Transformer cost excluded from plant and machinery investment, making eligibility certificate cancellations unsustainable.

Eligibility for certificates under rule 3(66) of the Bengal Sales Tax Rules turned on whether transformers installed by the assessees formed part of the investment in plant and machinery. The Tribunal, applying earlier decisions and the electricity board's requirement that the units install their own step-down transformers and related equipment, held that the transformers were not includible in that computation. Once excluded, the investment fell below the prescribed limit, so cancellation of the eligibility certificates and renewals could not be sustained.

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Issues: Whether all transformers installed by the assessees were to be excluded from the computation of investment on plant and machinery for the purpose of eligibility under rule 3(66) of the Bengal Sales Tax Rules, 1941.

Analysis: The applications concerned eligibility certificates granted under rule 3(66), which empowered cancellation for good and sufficient reasons. The decisive question was whether the cost of the transformers had to be included in the investment on plant and machinery. Relying on earlier Tribunal decisions and the electricity board's requirement that the units install their own step-down transformers and related equipment for use of the power supply, the Tribunal held that the transformers were not to be included in the plant and machinery computation. Once all the transformers were excluded, the investment fell below the prescribed limit, and the impugned cancellation orders could not be sustained.

Conclusion: The transformers were required to be excluded from the computation of investment on plant and machinery, and the cancellation of the eligibility certificates and renewals was unsustainable. The issue is decided in favour of the assessees.

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