2003 (10) TMI 631 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the order rejecting the review application under section 4A of the U.P. Trade Tax Act, 1948.
2. Interpretation of the exemption application rejection grounds.
3. Binding nature of circulars issued by the Commissioner of Sales Tax.
4. Compliance with partnership deed for loan procurement.
5. Object of section 4A for encouraging new industries.

Analysis:
1. The petitioner, a partnership firm, challenged the validity of the order dated June 5, 1992, which rejected their review application under section 4A of the U.P. Trade Tax Act, 1948. The petitioner established a new unit for manufacturing polythene bags following a Government order dated September 30, 1992.
2. The rejection of the exemption application was based on two grounds: non-registration as a small-scale industry on the specified date and loan disbursement to a partner instead of the firm. The petitioner argued that the rejection was contrary to a circular dated March 10, 1987, emphasizing that differences in dates should not lead to denial of exemption.
3. The circular issued by the Commissioner of Sales Tax was deemed binding on authorities, as established in previous court decisions. The court referenced cases where such circulars were held to be legally enforceable, emphasizing the importance of following directives from higher authorities.
4. The partnership deed authorized a partner to procure loans on behalf of the firm, as evidenced by documents submitted. The court highlighted the compliance with the partnership agreement regarding loan procurement, further supporting the petitioner's position.
5. The court emphasized the objective of section 4A, which aims to encourage the establishment of new industries. Relying on a Supreme Court decision, the court stressed that interpretations should align with the legislative intent to promote industrial growth. Consequently, the order rejecting the review application was set aside, and the Divisional Level Committee was directed to grant the eligibility certificate to the petitioner promptly. Additionally, tax realization for specific assessment years was stayed until the issuance of the eligibility certificate.