2004 (11) TMI 550 - HC - VAT and Sales Tax

High Court overturns Tribunal decision on recognition certificate & exemption eligibility for flour mill

The High Court set aside the Tribunal's decision in a case involving a recognition certificate and full exemption eligibility for a flour mill. The Court ... - Issues Involved:1. Retrospective Effect of Recognition Certificate2. Full Exemption Eligibility for Flour MillIssue-Wise Detailed Analysis:1. Retrospective Effect of Recognition Certificate:The dealer applied for a recognition certificate under section 4B of the U.P. Sales Tax Act, 1948 on February 23, 1991, which was granted with effect from the same date. The dealer later sought the exemption for previous assessment years (1988-89, 1989-90, and 1990-91), which was rejected. Upon further application on June 24, 1991, the Sales Tax Officer rejected the request for retrospective effect, stating that exemptions could not be granted retroactively under the Act. The Tribunal, however, directed the recognition certificate to be granted with retrospective effect from 1988-89, citing a mistake by the dealer's counsel.The High Court found this view erroneous, referencing Rule 25A(5), which stipulates that the recognition certificate takes effect from the date of application presentation and not retroactively. The Tribunal's decision to grant retrospective effect was thus contrary to the provisions of the Act and was set aside.2. Full Exemption Eligibility for Flour Mill:The dealer's mill was not a roller flour mill but employed a similar manufacturing process. The Sales Tax Officer and the first appellate authority denied full exemption, asserting that full exemption was reserved for roller flour mills manufacturing atta, maida, and suji from wheat purchased from the Food Corporation of India, as per Notification No. ST-II4519-X dated August 29, 1987. The Tribunal, however, granted full exemption, reasoning that the manufacturing process was similar to that of a roller flour mill.The High Court scrutinized the notification, which specified full exemption only for roller flour mills. It emphasized that the essential component of a roller flour mill is the use of rollers for grinding, which was not evidenced in the dealer's mill. The Court cited the principle from the apex court ruling in Commissioner of Income-tax v. Keshavlal Lallubhai Patel, stressing that in a taxing Act, one must look at what is clearly stated without room for intendment or presumption. The Tribunal's decision to grant full exemption based on the similarity of the manufacturing process was deemed erroneous and was overturned.Conclusion:The High Court allowed the revision, setting aside the Tribunal's order. It concluded that the dealer was not entitled to retrospective effect for the recognition certificate and that full exemption was not applicable to the dealer's mill as it was not a roller flour mill per the specific notification requirements.