1993 (4) TMI 301 - AT - VAT and Sales Tax

West Bengal Tax Tribunal restores eligibility certificates to companies, excludes transformers from investment calculation

Sarvopari Steel Pvt. Ltd. and Others Versus Commercial Tax Officer, Monohar Katra Charge and Others

Sarvopari Steel Pvt. Ltd. and Others Versus Commercial Tax Officer, Monohar Katra Charge and Others - [1999] 116 STC 297 (WBTT) Issues:Whether certain equipment should be considered as part of plant and machinery for the purpose of exemption under rule 3(66) of the Bengal Sales Tax Rules, 1941.Detailed Analysis:1. Background of the Cases:The cases RN-187 and RN-188 involved challenges to the eligibility certificates and renewals granted to two companies, Sarvopari Steel Pvt. Ltd. and Refine Special Steel Pvt. Ltd., respectively. The companies were involved in manufacturing alloy steel castings and ingots for sale, claiming exemption from sales tax based on representations made by the Government of West Bengal.2. Legal Arguments:The applicants contended that the authorities erred in including certain equipment like transformers, cranes, and cooling systems in the calculation of investment on plant and machinery under rule 3(66). They argued that these items should not be considered as part of plant and machinery for the purpose of the exemption.3. Judicial Review:The Tribunal refrained from delving into the constitutional validity of clause (iii) of rule 3(66) under Article 14 of the Indian Constitution, as it was deemed unnecessary for the resolution of the cases at hand.4. Exclusion of Transformers from Calculation:The Tribunal analyzed the exclusion of transformers from the calculation of investment on plant and machinery. Citing precedents and guidelines, the Tribunal held that the cost of transformers should be excluded from the computation, as they were necessary for power utilization in the manufacturing process. By excluding the transformers, the total investment in plant and machinery fell below the prescribed limit of Rs. 35 lakhs in both cases.5. Decision and Outcome:Based on the exclusion of transformers alone being sufficient to resolve the cases effectively, the Tribunal did not delve into the exclusion of cranes and cooling systems from the investment calculation. Consequently, the Tribunal allowed the applications in RN-187 and RN-188, setting aside the impugned orders and restoring the eligibility certificates and renewals granted to the applicants.6. Conclusion:The Tribunal's decision to exclude transformers from the calculation of investment on plant and machinery proved pivotal in favor of the applicants, leading to the restoration of their eligibility certificates and renewals. The cases were resolved without imposing any costs on the parties involved.This detailed analysis encapsulates the key legal issues, arguments, judicial review, decision, and outcome of the judgment delivered by the Appellate Tribunal West Bengal Taxation Tribunal.