1997 (3) TMI 586 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Maintainability of the petition.
2. Definition and interpretation of "new manufacturing unit" under the notification dated June 13, 1994.
3. Entitlement of the petitioner-company to tax exemption under the notification.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition:

The preliminary objection raised by the respondents regarding the maintainability of the petition was rejected. The Tribunal found that a substantial question of law regarding the interpretation of the notification dated June 13, 1994, had arisen. Additionally, the Tribunal noted that the Tax Board lacked the authority to stay the assessment proceedings during the pendency of an appeal, and delaying the decision would lead to multiplicity of proceedings. Thus, the Tribunal decided to proceed with the petition.

2. Definition and Interpretation of "New Manufacturing Unit":

The core issue was whether the petitioner-company's industrial unit qualified as a "new manufacturing unit" under the notification dated June 13, 1994. The Tribunal observed that the term "new manufacturing unit" was not explicitly defined within the notification. The notification stipulated that tax exemption would be granted only to a "new manufacturing unit" registered as a 100% Export Oriented Unit (EOU) with the Government of India.

The Tribunal emphasized that mere registration as a 100% EOU was insufficient to claim tax exemption; it had to be established that the unit was indeed a "new manufacturing unit." The Tribunal rejected the petitioner's reliance on provisions from the Income-tax Act, 1961, and various case laws that were distinguishable on facts. The Tribunal concluded that the interpretation of "new manufacturing unit" should be based on the notification's context and not on external statutes or unrelated case laws.

3. Entitlement to Tax Exemption:

The Tribunal analyzed the facts and found that the petitioner-company had an existing unit with a capacity of 14 M.T. of guar gum powder, which was later expanded to 42 M.T. The old unit's capacity accounted for 33% of the total capacity. The Tribunal, guided by the principle established in the Supreme Court decision in Commercial Tax Officer v. Emkay Investments Pvt. Ltd., held that the unit could not be entirely denied the benefit of exemption merely because it included the old unit.

The Tribunal balanced the positions and concluded that the petitioner-company's industrial unit would be treated as a "new manufacturing unit" only concerning its additional installed capacity of 28 M.T. of guar gum powder. Consequently, the tax exemption would be apportioned accordingly, and the unit would not receive exemption for the 14 M.T. capacity of the old unit.

Conclusion:

The petition was partly allowed. The Tribunal held that the petitioner-company's industrial unit would be considered a "new manufacturing unit" for the additional capacity of 28 M.T. of guar gum powder, thereby entitling it to a partial tax exemption under the notification dated June 13, 1994. The exemption would not apply to the 14 M.T. capacity of the old unit. No order as to costs was made.