1999 (7) TMI 645 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the Commissioner's amendment of the eligibility certificate.
2. Application of Government Orders and their impact on the eligibility certificate.
3. Timeliness and discretion in the exercise of the Commissioner's powers.
4. Legal and factual basis for the Commissioner's decision.

Issue-wise Detailed Analysis:

1. Validity of the Commissioner's amendment of the eligibility certificate:
The revision petition challenges the Commissioner's order dated March 27, 1998, which amended the eligibility certificate granted to the revisionist, restricting the exemption period from January 9, 1983, to August 26, 1984. The Tribunal had affirmed this order. The Commissioner exercised powers under section 4-A(3) of the U.P. Trade Tax Act, which allows for the cancellation or amendment of an eligibility certificate if it is found that the facility has been misused or if the new unit is not entitled to such a facility.

2. Application of Government Orders and their impact on the eligibility certificate:
The revisionist set up a new industrial unit and was granted an eligibility certificate under Government Order No. 8244 dated September 30, 1982, which provided sales tax exemption for five years starting January 9, 1983. The Commissioner later issued a notice based on Government Order dated August 27, 1984, which mandated that units availing exemption under section 4-A must opt out of exemption under section 4-B. The revisionist argued that this Government Order did not apply to them as they were granted exemption under the earlier Government Order of September 30, 1982, and that the period of exemption had already expired.

3. Timeliness and discretion in the exercise of the Commissioner's powers:
The Commissioner initially issued a notice for cancellation on the grounds that the unit started production before October 1, 1982, but this was resolved in favor of the revisionist in 1989. After nearly eight years, the Commissioner issued another notice to amend the eligibility certificate based on the August 27, 1984, Government Order. The court found this delay to be unreasonable and arbitrary. The Commissioner's action was deemed injudicious and not a proper exercise of judicial discretion under section 4-A(3).

4. Legal and factual basis for the Commissioner's decision:
The court noted that the eligibility certificate was granted based on the Government Order dated September 30, 1982, and atta, maida, and suji were not items listed in annexure 3 of the Government Order dated December 31, 1976, which required opting out of exemption under section 4-B. The Government Order dated August 27, 1984, did not explicitly state that it applied to units already granted exemption under the earlier order. Furthermore, a subsequent Government Order dated January 29, 1985, repealed the August 27, 1984, order and removed the condition of opting out of section 4-B. The court concluded that the Commissioner's reasoning was flawed and that the eligibility certificate should not have been amended based on the August 27, 1984, Government Order.

Conclusion:
The court found that the Commissioner's action in amending the eligibility certificate was without jurisdiction and legally unsustainable. The Tribunal's order affirming the Commissioner's decision was set aside. The revision petition was allowed, the Commissioner's order dated March 27, 1998, was quashed, and the revisionist was awarded costs of Rs. 5,000.

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