1988 (12) TMI 319 - HC - VAT and Sales Tax

Summary

Issues:
Claim for exemption from sales tax based on late issuance of certificate.

Analysis:
The petitioner claimed exemption from sales tax due to a certificate issued late, covering the period from 1984 to 1989. The petitioner contended that they were entitled to a refund of sales tax paid during the exemption period. The respondents did not dispute the exemption but argued it should start from the date of registration, not the period in the certificate.

The relevant notification provided exemption from sales tax to newly set up small-scale industrial units starting production within a specified period. The petitioner's registration certificate indicated production commencement in 1984, despite registration in 1985. The certificate of exemption issued in 1988 validated the exemption from 1984 to 1989, supporting the petitioner's claim for retrospective exemption.

The court referred to previous decisions interpreting similar notifications. In Kailash Roller Flour Mills case, the court held that exemption should continue for the full period specified in the certificate unless withdrawn by a subsequent notification. In Tara Steel Industries case, it was emphasized that exemption provisions should be liberally construed, especially for industries commencing production within extended exemption periods.

Contrary to the government pleader's reliance on Gupta Brick Works case, the court distinguished it, noting that the specific mention of production commencement in the registration certificate recognized the petitioner as a newly set up small-scale industry since inception. The certificate of exemption granted from the year of production further supported the petitioner's claim for exemption.

Ultimately, the court held in favor of the petitioner, stating they were entitled to claim exemption of sales tax during the certificate's validity period. The petitioner could apply for a refund of sales tax paid during the exemption period, with directions for the respondents to process such applications in accordance with the law and the judgment.

In conclusion, the court granted the writ petition in favor of the petitioner, allowing them to seek a refund of sales tax paid during the exemption period as per the certificate's validity.