2008 (11) TMI 383 - SC - VAT and Sales Tax

Interpretation and/or application of an exemption notification dated July 27, 1991 Held that - It is not a case where the application was incomplete by itself. It was also not a case where having regard to the provisions of the Act, Rules, notifications as also the information required to be furnished in terms of paragraph 10 of form XLVI, any other or further information was necessary to be obtained or furnished. If the appellant, thus, had fulfilled the eligibility criteria for grant of exemption, it had acquired a right in respect thereof and we see no reason why it should have been deprived therefrom. It is in that sense the exemption notification was required to be construed liberally in favour of the appellant. Thus the impugned judgment cannot be sustained. It is set aside accordingly. The respondents are directed to extend the benefit of exemption to the appellant for a period of 10 years from October 24, 1992. The appeal is allowed with costs. The counsel s fee assessed at Rs. 50,000.

Issues Involved:
1. Interpretation and/or application of an exemption notification dated July 27, 1991.
2. Eligibility for exemption from payment of trade tax for a period of ten years.
3. Requirement to supply a copy of the deed of lease for eligibility certificate.
4. Grant of exemption period based on the completion of application.

Issue-wise Detailed Analysis:

1. Interpretation and/or application of an exemption notification dated July 27, 1991:
The core issue in this appeal revolves around the interpretation and application of an exemption notification dated July 27, 1991. The appellant, a private limited company, sought exemption from trade tax under this notification. The notification's relevant provisions were scrutinized to determine whether the appellant met the eligibility criteria for the exemption period.

2. Eligibility for exemption from payment of trade tax for a period of ten years:
The appellant claimed exemption from trade tax for a period of ten years starting from October 24, 1992, the date of the first sale of their manufactured products. However, the respondents contended that the exemption should only be granted from April 16, 1994, the date when a copy of the deed of lease was furnished. The court examined whether the appellant was entitled to exemption for the entire ten-year period based on the date of the first sale or from the date the application was deemed complete.

3. Requirement to supply a copy of the deed of lease for eligibility certificate:
A significant point of contention was whether the appellant was required to supply a copy of the deed of lease along with their application for exemption. The appellant argued that the letter of allotment from the Uttar Pradesh State Industrial Development Corporation (UPSIDC) should suffice. The court analyzed the provisions of the U.P. Trade Tax Act, 1948, and the U.P. Trade Tax Rules, 1948, particularly Rule 25 and Form XLVI, to determine if the deed of lease was a mandatory requirement.

4. Grant of exemption period based on the completion of application:
The court examined whether the application for exemption was complete when initially filed or only after the submission of the deed of lease. The appellant's application was initially returned for lack of the lease deed, which was later submitted on April 16, 1994. The court had to decide if the exemption period should commence from the date of the first sale or from the date the application was deemed complete with all required documents.

Detailed Judgment Analysis:

Interpretation and/or application of the exemption notification:
The court noted that the exemption notification dated July 27, 1991, provided conditions for granting trade tax exemption to new units. The appellant's unit was established on land allotted by UPSIDC, a state government corporation. The court emphasized that the notification's eligibility criteria must be construed strictly. However, once the criteria are met, the notification should be interpreted liberally to grant the intended benefits.

Eligibility for exemption from payment of trade tax:
The court observed that the appellant's unit commenced production on September 15, 1992, and the first sale occurred on October 24, 1992. The application for exemption was filed on March 12, 1993, within the stipulated six-month period. The court held that the appellant was entitled to exemption from October 24, 1992, to October 23, 2002, as the application was filed within the required timeframe.

Requirement to supply a copy of the deed of lease:
The court examined the statutory provisions and the prescribed form (Form XLVI). It concluded that while a copy of the registered lease deed was required for leased land, an allotment letter from a government corporation sufficed for land allotted by the government or its corporations. The appellant had submitted the allotment letter, which met the statutory requirements. Therefore, the failure to submit the lease deed initially did not render the application incomplete.

Grant of exemption period based on the completion of application:
The court found that the appellant's application was complete when filed with the allotment letter. The additional requirement for the lease deed was not applicable in this case, as the land was allotted by a government corporation. Consequently, the court held that the appellant was entitled to the full ten-year exemption period from October 24, 1992, to October 23, 2002.

Conclusion:
The Supreme Court set aside the impugned judgment and directed the respondents to extend the benefit of exemption to the appellant for the ten-year period from October 24, 1992. The appeal was allowed with costs, and the court's fee was assessed at Rs. 50,000.

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