1989 (6) TMI 279 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Refusal to issue eligibility certificate for tax holiday.
2. Withholding of declaration forms.

Issue-Wise Detailed Analysis:

1. Refusal to Issue Eligibility Certificate for Tax Holiday:

The applicant, a small-scale industrial unit, applied for an eligibility certificate under rule 3(66a) of the Bengal Sales Tax Rules, 1941, to benefit from a tax holiday. The application was rejected by the Assistant Commissioner of Commercial Taxes and subsequent appeals were also dismissed. The applicant contended that it fulfilled all conditions laid down in rule 3(66a) and that the findings of the sales tax authorities were not based on facts and law.

Grounds for Rejection:
- Non-Issuance of Serially Numbered Cash/Credit Memos: The applicant did not issue serially numbered cash/credit memos for sales of goods manufactured in the unit. However, the Tribunal found that the non-entry of certain cancelled bills in the sales book was a minor irregularity and should not defeat the objective of granting incentives to small-scale industries.
- Extraneous Issues Considered: The authorities considered payments not received and the form of rent receipts, which were deemed extraneous and irrelevant to the grant of the eligibility certificate. The Tribunal agreed that the competent authority should consider only the requirements of law.
- Intermingling of Accounts: The applicant did not keep separate accounts for the newly set up small-scale industry and intermingled sales of goods manufactured in its own factory with those manufactured outside. The Tribunal held that the scheme clearly requires goods to be manufactured in the small-scale industry itself to qualify for tax exemption.

Tribunal's Findings:
- Substantial Compliance: The Tribunal emphasized substantial compliance with the requirements of law and found that minor defects should not defeat the objective of the scheme.
- Subsequent Compliance: The applicant complied with all requirements from February 19, 1986, onwards, and thus should be issued the eligibility certificate from this date instead of the date of the first sale, February 5, 1986.
- Period of Eligibility: The eligibility certificate should be issued for the period from February 19, 1986, to February 4, 1987, with the possibility of renewal for the remaining period.

2. Withholding of Declaration Forms:

The applicant alleged that the sales tax authorities withheld the issue of declaration forms in violation of rule 27AA of the Bengal Sales Tax Rules, 1941. The respondents argued that the applicant's first application for declaration forms was made on April 10, 1989, and that it had shown the entire claim of sales tax as exempted under rule 3(66a), despite the rejection of its eligibility certificate.

Tribunal's Findings:
- Pending Application: Since the application for the eligibility certificate was still under consideration by the Tribunal, the applicant could not be deemed a defaulter.
- Compliance with Returns and Payments: The applicant had been filing returns and paying taxes as per returns. Therefore, declaration forms should not have been withheld.

Conclusion:
The Tribunal quashed the order of refusal of the eligibility certificate and directed that the certificate be issued for the period from February 19, 1986, to February 4, 1987. The applicant was also allowed to apply for renewal. Additionally, the Tribunal ordered that declaration forms be issued to the applicant as admissible. The application succeeded on contest and was allowed without any order for costs.