2007 (10) TMI 568 - HC - VAT and Sales Tax

Claim of exemption on the turnover of the manufactured product under section 4A of the U.P. Trade Tax Act 1948 - Held that - For the claim of exemption it is necessary to comply with the conditions mentioned under the provisions of section 4A of the Act and the notifications issued thereunder. It is on the dealer who claims the exemption to establish that the conditions of the notifications are fulfilled. If any of the condition is not fulfilled the exemption cannot be allowed. As referred hereinabove dealer was not able to fulfil the conditions of the notifications on the day on which it was required to be fulfilled and therefore the exemption has rightly been refused. In the circumstances no interference is called for. In the result revision fails and is accordingly dismissed.

Summary

Issues Involved:
1. Eligibility for tax exemption under section 4A of the U.P. Trade Tax Act, 1948.
2. Compliance with conditions specified in relevant notifications for tax exemption.
3. Timely application for term loan.
4. Registration with the Director of Industries.

Issue-wise Detailed Analysis:

1. Eligibility for Tax Exemption:
The applicant sought tax exemption under section 4A of the U.P. Trade Tax Act, 1948. The Tribunal and Divisional Level Committee rejected the exemption claim on the grounds that the applicant did not meet the necessary conditions as specified in the relevant notifications. The applicant argued that the conditions were met and that the delay in registration for paints was due to the industries department's delay, not their own.

2. Compliance with Conditions Specified in Relevant Notifications:
The relevant notifications were Notification No. KA. NI-2-2591, dated August 24, 2000, and Notification No. KA-NI-2-3867, dated December 22, 2001. The former did not require registration with the Industries Department, while the latter did. The Tribunal found that the applicant's unit was not registered for paints by the cut-off date of March 31, 2000, as required by the latter notification. The court noted that the notification dated August 24, 2000, was applicable since the production and first sale occurred before the December 22, 2001 notification.

3. Timely Application for Term Loan:
The notifications required that the unit apply for a term loan by specific dates (January 17, 2000, for the August 24, 2000 notification, and March 31, 2000, for the December 22, 2001 notification). The applicant applied for the term loan after May 26, 2000, which was beyond the required dates. The court emphasized that the term loan was not sanctioned based on the 1994 applications but on the later application, failing to meet the notification conditions.

4. Registration with the Director of Industries:
The applicant's unit was registered for synthetic resins but not for paints by the cut-off date. The court found that the notification dated August 24, 2000, did not require such registration, and thus the registration issue was not a valid ground for denying the exemption. However, the failure to apply for the term loan on time was sufficient to disqualify the applicant from the exemption.

Conclusion:
The court concluded that the applicant did not meet the mandatory conditions for tax exemption under section 4A of the Act and the relevant notifications. The strict construction of exemption provisions, as upheld by the Supreme Court in various cases, mandated that all conditions be strictly complied with. Since the applicant failed to apply for the term loan within the stipulated time, the exemption was rightly denied. The revision was dismissed.