1990 (2) TMI 290 - AT - VAT and Sales Tax

Summary

Issues:
Renewal of eligibility certificate for the period July 1982 to June 1983 - rejection by Assistant Commissioner and confirmation by Additional Commissioner.

Analysis:
The applicant, a small-scale industrial unit, had previously been granted eligibility certificates for specific periods. The renewal application for the period ending June 1983 was rejected by the Assistant Commissioner based on various grounds. These grounds included discrepancies in the cash book, lack of vouchers for certain payments, running at a loss in previous years, and a focus on domestic goods affecting economic viability. The Assistant Commissioner concluded that the stress on domestic goods had negatively impacted the industry's economic viability, leading to the rejection of the renewal application.

The Additional Commissioner, in reviewing the revisional application, considered the reasons provided by the Assistant Commissioner. While he deemed the first two grounds as minor, he focused on the cessation of manufacturing activity by the industry post the tax exemption period. The Additional Commissioner highlighted the purpose of providing tax incentives to new industries and how the industry's closure without contributing revenue post the tax holiday period frustrated the scheme's objective. This led to the confirmation of the rejection of the renewal application by the Additional Commissioner.

However, the Tribunal noted that there was no requirement in the Rules for an industrial unit to continue operations post the tax holiday period. The mere closure of the industry could not be the sole basis for refusing renewal of the eligibility certificate. It was emphasized that a disturbance in economic viability due to the applicant's actions or inactions must be established to justify rejection. In this case, the Tribunal found no evidence or finding that the applicant's actions had directly impacted economic viability. The Tribunal concluded that the rejection of the renewal application based on the industry's closure post the tax holiday period was not justified, as it did not establish a causal link between the applicant's actions and economic viability disturbance.

Therefore, the Tribunal set aside the orders of the Assistant Commissioner and Additional Commissioner, directing the appropriate authority to renew the eligibility certificate for the period ending in June 1983. The application was allowed, and no costs were awarded.