*State of Gujarat Vs Arcelor Mittal Nippon Steel India Limited*
*Forum-Supreme Court of India*
*Date-21st January 2022*

*Sub-Whether exemption for payment of purchase tax on purchase of Naptha and Natural gas to be used by Steel making unit can be allowed even when the said raw materials are used not directly but indirectly.*

The Supreme Court of India in this case was dealing with interpretation of an exemption notification issued under the Gujarat Sales tax Act 1969 whereby the respondent in this case was allowed exemption from purchase tax on fulfilment of certain conditions as per the Notification which interalia provided that the purchases so made must be utilised by the eligible entity itself and the exemption was specifically denied to power producing entities. The respondent in this case which was earlier known as Essar Steels Ltd after purchasing Naptha and natural gas sold them to Essar Power ltd which utilised these raw materials for producing power which was supplied to ESL and on these facts the department denied the exemption on account of violation of the conditions of the notification. The Supreme Court allowing the appeal of State of Gujarat held that While the exemption notification should be liberally construed, beneficiary must fall within the ambit of the exemption and fulfill the conditions thereof. In case such conditions are not fulfilled, the issue of application of the notification does not arise. It is settled law that the notification has to be read as a whole.

If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. An exception and/or an exempting provision in a taxing statute should be construed strictly and it is not open to the court to ignore the conditions prescribed in industrial policy and the exemption notifications. The exemption notification should be strictly construed and given meaning according to legislative intendment. The Statutory provisions providing for exemption have to be interpreted in the light of the words employed in them and there cannot be any addition or subtraction from the statutory provisions.

The Supreme Court also turned down the arguments relating to promissory estoppel by observing that the rules of promissory estoppel and estoppel by conduct may not be applied to alter or amend the specific terms and against statutory provisions. All the terms and conditions contained in the exemption notification shall prevail and the person claiming the exemption has to fulfil and satisfy all the eligibility criteria/conditions mentioned in the exemption notification.

*This judgement is another judgement on interpretation of exemption notification and will be helpful in all exemption interpretation related matters.*

Ramesh Patodia
21-01-2022