AI Drafter 
TaxTMI 
TaxTMI 
1999 (7) TMI 645
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....n 4-A of the U.P. Sales Tax Act, 1948 (now "the U.P. Trade Tax Act") providing exemption from sales tax to new units. It was under the Government order that the petitioner applied for and was granted an eligibility certificate by the Divisional Level Committee granting it exemption from the sales tax for a period of five years with effect from January 9, 1983. The period of exemption expired on the January 8, 1988. Under section 4-A(3) the Commissioner has the power to cancel or amend the eligibility certificate. The said provision of law stands as under: "(3) Where the Commissioner of Sales Tax is of the opinion that the facility of exemption from, or reduction in the rate of tax obtained on the basis of an eligibility certificate referred to in clause (d) of sub-section (1) or on the basis of any eligibility certificate issued under any executive orders of the Government issued before or after September 13, 1985 has been misused in any manner whatsoever or that the new unit has committed breach of any of the conditions, subject to which the facility of exemption from, or reduction in the rate of tax was granted or that the new unit to which the eligibility certificate has been....
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....e exemption under section 4-B and for that reason also, the exemption could not be withdrawn. These contentions were not accepted and the Commissioner in exercise of powers under section 4-A(3) ordered that the eligibility certificate would be effective only up to August 26, 1984 and the exemption could not be available for any period thereafter. The revisionist appealed to the Tribunal but without any success. 5.. A perusal of the provisions of sub-section (3) would show that the power conferred on the Commissioner to cancel or amend the eligibility certificate is discretionary. This being a statutory power, that can adversely affect a taxpayer, the discretion has to be exercised judiciously and the facts of this case would show that the Commissioner's action is thoroughly injudicious and arbitrary. 6.. As stated above, in this case the dealer was subjected to the same exercise by the Commissioner that ended in favour of the dealer by an order passed on July 10, 1989, i.e., much after the issuance of the Government order dated August 27, 1984 which has been made the basis of the present action. If at all the ground of the revisionist having availed the benefit of section 4-B....
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....they can woke up any time and can harass any and every dealer by looking into past records and finding some cause, good, bad or indifferent, for initiation of any action like this. The present case is also one of such cases. An earlier proceedings terminated in favour of the revisionist and yet the department after several years chose to find out another ground of action which is nothing but a mala fide exercise of discretion. In Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211; [1972] 83 ITR 26, the honourable Supreme Court held that whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of the relevant circumstances and the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or a venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. The ratio of the aforesaid case applies to all actions which adversely affect the other side and where the authority concerned has that discreti....
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....order dated December 31, 1976 will have to opt whether they would avail the exemption on the purchase of raw materials, etc., or on the sale of manufactured goods. It is admitted that atta, maida and suji which the dealer-revisionist was manufacturing, was not an item mentioned in annexure 3 and, therefore, the revisionist could avail the benefit under section 4-B as well as under section 4-A and the eligibility certificate was accordingly granted to the revisionist knowing fully well that it had a recognition certificate as well under section 4-B. The requirement of opting out of the exemption under section 4-B came vide Government Order No. 6468 dated August 27, 1984. A copy of this Government order has been placed before me and there is nothing therein that this Government order affected the exemption already granted to industrial units in terms of the Government Order No. 8244 dated September 30, 1982. In fact the Government order dated August 27, 1984 does not refer to the Government order dated September 30, 1982. Therefore at the most what the Government order dated August 27, 1984 provided was that in respect of the pending applications for exemption under section 4-A a new....