TaxTMI 
TaxTMI 
2010 (4) TMI 1001
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....registered office at Dhampur, District Bijnore, U.P. It carries out business of manufacturing of sugar, alcohols, molasses, other by-products and paper. It has several units, sugar mills at Dhampur, District Bijnore, Rauzagaon, District Barabanki, Asmoli, District Moradabad, Amosi, District Lucknow and other places. The company has its sales depots and offices at various places. In the year 1991 it opened its Dhampur unit for manufacturing chemicals and thereafter in the year 1993 it opened another unit manufacturing particle board at Agahwanpur in District Moradabad. The company's progress continued. It opened another unit for manufacturing sugar in the year 1993 in Rauzagaon District Barabanki and in the year 1995 it established a unit for manufacturing sugar at Asmoli District Moradabad, U.P. The turnover of sales and purchases of all these sugar mills units are assessed by the assessing officer, trade tax/VAT at Dhampur treating M/s. Dhampur Sugar Mills Ltd., as dealer, as per the provisions of section 7 of the U.P. Trade Tax Act and section 9(2) of the Central Sales Tax Act. The company was issued an industrial licence from the appropriate authority for expand....
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....s dated October 30, 2000 and March 20, 2001. The High Court had directed the concerned authority to issue an eligibility certificate under section 4A for the benefit of tax rebate on all goods manufactured as well as on the waste products. The High Court had further directed reimbursement of amounts paid earlier with interest thereon at nine per cent from the date of deposit. This judgment and order passed by the honourable High Court on May 24, 2002 was challenged by the State Government by filing a Civil Appeal No. 6635 of 2003 (Commissioner of Trade Tax, U.P. v. D.S.M. Group of Industries [2005] 139 STC 269) in the Supreme Court of India. This appeal was disposed of with the directions that the matter be remitted back to the Divisional Level Committee which shall decide the application of the revisionist-company on merits within a period of six months from the date of the judgment of honourable apex court. An interim order was granted indicating that the company could not be said to be treated under arrears of tax till the decision is taken by the Divisional Level Committee. The Divisional Level Committee had dismissed the application of the revisionist on April 22, 2006. The....
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....essment of tax had accepted earlier that the Mansurpur Sugar Mills is branch of the Dhampur Sugar Mills Ltd., and against this acceptance no appeal was filed? (i) Whether the Trade Tax Tribunal is correct in law in ignoring the provisions of section 4A for not allowing the benefit of Mansurpur Sugar Mills against the provision of section 4A(5) of the Act? (j) Whether the respondents were legally right in holding the claim of the Mansurpur Sugar Factory as time-barred? (k) Whether the Divisional Level Committee and the appellate authority erred in rejecting the benefit on additional investment made by the revisionist which has been admitted and certified by the chartered accountant? (l) Whether the certificate issued by the chartered accountant as per clause 5(c) of the notification dated February 21, 1997 could have been ignored? (m) Whether the benefit claimed by the revisionist under the notification dated February 21, 1997 could have been denied despite acceptance of the eligibility for the benefit under the said notification? (n) Whether the Department and the appellate authority was right in applying the case of Kazaria Ceramics [2005] 141 STC 406 (SC) when t....
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....y 17, 2000 finding themselves eligible under Notification Nos. 640 and 641 dated February 21, 1997 for claiming the exemption on the additional fixed capital investment made during the period from December 1, 1994 to March 31, 2000 exceeding the investment of Rs. 50 crores in expansion and diversification had filed their application before the General Manager, District Industry Centre, Bijnore. The application of the revisionist-company was rejected by an order dated October 31, 2000 by the Divisional Level Committee on three grounds, namely: (a) A joint application for multiple units is not permissible under the Rules. (b) The application was time-barred. (c) The company was in arrears of tax for Rs. 1,742.25 lacs. The revisionist filed appeal against the above order before the Trade Tax Tribunal which was rejected by the Trade Tax Tribunal vide its order dated September 20, 2001. The Trade Tax Tribunal while rejecting the appeal held that every unit was a separate unit and a joint application of different factories was not permissible as per conditions mentioned in section 4A of the U.P. Trade Tax Act, 1948 read with Rules framed thereunder. On filing revision ....
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....e said to be in arrears of tax. It further held that the application submitted cannot be treated as time-barred as per section 4A. The honourable Supreme Court further clarified and directed the Divisional Level Committee to determine whether factually there has been any expansion, modernization or diversification and also to determine to what extent the expansion, modernization, modernization after December 1, 1994 and before March 31, 2000 had taken place. Further the General Manager, District Industry Centre, Bijnore, was directed to consider whether clause 3(b) of the notification is applicable and whether the expansion, modernization and diversification now claimed is not in respect of any exemption already claimed on expansion, modernization and diversification which was granted to the company or any of its units earlier in notification of 1991. Further the General Manager, District Industry Centre, Bijnore and Divisional Level Committee was directed to decide the application of the revisionist on the principle of law laid down by the honourable Supreme Court in its order dated December 9, 2004(1) on merit. It had also directed that any information in case needed for....
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....ituted the sub-committee of the Officer of Industries Department as also the Trade Tax Department to submit their "joint inspection report" after verifying and checking the datas submitted by the revisionist for the purposes of benefit claimed by them under notification dated February 21, 1997. The "joint inspection report" was drawn after visiting the factories and was submitted by the District Industry Centre as well as the Trade Tax Department to the Divisional Level Committee. The Divisional Level Committee accepted the "joint inspection report" and passed an order dated March 27, 2006 for issuance of eligibility certificate under section 4A in terms of notification dated February 21, 1997, making this joint inspection report as a part of its order dated March 27, 2006. The Joint Director of Industries communicated the said order in the shape of eligibility certificate vide its order Nos. 189-94 dated April 22, 2006. The revisionist being partly aggrieved by the aforesaid order filed appeal No. 27 of 2006 before the Trade Tax Tribunal, Lucknow. The Trade Tax Tribunal, Lucknow vide its order dated March 26, 2006 passed by the Divisional Level Committee. Miss Pushpila Bi....
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....r 15 years from the date of production of each diversified goods and not from the first date of production of one of the diversified goods. It should have been for ethyl acetate from April 1, 1996 to March 30, 2011, oxalic acid from May 25, 1995 to May 24, 2010, and carbon di-oxide from June 16, 1997 to June 15, 2012 according to section 4A(2) and condition laid down in notification for diversified goods. Further the Divisional Level Committee had wrongly not allowed the benefit to the company as a whole but had allowed amount of benefit to each factory separately and also the amount of benefit of exemption was ascertained on commodity basis. The Divisional Level Committee has also wrongly not granted the benefit of Mansurpur Sugar Mill being registered as the branch of the company situated at Mansurpur District Muzaffarnagar, U.P. The Trade Tax Tribunal while disallowing the benefit of Asmoli as a new unit had given the reasoning that the claim of new unit of Asmoli was not before the Divisional Level Committee in the application submitted by the revisionist, whereas this contention is absolutely incorrect as the benefit of Asmoli as a new unit being established in 1995, was cl....
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....ction (2) of section 4A is it lawful on the part of State Government to allow the benefit on all the goods manufactured by the unit as also in terms of clause (c) of sub-section (2) of section 4A to allow the benefit in respect of those goods only which are manufactured which had undertaken expansion, diversification or modernization on or after April 1, 1990. The notification dated February 21, 1997 in clause (1)(b) also allows the benefit in respect of goods manufactured in a unit which had undertaken expansion, modernization or diversification on or after December 1, 1994 but not later than March 31, 2000 in the areas mentioned in column 2 of annexure to the notification. The chemical division situated in Dhampur District Bijnor is mentioned in the area in column 2 of the annexure to the notification dated February 21, 1997. There is no bar in not allowing the benefit on expansion of alcohol in notification dated February 21, 1997 or in section 4A. Clause (1)(b)(i) read with clause (4A)(2)(c), the additional production in the case of expansion or modernization as a result of such expansion or modernization in excess of base production is eligible for relief of the amount of t....
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....ne and captive power plant. The learned counsel for the revisionist has submitted that Commissioner of Trade Tax v. Kajaria Ceramics Ltd. [2005] 141 STC 406 (SC) is not relevant in the set of circumstances. The honourable Supreme Court in its abovementioned judgment has dealt with the issues and made observations and recorded findings in the judgment which are binding on the respondents. The facts in the revisionist case are entirely different and even the notifications in both the cases are different. The benefit of investment made in Mansurpur Sugar factory was also to be provided to the company. The revisionist has already suffered. It has been litigating for several years seeking its due from the respondents. The company had established a case and as a matter of fact one case see on the site of the mills that the production, milling capacity has been increased during the relevant years, huge additional investment was made by no stretch of imagination. It can be said that the company has not multiplied its operations and increase the production capacity. It is evident from the excise tax returns, details of annual sugar production and other statutory documents and register....
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....bmissions put forth by the learned standing counsel and has led the court to the observations made by the honourable Supreme Court. According to her all these points have already been dealt with and taken note of by the honourable apex court. The same issue cannot be raised. These issues have already been settled. I have heard learned counsel for the parties and perused the record and the judgments rendered by the honourable apex court on December 9, 2004, report of the Divisional Level Committee and the judgment rendered by the Tribunal, impugned in this revision. There appears to be substance in the submissions of learned counsel for the revisionist. In the present case the respondents had admitted that the period of establishing a new unit or undertaking expansion, modernization and diversification for grant of exemption under the terms of notification dated February 21, 1997 was December 1, 1994 to March 31, 2000, both the dates being inclusive. The restrictions imposed in the joint inspection report, which is now a part of the Divisional Level Committee's report and is also a part of Trade Tax Tribunal's order is not proper. It has erroneously restricted the expa....
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....red. Even if production capacity of only the unit/units, in which expansion, modernization or diversification has taken place, is to be taken into account then also it would not show that the entire investment is to be only in one unit. The very fact that this clause is dealing with all the aspects, i.e., expansion, modernization and diversification shows that in most cases they would be in separate units. Further the honourable Supreme Court has decided that undoubtedly the industrial undertaking may diversify in any of the units but it does not mean that it is the unit and not the industrial undertaking which is diversifying. In the company, production has certainly increased by enhancing the crushing capacity. It is the result of modernization, diversification, development and substantial investment. The honourable Supreme Court while considering sub-clause (d) of section 4A(6)(5) expressed its view that clause (d) makes it clear that it is the industrial undertaking and not a unit which is making the additional fixed capital investment. Thus it is the company who has to arrange for the additional fixed capital and deduction of depreciation is not necessary. It is the comp....
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.... effect 'in a particular unit' or 'in one unit' are missing. To accept Mr. Sunil Gupta's submission would require adding words to a notification which the Government purposely omitted to add. Even otherwise, the purpose of notification being to encourage increased production and to give benefit to industries which have invested rupees fifty crore or more in the State and whose production has thus increased, an interpretation must be given which would extend benefit to such industries. There would be no purpose in denying, an industry which has invested rupees fifty crore or more and whose production in the State has as a result increased, the benefit of the exemption granted by this notification merely because the whole of the investment is not in any particular unit. Thus even where the investment is made by the company in more than one units, so long as the total investment is rupees fifty crore or more, the benefit of the notification would be available. Such benefit would then be distributed in the manner set out in the Schedule depending on where a unit in which expansion, diversification or modernization has taken place, is situated. . ." The judgment a....
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....ate of tax under this notification shall not be available to such industrial units as are notified by the State Government." The revisionist has submitted that the investment made even for the first year is less than 50 crores and there is excess production even in first year, the relief of tax is to be granted under notification dated February 21, 1997 as certified by chartered accountant. Similarly this additional fixed capital investment is to be cumulated year-wise from December 1, 1994 to March 31, 2000. In case additional fixed capital investment is less than Rs. 50 crores, the relief of exemption shall not be available to such unit where additional fixed capital investment is less than Rs. 50 crores during the period December 1, 1994 to March 31, 2000. The counsel for the petitioner is right in saying that in view of this specific condition, the investment on plant and machinery certified by chartered accountant cannot be disturbed by any other authority, i.e., the statutory authority, for purposes of investment is chartered accountant under section 4A read with notification dated February 21, 1997. In view of this the revisionist is entitled for the benefit on the add....
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.... clause 4(e) of Explanation 6 of section 4A which reads as under: "The facility of exemption from or reduction in the rate of tax on the basis of fixed capital investment in a captive power plant will be available when the unit does not sell the power which is in excess of its consumption to any person other than the Uttar Pradesh State Electricity Board and in case the unit sells such excess power to person other than the said board, the unit will be liable to pay the tax on the sale of its manufactured goods on pro rata basis along with the interest in accordance with the provisions of sub-section (1) of section 8." The denial of investment made in power plant on the reasoning that it is an old plant is against the provision mentioned in clause (4)(c) because there is no word that old or new captive power plant is to be established. Naturally without addition of power generating capacity the crushing capacity of sugarcane in the mills cannot be increased. More power is to be generated and needed due to the increased crushing in the mills. The State Government has avoided the word "old" or "new" in this clause and it is only the investment made in power plant during the p....
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....hat of Kajaria Ceramics case and even the notifications in both the cases are different. The said case may not come to the rescue of the respondents. The observations and directions contained in the above judgment have to be complied with by the respondents. It was also submitted that the benefit on investment made in Mansurpur Sugar Factory is admissible to the revisionist-company since it is a branch of Dhampur Sugar Mills Ltd., as decided by the Trade Tax Tribunal and the investment made in Mansurpur may be allowed as Dhampur Sugar Mills Ltd., Mansurpur had applied separately before the General Manager, District Industry Centre, Muzaffarnagar and their application was rejected by Divisional Level Committee, Muzaffarnagar against which they had filed an appeal before the Trade Tax Tribunal, Lucknow. The Trade Tax Tribunal, Lucknow, had decided the appeal as they had also filed revision against this order before this honourable High Court. The revisionist has submitted that instead of granting the exemption separately to Mansurpur Sugar Mills it may be granted in this very revision to the Dhampur Sugar Mills who is the "dealer" for the sales effected at Mansurpur. The revisioni....