1998 (9) TMI 638 - AT - VAT and Sales Tax

Summary

Issues:
1. Interpretation of eligibility certificate for exemption of sales tax on poly bags.
2. Consideration of different commercial commodities under the eligibility certificate.
3. Assessment of tax on sales of poly bags based on eligibility certificate.

Analysis:
1. The application involved a dispute regarding the interpretation of an eligibility certificate issued under the Bengal Sales Tax Rules, 1941, for exemption of sales tax on poly bags manufactured in a new industrial unit. The assessing authority rejected the claim for exemption as poly bags were not specifically mentioned in the eligibility certificate. The applicant sought an amendment to include poly bags in the certificate.

2. The Assistant Commissioner of Commercial Taxes held that poly films and poly bags are distinct commercial commodities, leading to the rejection of the exemption claim for sales of poly bags. The West Bengal Commercial Taxes Appellate and Revisional Board also upheld this decision, emphasizing the difference between poly bags and poly films.

3. The applicant contended that despite the omission of poly bags in the eligibility certificate, the taxing authorities had granted exemption for the first three years based on the same certificate. The applicant argued that poly bags were intended to be manufactured in the unit from the beginning, as indicated in the scheme submitted for approval. The applicant highlighted the mistake in not explicitly mentioning poly bags in various documents.

4. The State Representative argued that since poly bags were not specified in the eligibility certificate and were considered distinct from poly films, the exemption for sales tax on poly bags was rightfully denied by the authorities.

5. The Tribunal acknowledged the distinction between HMHDPE films and bags as different commercial commodities. It was noted that the case did not require a determination on whether all goods manufactured in the unit were entitled to exemption under the relevant rule, despite not being explicitly listed in the eligibility certificate.

6. Ultimately, the Tribunal found that there was a genuine mistake in not mentioning poly bags in the eligibility certificate, supported by the conduct of the taxing authorities and the scheme approved for the industrial unit. The Tribunal concluded that the omission of bags in the certificate was an oversight, and directed the assessing authority to conduct a fresh assessment considering bags impliedly included in the eligibility certificate.

7. The Tribunal allowed the application, setting aside the previous orders and directing a fresh assessment for the period in question based on the understanding that poly bags were intended to be covered under the eligibility certificate. No costs were awarded in the disposal of the application.