1990 (4) TMI 278 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Rejection of Eligibility Certificate
2. Withholding of Declaration Forms
3. Use of Plant and Machinery from Other Units
4. Maintenance of Books of Accounts
5. Use of Trade Mark of Existing Industrial Units

Detailed Analysis:

1. Rejection of Eligibility Certificate:
The application for an eligibility certificate was rejected by the Assistant Commissioner of Commercial Taxes on grounds including the use of plant and machinery from other units, improper maintenance of books of accounts, and the use of trade marks of existing industrial units. The Additional Commissioner confirmed this rejection. The Tribunal found that the rejection was not substantiated by evidence, particularly with respect to the use of plant and machinery and the maintenance of books of accounts.

2. Withholding of Declaration Forms:
The withholding of declaration forms was linked to the rejection of the eligibility certificate. The Tribunal directed that the application for declaration forms should be disposed of based on the order granting the eligibility certificate.

3. Use of Plant and Machinery from Other Units:
The Assistant Commissioner alleged that the company used plant and machinery from another unit that had previously enjoyed tax-holiday benefits, violating rule 3(66a). The Tribunal found that there was no evidence to show that the plant and machinery were used in any other unit that had availed of tax-holiday benefits. The use of two stirrers from a sister concern was deemed insignificant and not substantial enough to establish that the unit was set up with machinery from another unit.

4. Maintenance of Books of Accounts:
The rejection was also based on alleged discrepancies in the company's stock accounts and improper maintenance of books of accounts. The Tribunal noted that the alleged discrepancies related to a period before the company started production and were not relevant to the period for which the eligibility certificate was sought. The Tribunal emphasized that proper maintenance of records is a legal requirement, but the alleged irregularities did not pertain to the specific requirements for the eligibility certificate.

5. Use of Trade Mark of Existing Industrial Units:
The company was accused of using trade marks similar to those of existing industrial units, violating rule 3(66a). The Tribunal found that the marks or designs used were not distinctive and were used by multiple firms. The Tribunal concluded that there was no infringement of trade mark laws or passing off, and the use of such marks did not violate the relevant rule.

Conclusion:
The Tribunal quashed the orders of the Assistant Commissioner and the Additional Commissioner, directing them to issue the eligibility certificate to the applicants. The application for declaration forms should also be disposed of in accordance with this order. The applications were allowed on contest without any order for costs.