2004 (6) TMI 610 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to rejection of eligibility certificate for sales tax exemption based on advance payment for plant and machinery.

Analysis:
The case involved a writ appeal by the State of Kerala and others against a judgment allowing the challenge to the rejection of an eligibility certificate for sales tax exemption. The respondent, a private company, had set up an industrial unit and applied for the eligibility certificate, which was rejected based on the advance payments made for plant and machinery. The central question was whether the rejection was justified.

The Government of Kerala had issued a notification granting sales tax exemption to certain industrial units, including new industrial units that had taken effective steps before January 1, 2000. The dispute in this case revolved around whether the company had taken effective steps by placing firm orders for plant and machinery before the specified date. The clause in question did not specify a particular amount to be paid as advance, only requiring firm orders to be placed.

The court emphasized that the clause did not mandate a specific advance payment amount, but rather the placement of firm orders for plant and machinery. The department's argument that the small advance payment made by the company was insufficient was deemed erroneous. Therefore, the rejection of the application for the eligibility certificate was found to be unjustified. The court upheld the decision of the learned single Judge to allow the writ petition, set aside the rejection order, and remand the case for a fresh decision in accordance with the law.

In conclusion, the appeal was dismissed, and no costs were awarded.