1992 (4) TMI 233 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility certificate under rule 3(66a) of the Bengal Sales Tax Rules, 1941.
2. Registration as a small-scale industry.
3. Maintenance of separate accounts and relevant records.
4. Production and installation of machines.

Detailed Analysis:

1. Eligibility Certificate under Rule 3(66a):
The applicant, a company incorporated in 1982, sought an eligibility certificate for tax exemption under rule 3(66a) of the Bengal Sales Tax Rules, 1941. The Assistant Commissioner of Commercial Taxes rejected the application for the period from January 28, 1985, to December 31, 1985, on three grounds: lack of continuous registration as a small-scale industry, non-maintenance of separate accounts, and discrepancies in machinery records.

2. Registration as a Small-Scale Industry:
The Assistant Commissioner observed that the applicant did not have a valid small-scale industry registration from October 25, 1984, to June 2, 1986. The provisional certificate covered different goods and factory locations than the permanent certificate. The applicant argued that the permanent certificate should be considered a continuation of the provisional one. However, the Tribunal found that the certificates differed materially, and the unit was not registered during the relevant period. The Tribunal emphasized that strict compliance with registration requirements is necessary for exemption eligibility.

3. Maintenance of Separate Accounts and Relevant Records:
The applicant claimed that manufacturing began in its factory at the end of December 1984 and that separate accounts were not necessary since no other business was conducted post-manufacturing commencement. The Assistant Commissioner noted the absence of specific production dates and separate accounts for raw materials and production, making it difficult to segregate goods manufactured in the factory from those processed externally. The Tribunal upheld the need for maintaining separate accounts to substantiate exemption claims.

4. Production and Installation of Machines:
The third ground for rejection involved discrepancies in machinery records. The applicant claimed that certain machines were components of parent machines, supported by a supplier's letter. The Tribunal deferred the decision on this matter, suggesting it be examined during the issuance of the eligibility certificate for subsequent periods.

Final Decision:
The Tribunal upheld the rejection of the eligibility certificate for the period from January 28, 1985, to December 31, 1985, based on valid grounds. However, it noted that the applicant, holding a permanent registration certificate from June 3, 1986, might be eligible for an eligibility certificate for the subsequent period, provided all conditions are met. The Assistant Commissioner was directed to dispose of the eligibility certificate application for the period from June 3, 1986, to December 31, 1986, within three months of application and to consider the machinery issue during this process. Interim orders for assessments for the four quarters ending December 31, 1986, and December 31, 1987, were to continue pending the Assistant Commissioner's decision. The application was disposed of without costs.