Essar Oil Loses Huge Case in Supreme Court - Taxing Statute to be construed liberally while exemptions to be interpreted strictly
ESSAR was encouraged by the State Government to set up a major venture at Vadinar in Jamnagar District of Gujarat as a 100% export oriented unit for refining of petroleum products with a capacity of 9 Million Tons per annum at an estimated project cost of Rs. 1900 crores. It all started in 1990 and the project was embroiled in court cases and delays due to various reasons. The State Government had promised a sales tax deferment scheme. They had to lay a pipeline through a National Park, which was objected to by environmentalists, and there were several PILs in the High Court. As per the Scheme Essar was to start commercial production by 15.08.2003, but it could do so only on 26.11.2006 and the State Government refused to extend the due date. The case finally reached the Supreme Court.
The Supreme Court observed,
++ It is well known that due diligence must be exhibited by the party to seek equity.
++ In case of ambiguity, a taxing statute should be construed in favour of the assessee, does not apply to the construction of an exception or an exempting provision, as the same have to be construed strictly.
++ A person invoking an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision and in case of doubt or ambiguity, benefit of it must go to the State.
++ There is no question of equity here; an exemption is a stand-alone process.
++ Either an industry claiming exemption comes within it or it does not.
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