Fixed-capital-investment exemption continues under successor VAT law, supporting entitlement to a certificate and remand for reconsideration.

An industrial unit whose exemption under the repealed Uttar Pradesh Trade Tax Act was linked to fixed capital investment could rely on the saving provision in section 81(1)(b) of the Uttar Pradesh Value Added Tax Act to seek continuation of that benefit. Section 42(3)(a) was read to cover units enjoying exemption or tax reduction under the earlier law or a notification issued under it, so rejection of the application for a certificate of entitlement on non-maintainability was not sustainable. The Tribunal's order was set aside and the matter remanded for fresh decision on entitlement.

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Issues: Whether the assessee was entitled to a certificate of entitlement under section 42(3)(a) of the Uttar Pradesh Value Added Tax Act on the basis that its exemption under section 4A of the Uttar Pradesh Trade Tax Act was linked to fixed capital investment, and whether the benefit of exemption continued under section 81(1)(b).

Analysis: The exemption granted to the industrial unit was founded on fixed capital investment and was traceable to the notification issued under section 4A of the Uttar Pradesh Trade Tax Act. Section 42(3)(a) of the Uttar Pradesh Value Added Tax Act covers industrial units enjoying exemption or reduction of tax where the facility is based on fixed capital investment under the erstwhile enactment or a notification issued thereunder. Section 81(1)(b) also preserved accrued rights and entitled units enjoying exemption under section 4A of the repealed enactment to claim continuation in accordance with section 42. The rejection of the application for certificate of entitlement on the ground of non-maintainability was therefore not sustainable.

Conclusion: The assessee was entitled to consideration for a certificate of entitlement under section 42(3)(a), and the benefit of exemption continued under section 81(1)(b); the Tribunal's order was set aside and the matter remanded for fresh decision.

Ratio Decidendi: Where an exemption under the repealed trade tax law is based on fixed capital investment and is preserved by the saving provision, the successor value added tax regime must recognize entitlement to continuation of that benefit under the corresponding certificate provisions.

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