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of <h1>Tax Tribunal Upholds Rejection of Eligibility Certificate Application</h1> <h3>Ponney Footwears Limited Versus Assistant Commissioner, Commercial Taxes, Special Cell and others</h3> Ponney Footwears Limited Versus Assistant Commissioner, Commercial Taxes, Special Cell and others - [1999] 112 STC 57 (WBTT) Issues:- Challenge to the order refusing to grant eligibility certificate (E.C.) under West Bengal Taxation Tribunal Act, 1987.- Rejection of E.C. application based on financial viability and cessation of production.- Interpretation of the provisions of section 10F of the Bengal Finance (Sales Tax) Act, 1941.- Consideration of subsequent events in the decision-making process for granting E.C.Analysis:1. The case involves an application challenging the refusal to grant an eligibility certificate (E.C.) under the West Bengal Taxation Tribunal Act, 1987. The applicant, a private limited company, established a small-scale industrial unit for manufacturing footwears and applied for deferment of tax payment under section 10-F of the Bengal Finance (Sales Tax) Act, 1941. The refusal was based on the cessation of production in the factory and financial viability concerns.2. The respondent argued that financial viability is a crucial factor in deciding the grant of an E.C. under section 10F. The complete stoppage of production in the factory and failure to fulfill obligations to the lender bank indicated the applicant's inability to survive as an industrial unit. The respondent contended that the State's right to collect deferred tax post the eligible period necessitates consideration of the unit's financial viability.3. The applicant denied the allegations and sought quashing of the impugned orders. The key issues revolved around whether financial viability could be a ground for rejecting an E.C. under section 10F and if subsequent events could be considered in the decision-making process.4. The Tribunal analyzed the distinction between two types of E.C.: one providing total tax exemption for a specified period and the other allowing deferment of tax payment. The latter scheme under section 10F involves the State's interest in ensuring the payment of deferred tax post the eligible period, making financial viability a relevant factor.5. The Tribunal concluded that the financial viability of the industrial unit post the eligible period is crucial in granting the privilege of tax deferment. The applicant's failure to pay loan instalments, resulting in production stoppage, indicated a lack of viability. The Tribunal upheld the rejection of the E.C. application based on the unit's uncertain future and remote possibility of tax realization.6. The Tribunal dismissed the application, emphasizing the importance of financial viability in the context of tax deferment schemes. The decision highlighted the State's interest in ensuring tax payment post the eligible period and rejected the plea for stay of operation of the judgment.7. The judgment was delivered by the Tribunal consisting of RAY L.N., GUPTA J., and KAR GUPTA M.K. The application challenging the refusal to grant E.C. was dismissed with no order as to costs, and the tax assessed for specific periods was directed not to be realized for a limited period.
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