1999 (2) TMI 521 - SC - VAT and Sales Tax

Exemption under section 4-A of the U.P. Sales Tax Act, 1948 for a period of six years from payment of sales tax under the notification dated December 26, 1985 rejected - Held that - Appeal allowed. The judgment of the High Court is wholly unsatisfactory and it is not a judgment at all. The writ petition filed by the appellant before the High Court contained all the relevant facts and the contentions. The High Court has not dealt with any of them. On the other hand, the High Court has framed only one question for determination as to whether the petitioner before it was entitled to exemption for six years or for four years . That question was wide enough to consider all the relevant facts and decide the case. The High Court has failed to take into account the relevant facts in this matter. Nor has the High Court adverted to the relevant provisions in law. The High Court has chosen to refer to a provision of law which came into force much later than the relevant date, which ought not to have been done.

Summary

Issues:
1. Interpretation of the date of starting production for exemption under the U.P. Sales Tax Act.
2. Application of the definition of "industrial unit" in the notification of exemption.
3. Failure of the High Court to provide a reasoned judgment.

Analysis:
1. The appellant started a manufacturing unit without registering under the Factories Act but obtained sales tax registration later. The issue arose when the appellant applied for exemption under section 4-A of the U.P. Sales Tax Act for a period of six years from the date of the first sale, which was contested by the second respondent based on the date of trial run and first sale in November 1985. The High Court dismissed the writ petition without a proper judgment, relying on a definition introduced after the relevant period. The Supreme Court held that the relevant date for exemption should be when the industrial unit started production, which was in March 1986, not November 1985, as determined by the second respondent and the High Court.

2. The notification of exemption defined an "industrial unit" as one holding permanent registration with the Directorate of Industries and starting production after obtaining a term loan or registering under the Factories Act. The appellant obtained permanent registration in September 1986 and started production in March 1986, meeting the criteria for exemption for a period of six years from the actual start of production. The Supreme Court emphasized that the High Court overlooked this definition and wrongly applied a later definition in its decision, leading to the dismissal of the writ petition.

3. The High Court's failure to provide a reasoned judgment was a significant issue highlighted by the Supreme Court. The High Court's reliance on a definition introduced after the relevant period and its failure to consider the definitions and provisions in the law led to an unsatisfactory decision. The Supreme Court set aside the High Court's judgment, emphasizing the importance of considering all relevant facts and legal provisions in delivering a judgment. The appeal was allowed with costs, indicating a lack of proper reasoning and consideration by the High Court in the original decision.