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of <h1>Tribunal denies tax exemption over brand name violation in partnership firm application</h1> The Tribunal upheld the rejection of the eligibility certificate for tax exemption sought by a partnership firm due to the use of brand names from an ... - Issues Involved:1. Eligibility certificate rejection.2. Use of brand names from an existing industrial unit.3. Procedural fairness and natural justice.4. Delay in processing the eligibility certificate.Detailed Analysis:1. Eligibility Certificate Rejection:The applicants, a partnership firm, sought an eligibility certificate for tax exemption under Notification No. 1177-F.T. dated March 31, 1983. The Assistant Commissioner rejected their application on August 13, 1991, on grounds that the unit was 'acting as an extension counter' of Messrs. Eversharp Blades (P) Ltd. and had violated conditions by using brand names of the existing industrial unit. The Additional Commissioner upheld this decision on April 7, 1992, noting the violation of the tax-holiday scheme stipulation regarding the use of trade marks or brand names of an existing industrial unit.2. Use of Brand Names from an Existing Industrial Unit:The applicants used the brand names 'Panna' and 'Oasis' assigned by Messrs. Eversharp Blades (P) Ltd., and continued using 'Raja' without formal assignment. The Assistant Commissioner concluded that this violated clause (vi) of the notification, which prohibits the use of trade marks or brand names of any product of an existing industrial unit. The Tribunal found that the use of the brand name 'Raja' indeed violated the tax-holiday scheme and rejected the argument that this clause was merely directory and not mandatory.3. Procedural Fairness and Natural Justice:The applicants argued that there was a denial of natural justice as the Assistant Commissioner relied on enquiry reports without giving them an opportunity to respond. However, it was noted that the applicants were informed of the enquiry findings and had an opportunity to respond in their letter dated July 5, 1991. The Tribunal emphasized that a quasi-judicial order must stand on its own reasoning and cannot be supplemented by new facts or reasons at the counter-affidavit stage.4. Delay in Processing the Eligibility Certificate:The applicants claimed that the delay in processing their application caused them prejudice as they could not collect sales tax during the relevant period. The Tribunal acknowledged the delay but found it not inordinate given the detailed enquiries required. It concluded that the delay did not warrant granting the eligibility certificate, especially since a vital condition of the tax exemption scheme was not met.Conclusion:The Tribunal dismissed the application, agreeing with the Additional Commissioner's order that the use of the brand name 'Raja' violated clause (vi) of the notification. The plea of delay was also rejected, as the delay was not deemed inordinate under the circumstances. The interim order was vacated, and the application was dismissed without any order for costs.
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