2002 (2) TMI 1311 - HC - VAT and Sales Tax

Summary

Issues:
1. Provisional assessment orders under U.P. Trade Tax Act, 1948 challenged by M/s. Dhampur Sugar Mills Ltd.
2. Grant of exemption of total tax under section 4-A of the Act by Divisional Level Committee.
3. Discrepancy in assessing the tax provisionally on derivatives of chemicals.
4. Review of the order by Trade Tax Tribunal under section 22 of the Act.

Analysis:
1. M/s. Dhampur Sugar Mills Ltd. challenged the provisional assessment orders passed by the Trade Tax Tribunal, Moradabad, against the order dated July 2, 1999. The Tribunal remanded the case to the assessing authority to ascertain the utilization of the tax facility granted by the Divisional Level Committee and the eligibility of derivatives for exemption under section 4-A of the Act.

2. The Divisional Level Committee granted a total tax exemption facility to M/s. Dhampur Sugar Mills Ltd. for chemicals and derivatives manufactured under a notification dated July 27, 1991. The statutory authority's decision was crucial in determining the eligibility for tax exemption under section 4-A of the Act.

3. The assessing officer provisionally assessed the tax on derivatives of chemicals and held that the facility was not for total tax exemption but for a reduced rate of tax. The Trade Tax Tribunal, in its initial order dated July 2, 1999, set aside the provisional assessment orders and directed a reevaluation based on the utilization of the tax facility and the coverage of derivatives under the exemption notification.

4. The Trade Tax Tribunal, suo motu, reviewed its earlier order and dismissed the appeals of M/s. Dhampur Sugar Mills Ltd. on October 23, 1999, under section 22 of the Act. However, the High Court found the order unsustainable, quashed it, and directed the payment of interest at a rate of 15% from the date of deposit. The Court emphasized the importance of honoring the decisions of the Divisional Level Committee in granting tax exemptions.

This detailed analysis highlights the legal proceedings, the role of statutory authorities, and the corrective actions taken by the Trade Tax Tribunal and the High Court in resolving the dispute regarding tax exemption for M/s. Dhampur Sugar Mills Ltd.