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of <h1>Court dismisses writ petitions on tax exemptions for paper manufacturers.</h1> <h3>M/s Rana Papers Limited Thru´ Director Noor Salim Rana Versus The State of UP. & Others</h3> M/s Rana Papers Limited Thru´ Director Noor Salim Rana Versus The State of UP. & Others - TMI, [2013] 60 VST 407 (All) Issues Involved:1. Quashing of Circular dated 7.9.2006.2. Restraining Deputy Commissioner from realizing State Development Tax.3. Quashing Notices dated 6.10.2006 and 11.12.2006.4. Entitlement to Rebate on Trade Tax and Exemption from State Development Tax.Issue-wise Detailed Analysis:1. Quashing of Circular dated 7.9.2006:The petitioners, manufacturers of paper for packing purposes, sought to quash the circular dated 7.9.2006 issued by the Commissioner of Trade Tax, U.P. Lucknow. The petitioners argued that this circular was inconsistent with the provisions of the U.P. Tax on Entry of Goods Act 2000 and the subsequent notifications that allowed rebates on Trade Tax to the extent of the Entry Tax paid.2. Restraining Deputy Commissioner from Realizing State Development Tax:The petitioners requested a writ of mandamus or prohibition to restrain the Deputy Commissioner (Assessment) Trade Tax, Muzaffarnagar, from taking any action for the realization of State Development Tax for the period April 2006 to November 2006. They argued that since they were entitled to a rebate on Trade Tax equivalent to the Entry Tax paid, they should not be liable for the State Development Tax.3. Quashing Notices dated 6.10.2006 and 11.12.2006:The petitioners sought to quash the notices dated 6.10.2006 and 11.12.2006 for the assessment year 2006-07, which demanded State Development Tax for the period April 2006 to November 2006. They contended that these notices were issued without considering the rebate provisions under the relevant notifications.4. Entitlement to Rebate on Trade Tax and Exemption from State Development Tax:The core issue revolved around the interpretation of the notifications dated 7.3.2005 and 28.04.2005. The petitioners argued that they were entitled to a rebate on Trade Tax to the extent of the Entry Tax paid, which was 5%. They relied on the notification dated 7.3.2005, which allowed such a rebate, and the notification dated 28.04.2005, which exempted goods from State Development Tax if the Trade Tax rebate was allowed to the full extent.The court examined the relevant notifications and legal principles, including the strict interpretation of exemption notifications. It was noted that the notification dated 7.3.2005 provided a rebate to the extent of the amount of tax paid by the dealer, subject to certain conditions. The notification dated 28.04.2005 exempted goods from State Development Tax if the Trade Tax rebate was allowed to the full extent.The court emphasized that exemption notifications must be strictly construed. The term 'to the full extent' in the notification dated 28.04.2005 was interpreted to mean that the rebate must cover the entire amount of Trade Tax paid, not just an equivalent amount of Entry Tax. The court referred to various judgments, including Bhai Jaspal Singh and another Vs. Assistant Commissioner of Commercial Taxes and Others, which highlighted the need for strict interpretation of exemption provisions.The court concluded that the petitioners' interpretation of the notifications was incorrect. The rebate allowed under the notification dated 7.3.2005 did not automatically entitle them to an exemption from State Development Tax under the notification dated 28.04.2005. The claim that the same rate of Entry Tax and Trade Tax should result in an exemption from State Development Tax was not supported by a strict interpretation of the notifications.Conclusion:The court dismissed the writ petitions, holding that the petitioners were not entitled to an exemption from State Development Tax merely because they had received a rebate on Trade Tax equivalent to the Entry Tax paid. The notifications required a strict interpretation, and the conditions for exemption were not met by the petitioners.
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