Generator and electrical installation costs excluded from plant and machinery investment for eligibility certificate renewal

For renewal of an eligibility certificate under rule 3(66) of the Bengal Sales Tax Rules, the cost of a generator and electrical installation was not to be included in investment on plant and machinery. Earlier tribunal and High Court authority was applied to hold that those items fall outside the relevant investment base for eligibility-certificate purposes. The authorities below therefore erred in counting them while considering renewal. The rejection orders were set aside, and the matter was remanded for fresh consideration after excluding those costs, with the remaining requirements of rule 3(66) to be examined by the assessing authority.

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Issues: Whether, for the purpose of renewal of an eligibility certificate under rule 3(66) of the Bengal Sales Tax Rules, 1941, the cost of generator and electrical installation was to be included in the investment on plant and machinery.

Analysis: The relevant rule was applied in the light of earlier tribunal and High Court authority holding that the cost of a generator and the cost of installation are not to be treated as part of investment on plant and machinery for eligibility-certificate purposes. On that basis, the authorities below erred in counting those items while examining the renewal application. At the same time, compliance with the remaining requirements of rule 3(66) was left to be examined by the assessing authority on remand.

Conclusion: The inclusion of the cost of generator and electrical installation in investment on plant and machinery was in law, and the rejection orders were set aside with a remand for fresh decision after excluding those items.

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