2007 (8) TMI 665 - HC - VAT and Sales Tax

Eligibility certificate denied - Held that - It is now well-settled that where initially the unit was established over land which was taken on lease on the basis of unregistered document but subsequently rectified by a registered lease deed making it effective from earlier date, eligibility would not be denied nor could it be reduced and made effective from the date of the registered deed. The dealer would be entitled to exemption under section 4A of the Act from the date of the first sale or otherwise as the case may be. Reliance has been placed on the various decisions of this court. In this view of the matter the order of the Tribunal is set aside as also the decision of the Divisional Level Committee granting partial eligibility to the dealer. The Divisional Level Committee may issue revised eligibility certificate or amend the same as the case may be for the entire period admissible to the dealer with effect from the date of the first sale.

Summary

Issues:
Establishment of industrial unit for manufacturing blank video cassettes, eligibility for exemption under section 4A of the U.P. Trade Tax Act, 1948, rejection of application by Divisional Level Committee, interpretation of lease deeds, consideration of unregistered lease deeds, granting of eligibility certificate, appeal before Tribunal, admissibility of additional evidence, misreading of material on record by Tribunal, legal entitlement of applicant, rectification of eligibility period.

Analysis:
The judgment pertains to a case where the applicant, a registered dealer, established a new industrial unit for manufacturing blank video cassettes in the financial year 1986-87. The applicant applied for an eligibility certificate under section 4A of the U.P. Trade Tax Act, 1948, which required fulfillment of certain conditions, including the establishment of the unit on land owned or leased for more than seven years. Initially, the land was leased for eleven months through an unregistered lease deed, later renewed, and eventually replaced by a registered lease deed effective from April 1, 1986. The Divisional Level Committee initially rejected the application, leading to litigation culminating in a High Court decision recognizing the registered lease deed from November 5, 1988, as qualifying for exemption under section 4A.

Subsequently, the Divisional Level Committee, relying solely on the High Court's observations, issued a partial eligibility certificate from November 5, 1988, to January 19, 1999, contrary to the applicant's claim for eligibility from the date of the first sale on January 28, 1987. The Tribunal dismissed the appeal on the grounds of missing registered lease deeds before the Committee and inadmissible additional evidence. The High Court, upon review, found the Tribunal's decision flawed, emphasizing that once a registered lease deed rectified earlier unregistered deeds, eligibility could not be denied or reduced, entitling the dealer to exemption from the date of the first sale.

The High Court set aside the Tribunal's decision and the partial eligibility granted by the Divisional Level Committee, directing the Committee to issue a revised eligibility certificate for the entire admissible period from the date of the first sale. The judgment underscores the legal principle that rectification of lease deeds to establish eligibility under section 4A should not result in denial or reduction of entitlement, emphasizing adherence to legal provisions over procedural technicalities.

This comprehensive analysis of the judgment highlights the legal intricacies involved in determining eligibility for tax exemptions under specific statutory provisions, emphasizing the importance of correct interpretation of lease agreements and adherence to legal principles in administrative decisions.