2009 (4) TMI 892 - HC - VAT and Sales Tax

High Court grants exemption to assessee in manufacturing case, sets aside Tribunal's order

The High Court ruled in favor of the assessee in a case involving exemption under a 1991 notification for a manufacturing unit in Mathura. The Court held ... Grant of an exemption under notification dated July 27, 1991 rejected - Held that:- The facts, which emerge from the material on record are that the assessee had purchased land for setting up of a new unit in the year 1993. He had completed the construction in the year 1994. The assessee had also applied for the power connection, which had been granted to him but had not been fixed. It is also clear from the record that the assessee had indeed purchased the til oil for ₹ 2,68,800. On March 27, 1995 generators were found at the site, even by the survey report dated April 26, 1995. The fact that the generators were found at the site is also evident from the certificate dated March 29, 1995 issued by the Assistant Director, Electricity Safety Department, U.P. Government, Mathura. Thus clearly the assessee has been able to establish his case that the 'date of production' as stated was prior to March 31, 1995. The provisions of section 4A, Explanation (3) thus stood satisfied by the assessee. Thus the view as taken by the Tribunal with regard to the 'actual date of production ' is clearly a mistaken view and deserves to be struck down and the assessee is entitled to the benefit of Notification No. 1093 dated July 27, 1991. Revision allowed. Issues:1. Grant of exemption under notification dated July 27, 1991.2. Eligibility for eligibility certificate under section 4A of the U.P. Trade Tax Act.3. Interpretation of 'date of starting production' under section 4A.4. Justification of overlooking the certificate of the Asstt. Director.5. Error in dismissing the appeal by overlooking written arguments.6. Legality of the order passed by the Trade Tax Tribunal.Analysis:Issue 1 - Grant of Exemption under Notification:The assessee sought exemption under a notification dated July 27, 1991, for setting up a new manufacturing unit in Mathura. The Tribunal rejected the case for exemption, citing a subsequent notification dated March 31, 1995, placing vanaspati manufacturing units in the negative list. The High Court held that the assessee was entitled to the benefit of the July 27, 1991 notification as it had made investments and started production before the cutoff date of March 31, 1995.Issue 2 - Eligibility Certificate under Section 4A:The assessee contended that it fulfilled the criteria for an eligibility certificate under section 4A of the U.P. Trade Tax Act. The High Court found that the assessee had purchased land, constructed the building, acquired raw materials, and installed generators before the specified date, meeting the requirements for the eligibility certificate.Issue 3 - Interpretation of 'Date of Starting Production':The dispute revolved around the interpretation of the 'date of starting production' as defined in Explanation (3) to section 4A of the Act. The High Court emphasized that the artificial date of production should be considered, based on when raw materials were purchased and power supply was obtained. The Court ruled in favor of the assessee, stating that production had commenced before the deadline, entitling them to the benefits under the notification.Issue 4 - Oversight of Certificate by Asstt. Director:The Tribunal was criticized for overlooking the certificate issued by the Assistant Director, Electricity Safety Department, confirming the installation of generators before the cutoff date. The High Court considered this oversight as a crucial error in the Tribunal's decision-making process.Issue 5 - Error in Dismissing Appeal:The Tribunal's dismissal of the appeal without considering the written arguments and supporting documents filed by the assessee was highlighted as a legal error. The High Court emphasized the importance of reviewing all relevant evidence and arguments before making a decision.Issue 6 - Legality of Tribunal's Order:The High Court deemed the Tribunal's order as arbitrary and illegal, emphasizing that the Tribunal had misinterpreted the 'date of production' and failed to consider the material evidence presented. Consequently, the High Court set aside the Tribunal's order and directed the issuance of an eligibility certificate to the assessee, granting them the benefits under the notification.In conclusion, the High Court's judgment favored the assessee, recognizing their compliance with the statutory requirements and entitlement to the benefits under the relevant notification and trade tax provisions.