2003 (2) TMI 444 - HC - VAT and Sales Tax

Summary

Issues:
- Writ petition for quashing order rejecting application under section 4-A of U.P. Trade Tax Act
- Praying for mandamus to issue eligibility certificate under section 4-A

Analysis:
The writ petition was filed seeking to quash an order dated January 17, 1987, rejecting the petitioners' application under section 4-A of the U.P. Trade Tax Act, 1948, along with the subsequent rejection of the review petition through an order dated October 24, 1990. The petitioners, a proprietorship firm and its proprietor, had established a new unit with machinery for manufacturing parts, applied for exemption under section 4-A, and faced rejection despite fulfilling necessary criteria. The petitioners sought a mandamus to compel the issuance of an eligibility certificate under section 4-A.

The petition detailed the establishment of a factory by the petitioner firm, including obtaining provisional registration, sales tax registration, and a loan for factory setup. The petitioner applied for exemption under section 4-A for six years, supported by relevant documentation like an enquiry report and bills for materials purchased for factory construction. The rejection of the application was based on the alleged use of old crucibles and the nature of manufacturing activities, which the petitioners refuted with evidence of their fabrication process using lathe and drilling machines.

Upon reviewing the impugned orders, the court noted discrepancies in the reasoning for rejection and the actual manufacturing process followed by the petitioners. Citing legal precedents emphasizing a liberal interpretation of exemption provisions to encourage industrial growth, the court found the facts of the case aligned with such principles. Referring to relevant judgments, the court highlighted the objective of section 4-A to promote new industries and cautioned against narrow interpretations, ultimately allowing the writ petition.

Consequently, the court quashed the impugned orders, directing the respondents to grant the petitioners exemption under section 4-A for the period applied. The decision was based on the court's alignment with legal principles supporting industrial growth and a broader view of exemption provisions, ensuring the petitioners' entitlement to the benefit under the U.P. Trade Tax Act.