2007 (10) TMI 575 - HC - VAT and Sales Tax

Eligibility certificate cancelled - Held that - In the present case since the eligibility certificate was granted in favour of the transferor-manufacturer, the officer competent to grant eligibility certificate was required under sub-section (2B) of section 4A of the Act to compute the unexpired portion of the period and grant the exemption certificate for unexpired period as there was already approval of the committee in favour of the unit. Thus, the certificate issued by the Joint Director (Industries) in the present case was perfectly legal and valid. The view taken by the Commissioner, Trade Tax, as well as the Appellate Tribunal is contrary to the clear provision of law contained in sub-section (2B) of section 4A of the Act read with clause (f) of sub-rule (3) of rule 25 of the Trade Tax Rules. Questions of law answered in favour of revisionist and the revision is allowed.

Issues Involved:

1. Justification of the eligibility certificate issuance by respondent No. 3.
2. Competence of respondent No. 1 to negate the eligibility certificate.
3. Consideration of the applicant as a successor-manufacturer and remanding the matter back to the DLC.

Detailed Analysis:

Issue 1: Justification of the eligibility certificate issuance by respondent No. 3

The court examined whether respondent No. 1 was justified in holding that the eligibility certificate was wrongly issued by respondent No. 3, who is the convener of the Divisional Level Committee (DLC) and competent to issue/amend the eligibility certificate under rule 25(3)(f) of the Uttaranchal Trade Tax Act, 1948. The applicant had purchased the unit from UPFC and applied for the exemption certificate for the unexpired period. The Joint Director of Industries, acting as the convener of the DLC, amended the eligibility certificate granted to the erstwhile manufacturer and issued it to the applicant. The court found that the issuance of the certificate by the Joint Director (Industries) was legal and valid as per sub-section (2B) of section 4A of the Act, which allows the successor-manufacturer to apply for exemption for the unexpired portion of the period.

Issue 2: Competence of respondent No. 1 to negate the eligibility certificate

The court addressed whether respondent No. 1 was justified in passing orders negating the eligibility certificate on grounds of legal and factual errors. The Commissioner, Trade Tax, cancelled the eligibility certificate on the basis that it should have been processed and approved by the competent officer. The court noted that under sub-section (3) of section 4A, the Commissioner has the authority to cancel the certificate if there is any legal error after giving a reasonable opportunity of being heard. However, the court found that the eligibility certificate was issued according to the prescribed procedure and was thus valid. Therefore, the cancellation by the Commissioner and the affirmation of this view in the appeal were contrary to the clear provisions of the law.

Issue 3: Consideration of the applicant as a successor-manufacturer and remanding the matter back to the DLC

The court considered whether respondent No. 1 erred in not appreciating that the applicant, as a successor-manufacturer, was rightly granted the exemption for the unexpired period applicable to the former manufacturer. The court examined sub-section (2B) of section 4A and rule 25 of the Uttaranchal Trade Tax Rules, 1948, which allow the successor-manufacturer to apply for the unexpired portion of the exemption period. The court found that since the eligibility certificate was already granted to the transferor-manufacturer, the competent officer was required to compute the unexpired portion and grant the exemption certificate without referring it back to the DLC. The court held that the Joint Director (Industries) acted within his authority, and the certificate issued was valid. Therefore, remanding the matter back to the DLC was unnecessary.

Conclusion:

The court answered the questions in favor of the revisionist, allowed the revision, set aside the orders of the Commissioner, Trade Tax, and the Appellate Tribunal, and upheld the grant of the eligibility certificate by the Joint Director (Industries), Pauri Garhwal.

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