TaxTMI 
TaxTMI 
TaxTMI 
1996 (1) TMI 409
X X X X Extracts X X X X
X X X X Extracts X X X X
....lywood at Usti Road, Village-Kakura, P.O. Masat, Diamond Harbour, 24-Parganas (South). The applicant is duly registered as a small-scale industrial unit with the Directorate of Cottage and Small-scale Industries, Government of West Bengal. The applicant's production started from March 30, 1990 and the first sale was made on March 31, 1990. The applicant prayed for grant of an eligibility certificate under rule 3(66a) of the Rules, for the period from March 31, 1990 to March 30, 1991. The applicant's prayer for grant of eligibility certificate for the period from March 31, 1990 to March 30, 1991 was rejected by respondents Nos. 2 and 3. Thereafter the applicant had moved an application in this Tribunal against the said order of rejection. The applicant's application was allowed and pursuant to the judgment* of this Tribunal respondent No. 2 issued an eligibility certificate to the applicant for the period from March 31, 1990 to March 30, 1991. For the purpose of manufacturing plywood, machineries were purchased by the applicant before starting the first production and those machineries were duly reflected in the books of accounts and the balance sheet of the applicant. During the fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ertificate and he confirmed the order dated October 5, 1994 passed by respondent No. 2. Respondent No. 3 rejected *See Emkay Investments (Pvt.) Ltd v. C.T.O. [1995] 96 STC 379 (W.B.T.T.) the applicant's prayer on the ground that the applicant has sold capital assets otherwise than in the ordinary course of business. The impugned orders dated October 5, 1994 and March 13, 1995 are bad, illegal and arbitrary and without any application of mind. The applicant did not sell any plant and machinery used for manufacturing plywood for which exemption was sought for. The machines which were sold were not used and could not be used for manufacturing plywood. The machines were bought for making research for manufacturing particle board. But since the project for manufacturing particle board was not successful, those were sold on March 16, 1992. The applicant had never any business in manufacturing particle board for which the machines were required. The business of the applicant was confined to manufacturing plywood and the machines required for manufacturing plywood were not sold by the applicant. The machines which were sold on March 16, 1992 might have been shown in the balance sheet, but ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... so those machines were sold. Such sale should be treated as sale in the ordinary course of business. The project report for the business of manufacturing plywood does not show the disputed machines. 5.. There is no dispute that the applicant Emkay Investments Private Ltd. is a dealer registered under the Bengal Finance (Sales Tax) Act, 1941. There is also no dispute that it was carrying on business of manufacturing plywood. An eligibility certificate under rule 3(66a) of the Rules was granted in favour of the applicant for the period from March 31, 1990 to March 30, 1991. There is also no dispute that the applicant sold away two machines, viz. (1) one old and used 4' x 3' double deck vibrating screen completely steel fabricated for screen dust and (2) one old and used "Premur" make disintegrator 500 kgs. per hour capacity with hammer knife type batter. Annexure "E", page 59 of the application would show that those two machines were sold away by the applicant on March 16, 1992. The applicant has prayed for renewal of eligibility certificate for the period from March 31, 1991 to March 30, 1992. The sale of the machines was obviously done within the period for which the renewal was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te, Mr. Asit Chakraborty has drawn our attention to a certificate by a chartered engineer and project report (annexure "G", pages 63 to 80 of the application) and has contended that from the report of the chartered engineer it would be evident that the two machines, namely, disintegrator and vibrator were acquired by the applicant to produce particle board as a by-product from the wastes coming out from the manufacture of plywood. Mr. Chakraborty has also pointed out that the project report for manufacturing plywood does not include the two machines. The applicant had filed the project report as well as the chartered engineer's certificate in support of his contention before respondent No. 3. Mr. Chakraborty has further contended that the rejection of the chartered engineer's report by respondent No. 3 "as an afterthought" is not justified on appreciation of the facts of the case. Mr. J.K. Goswami, learned State Representative, has drawn our attention to the balance sheet filed by the applicant and has contended that it would appear from the said balance sheet as on March 31, 1991 (annexure "C", page 41) that the two machines, viz., waste veneer disintegrator and dust extractor are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isintegrator wherein the price shown is Rs. 40,800. It also shows concessional rate of sales tax. Mr. Goswami has rightly pointed out that the applicant as a dealer purchased that machine at concessional rate of tax as a dealer for manufacturing plywood. The machine, namely, waste veneer disintegrator with its price at Rs. 40,800 has been shown in the balance sheet as on 31st March, 1991 and also in the list of additions to plant and machinery from April 1, 1990 to March 31, 1991 at the same price. Applicant's learned Advocate, Mr. Chakraborty has contended that the machines appeared to be a burden and so those were sold away. Mr. Goswami has pointed out that the machines were not sold away for its malfunctioning or because those were obsolete. He has contended that the machines were sold as capital assets otherwise than in the ordinary course of business. 9.. Applicant's learned Advocate, Mr. Chakraborty has pointed out that of the two machines sold on March 16, 1992 one is old and used "Premur" disintegrator and the other is old and used double deck vibration screen for screen dust. While the "Premur" disintegrator was purchased on January 27, 1991, the other machine, namely, do....