2000 (3) TMI 1042 - HC - VAT and Sales Tax

Summary

Issues:
Grant of eligibility certificate under section 4-A of the U.P. Trade Tax Act, 1948 for a new unit's total investment of Rs. 73,25,000.

Analysis:
The revisionist applied for an eligibility certificate under section 4-A of the U.P. Trade Tax Act, 1948, claiming its unit as new with a total investment of Rs. 73,25,000. The Divisional Level Committee granted a certificate effective from May 6, 1995, only for Rs. 9,40,000 of the investment. The dealer appealed to the Tribunal after the rejection of the claim for the remaining fixed capital investment. Both authorities denied the claim for fixed capital investment in plant and machinery, considering them old and not eligible under the definition of a new unit.

The main contention raised was regarding the definition of a "new unit" under section 4-A. The revisionist argued that the unit, purchased in 1994, should be considered a new unit established after March 31, 1990, as it was bought from the U.P. Financial Corporation controlled by the State Government. The Tribunal and Divisional Level Committee failed to distinguish between the definitions of new units under Explanation (1)(d) and Explanation (2)(a) of section 4-A. The Tribunal's decision was based on incorrect interpretation of the exclusion clause for machinery and equipment already used by another factory.

The State Government's notification under section 4-A(1) provided for exemption based on the date of the first sale or starting production. The revisionist's claim for exemption was rejected for the balance amount of land and building investment to be paid post the first sale date. The Tribunal was directed to reconsider the appeal in light of the correct interpretation of the definitions of new units and the eligibility for exemption under the State Government's notification.

In conclusion, the High Court allowed the revision, setting aside the Tribunal's order and directing a re-decision based on the clarified directions. The matter was remanded to the Tribunal for reconsideration in light of the correct interpretation of the law and definitions of a new unit under section 4-A.