1994 (7) TMI 339 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to rejection of application for grant of exemption under section 4-A of the U.P. Sales Tax Act, 1948 based on grounds of lease deed registration, machinery vouchers, and unit closure duration.

Analysis:
The petitioner sought to quash the rejection of their exemption application under section 4-A of the U.P. Sales Tax Act, 1948, based on various grounds. Initially, the rejection was due to the lease deed not being registered and lacking the lease period information, along with the generator not being listed as machinery, and the unit being closed for over six months. The petitioner contended that the requirement of a registered lease deed came into effect after their production had started, relying on a circular dated February 1, 1988. The Court referred to a previous decision where it was held that the lease deed registration condition does not apply to units starting production before a specified date, thus the rejection based on the lease deed's status was deemed unsustainable.

Regarding the rejection based on the absence of generator vouchers at the time of the exemption claim, the petitioner argued that the generator was purchased after the application filing and was subsequently included with the review application. Citing another case, the Court noted that the absence of vouchers for the generator did not disqualify the petitioner from the exemption, especially considering the generator's use for electricity production. The Court found the rejection on this ground unsustainable.

Lastly, the rejection due to the unit's closure for over six months was challenged by the petitioner, who claimed entitlement to exemption at least until the unit's continuous operation till March 31, 1986. The Court agreed with the petitioner, stating that since the unit operated without interruption until March 31, 1986, the rejection based on closure duration was unjustified. Consequently, the Court allowed the writ petition, quashed the rejection orders, and directed the issuance of the eligibility certificate to the petitioner based on the observations made. The parties were instructed to bear their own costs in the circumstances of the case.