general in nature, provided that the specific or special statute
clearly includes the matter in controversy.
(Edmond v. U.S., 520 U.S. 651, Warden, Lewisburg
Penitentiary v. Marrero, 417 U.S. 653) D
31. The maxim generalia specialibus non derogant is dealt
with in Volume 44 (1) of the 4th ed. of Halsbury's Laws of
England at paragraph 1300 as follows:
E
"The principle descends clearly from decisions of the
House of Lords in Se..,ard v. Owner of "The Vera Cruz''. (1884)
1OApp Cas 59 and the Privy Council in Barker v Edger, [1898]
AC 748 and has been affirmed and put into effect on many
occasions .... If Parliament h'ds considered all the circumstances
of, and made special prov•sion for, a particular case, the F
presumption is that a subseq11&11t enactment of a purely general
character would not have bee!'\ intended to interfere with that
provision; and therefore, if sucti an enactment, although
inconsistent in substance, is cap_able of reasonable and
sensible application without extending to the case in question, G
it is prima facie to be construea as fl,ot so extending. The
. special provision stands as an exceptional proviso upon the
general. If, however, it appears from a consideration of the
general enactment in the light of admissible circumstances that
Parliament's true intention was to establish thereby a rule of H
24 SUPREME COURT REPORTS [2014] 3 S.C.R.
A universal application, then the special provision must give way
to the general."
32. The question in Seward v. Owner of the "Vera Cruz",
(1884) 10 App Cas 59 was whether Section 7 of the Admiralty
8 Court Act of 1861, which gave jurisdiction to that Court over
"any claim for damage done by any ship" also gave jurisdiction
over claims for loss of life which would otherwise come under
the Fatal Accidents Act, 1846. It was held that the general
words of Section 7 of the Admiralty Court Act did not exclude
C the applicability of the Fatal Accidents Act and therefore, the
Admiralty Court had no jurisdiction to entertain a claim for
damages for loss of life.
33. The adoption of the aforesaid rule in application of
principle of harmonious construction has been explained by
D Kasliwal J. while expressing his partial dissent to the majority
judgment in St. Stephen's College v. University of Delhi, (1992)
1 sec 558 as follows:
"140 .... The golden rule of interpretation is that words
E should be read in the ordinary, natural and grammatical
meaning and the principle of harmonious construction
merely applies the rule that where there is a general
provision of law dealing with a subject, and a special
provision dealing with the same subject, the special
prevails over the general. If it is not constructed in that way
F
the result would be that the special provision would be
wholly defeated. The House of Lords observed in
Warburton v. Loveland, (1824-34) All ER Rep 589 as
under:
G "No rule of construction can require that when the words
of one part of statute convey a clear meaning ... it shall
be necessary to introduce another part of statute which
speaks with less perspicuity, and of which the words may
be capable of such construction, as by possibility to
H diminish the efficacy of the first part."
COMMERCIAL TAX OFFICER, RAJASTHAN v. M/S 25
BINANI CEMENT LTD. & ANR. [H.L. DATIU, J.J
(Anandji Haridas and Co. (P) Ltd. v. S.P. Kasture, (1968) A
1 SCR 661, Patna Improvement Trust v. Lakshmi Devi,
1963 Supp (2) SCR 812, Ethiopian Airlines v. Ganesh
Narain Saboo, (2011) 8 SCC 539, Usmanbhai
Dawoodbhai Memon v. State of Gujarat, (1988) 2 SCC
271, South India Corpn. (P) Ltd. v. Secy., ·aoard of B
Revenue, Trivandrum, (1964) 4 SCR 280, Maharashtra
State Board of Secondary and Higher Secondary
Education v. Paritosh Bhupeshkumar Sheth, (1984) 4
sec 21)
34. In J.K. Cotton Spinning & Weaving Mills Co. Ltd. v.
c
State of U.P., (1961) 3 SCR 185, this Court has clarified that
not only does this rule of construction resolve the conflicts
between the general provision in one statute and the special
provision in another, it also finds utility in resolving a conflict
between general and special provisions in the same legislative . 0
Instrument too and observed that:
"9 .... We reach the same result by applying another well
known rule of construction that general provisions yield to
special provisions. The learned Attorney-General seemed E
to suggest that while this rule of construction is applicable
to resolve the conflict between the general provision in one
Act and the special provision in another Act, the rule
cannot apply in resolving a conflict between general and
special provisions in the same legislative instrument. This F
suggestion does not find support in either principle or
authority. The rule that general provisions should yield to
specific provisions is not an arbitrary principle made by
lawyers and Judges but springs from the common
understanding of men and women that when the same G
person gives two directions one covering a large number
of matters in general and another to only some of them his
intention is that these latter directions should prevail as
regards these while as regards all the rest the earlier
direction should have effect. In Pretty v. Solly (quoted in H
26 SUPREME COURT REPORTS [2014] 3 S.C.R.
A Craies on Statute Law at p.m. 206, 6th Edn.) Romilly, M.R.,
mentioned the rule thus:
"The rule is, that whenever there is a particular enactment
and a general enactment in the same statute and the latter,
B taken in its most comprehensive sense, would overrule the
former, the particular enactment must be operative, and
the general enactment must be taken to affect only the other
parts of the statute to which it may properly apply."
The rule has been applied as between different provisions
c of the same statute in numerous cases some of which only
need be mentioned: De Winton v. Brecon, Churchill v.
Crease, United States v. Chase and Carroll v. Greenwich
Ins. Co.
D 10. Applying this rule of construction ,that in cases of
conflict between a specific provision and a general
provision the specific provision prevails over the general
provision and the general provision applies only to such
cases which are not covered by the special provision, we
E must hold that clause 5(a) has no application in a case
where the special provisions of clause 23 are applicable."
35. Lord Cooke of Thomdon pointed out, however, in Effort
Shipping Co Ltd. v. Linden Management, SA [1998] AC 605
that the maxim is not a technical rule peculiar to English statutory
F interpretation, rather it "represents simple common sense and
ordinary usage". Bennion, Statutory Interpretation, 5th ed.
(2008), p. 1155 states that it is based, like other linguistic
canons of construction, "on the rules of logic, grammar, syntax
and punctuation, and the use of language as a medium of
G communication generally. As Lord Wilberforce observed in
Associated Minerals Consolidated Ltd v Wyong Shire Council
[1975] AC 538, 554, that it is still a matter of legislative intention,
which the courts endeavour to extract from all available
indications.
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 27
BINANI CEMENT LTD. & ANR. [H.L. DATTU, J.]
36. In Waverly Jute Mills Co. Ltd. v. Raymon & Co. A
(India) (P)Ltd., (1963) 3 SCR 209 and Union of India v. India
Fisheries (P) Ltd., AIR .1966 SC 35 this Court has observed
that when there is an apparent conflict between two
independent provisions of law, the special provision must
prevail. In CCE v. Jayant Oil Mills (P) Ltd., (1989) 3 SCC 343 B
this Court has accepted the aforesaid rule as "the basic rule
of construction" that is to say "a more specific item should be
preferred to one less so." In Sarabjit Rick Singh v. Union of
India, (2008) 2 SCC 417 this Court has in fact followed the
aforesaid precedents thus: c
"58. The Act is a special statute. It shall, therefore, prevail
over the provisions of a general statute like the Code of
Criminal Procedure." ·
37. This Court has noticed the application of the said rule D
in construction of taxing statutes along with the proposition that
the provisions must be given the most beneficial interpretation
in CIT v. Shahzada Nand & Sons, (1966) 3 SCR 379:
"10 .. ,.The classic statement of Rowlatt, J., in Cape E
Brandy Syndicate v. /RC, (1921) 1 KB 64, 71 still holds
the field. It reads:
"In a Taxing Act one has to look merely at what is
clearly said. There is no room for any intendment.
There is no equity about a tax. There is no F
presumption as to a tax. Nothing is to be read in,
nothing is to be implied. One can only look fairly at
the language used."
To this may be added a rider: in a case of reasonable G
doubt, the construction most beneficial to the subject is to
be adopted. But even so, the fundamental rule of
construction is the same for all statutes, .whether fiscal or
otherwise. "The underlying principle is that the meaning
and intention of a statute must be collected from the plain H
28 SUP!'"~EME COURT REPORTS [2014] 3 S.C.R
A and unambiguous expression used therein rather than from ·
any notions which may be entertained by the court as to
what is just or expedient." The expressed intention must
guide the court. Another rule of construction which is
relevant to the p~sent enquiry is expressed in the maxim,
B generalia speqalibus non derogant, which. means that
when there is a conflict between a general and a special
provision, the latter shall prevail. The said principle has
been stated in Craies on Statute Law, 5th Edn., at p. 205,
thus:
c "The rule is, that whenever there is a particular
enactment and a general enactment in the same
statute, and the latter, taken in its most
comprehensive sense, would overrule the former,
the particular enactment must be operative, and the
D general enactment must be taken to affect only the
other parts of the statute to which it may properly
apply."
... When the words of a section are clear, but its scope is
E sought to be curtailed by construction, the approach
suggested by Lord Coke in Heydon case, (1584) 3 Rep
7b, yield better results:
"To arrive at the real meaning, it is always necessary to
get an exact conception of the aim, scope, and object of
F the whole Act: to consider, according to Lord Coke: (1)
What was the law before the Act was passed; (2) What
was the mischief or defect for which the law had not
provided; (3) What remedy Parliament has appointed; and
(4) The reason of the remedy.""
G
(emphasis supplied)
38. In UC v. D.J. Bahadur, (1981) 1 SCC 315 this Court
was confronted with the question as to whether the UC Act is
H a special legislation or a general legislation and while
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 29
BINANI CEMENT LTD. & ANR. (H.L. DATTU, J.]
considering the rule in discussion, this Court observed thus: A
"49 .... the legal maxim generalia specialibus non derogant
is ordinarily attracted where there is a conflict. between a
special and a general statute and an argument of implied
repeal is raised. Craies states the law correctly: 8
,"The general rule, that prior statutes are held to be repealed
by implication by subsequent statutes if the two are
repugnant, is said not to apply if the prior enactment is
special and the subsequent enactment is general, the rule
of law being, as stated by Lord Selbourne in Sew_ards v. C
Vera Cruz, 'that where there are general words in a later
Act capable of reasonable and sensible application without
extending them to subjects specially dealt with by earlier
legislation, you are not to hold that earlier and special
legislation indirectly repealed, altered, or derogated from D
merely by force of such general words, without any
ind)cation of a particular intention to do so. There is a well-
known rule which has application to this case, which is that
a subsequent general Act does not affect a prior special
Act by implication. That this is the law cannot be doubted, E
and the cases on the subject will be found collected in the
third edition of Maxwell is generalia specialibus non
derogant - i.e. general provisions will not abrogate special
provisions.' When the legislature has given its attention to
a separate subject and made provision for it, the F
presumption is that a subsequent general enactment is not
intended to interfere with the special provision unless it
manifests that intention very clearly. Each enactment must
be construed in that respect according to its own subject-
matter and its own terms." G
39. In Ashoka Marketing Ltd. v. Punjab National Bank,
(1990) 4 SCC 406 this Court has placed reliance upon
Bennion, Statutory .Interpretation (supra) and J.K. Cotton
Spinning & Weaving .Mills case (supra), amongst others, and
explaining the rationale of this rule has reiterated the law as H
'
30 SUPREME COURT REPORTS (2014] 3 S.C.R.
A under:
"52. In UP. State Electricity Board v. 'Hari Shanker Jain
this Court has observed:
"In passing a special Act, Parliament devotes its
B "'
entire consideration to a particular subject. When
a general Act is subsequently passed, it is logical
to presume that Parliament has not repealed or
modified the former special Act unless it appears
that the special Act again received consideration
c from Parliament."
53. In Life Insurance Corporation v. D.J. Bahadur Krishna
Iyer, J. has pointed out :
"In determining whether a statute is a special or a
D
general one, the focus must be on the principal
subject matter plus the particular perspective. For
certain purposes, an Act may be general and for
certain other purpose it may be special and we
cannot blur distinctions when dealing with finer
E points of law.""
40. In U.P. SEB v. Hari Shankar Jain, (1978) 4 SCC 16,
this Court has concluded that if Section 79(c) of the Electricity
Supply Act generally provides for the making of regulations
F providing for the conditions of service of the employees of the
Board, it can only be regarded as a general provision which
must yield to the special provisions of the Industrial Employment
(Standing Orders) Act in respect of matters covered by the latter
Act, and observed that:
G "9. The reason for the rule that a general provision should
yield to a specific provision is this: In passing a special
Act, Parliament devotes its entire consideration to a
particular subject. When a general Act is subsequently
passed, it is logical to presume that Parliament has not
H
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 31
BINANI CEMENT LTD. & ANR. [H.L. DATTU, J.]
repealed or modified the former Special Act unless it A
appears that the Special Act again received consideration
from Parliament. Vide London and Blackwall Railway v.
Limehouse District Board of Works, and· Thorpe v.
Adams.
8
41. In Gobind Sugar Mills Ltd. v. State of Bihar, (1999) 7
SCC 76 this Court has observed that while determining the
questiQn whether a statute is a general or a special one, focus
must be on the principal subject-matter coupled with a
•
particular perspective with reference to the intendment of the
Act. With this basic principle in mind, the provisions must be C
examined to find out whether it is possible to construe
harmoniously the two provisions. If it is not possible then an
effort will have to be made to ascertain whether the legislature
had intended to accord a special treatment vis-a-vis the
general entries and a further endeavour will have to be made D
to find out whether the specific provision excludes the
applicability of the general ones. Once we come to the
conclusion that intention of the legislation is to exclude the
general provision then the rule "general provision should yield
to special provision" is squarely attracted. E
42. Having noticed the aforesaid, it could be concluded that
the rule of statutory construction that the specific governs the
general is not an absolute rule but is merely a strong indication
of statutory meaning that can be overcome. by textual F
indications that point in the other direction. This rule is
particularly applicable where the legislature has enacted
comprehensive scheme and has deliberately targeted specific
problems with specific solutions. A subject specific provision
relating to a specific, defined and descriptable subject is G
regarded as an exception to and would prevail over a general
provision relating to a broad subject.
43. In the instant case, the item 1E is subject specific
provision introduced by an amendment in 1996 to the Scheme.
The said amendment removed "new cement industries" from H
32 SUPREME COURT REPORTS [2014) 3 S.C.R.
A the non-eligible Annexure-B and placed it into Annexure-C
amongst the eligible industries. It classified the cement units
for eligibility of tax exemption into three categories: small,
medium and large. The said categories are comprehensive
whereby small and medium cement units have been prescribed
B to have maximum FCls of Rs.60/- lakhs and Rs.5/- crores,
respectively and large to be over the FCI of Rs.5/- crores. The
maximum ceiling for large cement units has been purposefully
left open and thereby reflects that the intention clearly is to
provide for an all-inclusive provision for new cement units so
c as to avoid any ambiguity in determination of appropriate
provision for applicability to new cement units to seek
exemption.
44. It leaves no doubt that what is specific has to be seen
in contradistinction with the other items/entries. The provision
0 more specific than the other on the same subject would prevail.
Here it is subject specific item and therefore as against items
1, 4, 6 and 7, which deal with units of all industries and not only
cement, item 1E restricted to only cement units would be a
specific and special entry and thus would override the general
E provision.
45. The proposition put forth by the respondent-Company
that the construction which is most beneficial to the assessee
must be applied and adopted fails to impress upon us its
F application in this case. Howsoever, it is true that the canons
of construction must be applied to extract most beneficial re-
conciliation of provisions. In case of fiscal statute dealing with
exemption, it would require interpretation benefiting the
assessee. But here the introduction of the subject specific entry
G vide amendment into general scheme of exemption speaks
volumes in respect of intention of the legislature to restrict the
benefit to cement industries as available only under Item 1E,
which categorically classified them into three as per their FCI.
The specific entries being mutually exclusive have been placed
H so systematically arranged and classified in the Scheme. The
COMMERCIAL TAX OFFICER, RAJASTHAN v. MIS 33
BINANI CEMENT LTD. & ANR. [H.L. DATTU, J.]
construction of provisions must not be divorced from the object A
of introduction of subject specific provision while retaining other
generalized provision that now specifically exclude the new
cement industries, which could otherwise fall into its ambit, lest
such interpretation would be not ab absurdo (i.e., interpretation
avoiding absurd results). B
46. Therefore, in our considered view the respondent-
Company would only be eligible for grant of exemption under
Item 1E as a large new cement unit in accordance with its FCI
being above Rs.5/- crores. In light of the aforesaid, we are of C
the considered opinion that the judgment and order passed by
the High Court ought to be set aside and the appeals of the
Revenue requires to be allowed.
47. In the result, the appeal is allowed and the judgment
and order passed by the High Court is set aside. No order as D
to costs.
D.G. Appeal allowed.
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