Mangalore Chemicals & Fertilizers Ltd. vs. Dy. Commissioner of Commercial Taxes & Ors.

Mangalore Chemicals & Fertilizers Ltd. vs. Dy. Commissioner of Commercial Taxes & Ors.

1992 Supp (1) SCC 21

Key Words: Substantial, Procedural, Non-compliance, Statutory, Mandatory, Technicalilties


Karnataka State Government issued a notification (1969) in order to provide certain incentives to entrepreneurs starting new industries in the State. The notification contained a package of reliefs and incentives including one concerning relief from payment of sales tax. This was followed by a further notification (1975) which modified certain procedures for effectuating the reliefs contemplated earlier.

Appellant had the necessary eligibility under the first notification and was entitled to the benefit of these adjustments. The only controversy was whether the appellant, not having actually secured the “prior permission”, as required by the second notification, would be entitled to adjustment of tax. The grant of permission was pending on account of certain outstanding inter-departmental issues.


It was contended that second notification was statutory in character and the condition as to ‘prior-permission’ for adjustment stipulated therein must also be held to be statutory.


Finding the fallacy in the above mentioned contention, the Court observed at para 20 that-

“The consequence which Shri Narasimha Murthy suggests should flow from the non-compliance would, indeed, be the result if the condition was a substantive one and one fundamental to the policy underlying the exemption. Its stringency and mandatory nature must be justified by the purpose intended to be served. The mere fact that it is statutory does not matter one way or the other. There are conditions and conditions. Some may be substantive, mandatory and based on considerations of policy and some others may merely belong to the area of procedure. It will be erroneous to attach equal importance to the non-observance of all conditions irrespective of the purposes they were intended to serve.”

The Court observed that the main exemption was under the 1969 notification and the subsequent notification which contained condition of prior-permission only envisaged a procedure to give effect to the original exemption. In its own words, it said at Para 22-

“A distinction between the provisions of statute which are of substantive character and were built-in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly distinguished. What we have here is a pure technicality.”

The Court further noted that the notification left no discretion to the Deputy Commissioner to refuse the permission if the conditions are satisfied. The appellant had satisfied these conditions and yet the permission was withheld-not for any valid and substantial reason but owing to certain extraneous things concerning some inter-depart-mental issues.

The Court referred to what Francis Bennion said in “Statutory Interpretation”, 1984 edition, at page 683-

“Unnecessary technicality: Modern courts seek to cut down technicalities attendant upon a statutory procedure where these cannot be shown to be necessary to the fulfilment of the purposes of the legislation.”

The Court accordingly concluded that the view taken by the High Court did not acknowledge the essential distinction between what was a matter of form and what was one of substance. A permission of this nature was a technical requirement and could be issued making it operative from the time it was applied for.


  • Appeal allowed.
  • Unnecessary procedural technicalities need not be complied with if it is not necessary to the fulfilment of the purposes of the legislation. 

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