2007 (10) TMI 591 - HC - VAT and Sales Tax

Certificate of eligibility - validity - Held that - The revisional authority in the present case found that the assessing authority didn t make the requisite application of mind or made the necessary enquiry as to whether the petitioner was a new industrial unit which is eligible to obtain a certificate of authorisation under the Concession Act, which is not available to an old industrial unit and disregarding the said obligation, passed assessment order giving benefit of tax exemption to the old industrial unit of the petitioner. The law can t be so helpless to undo an apparent jurisdictional error and revisional powers are clearly available to correct such error which is also prejudicial to the interest of the revenue of the State. Accordingly, the order of assessment passed on February 4, 1994 suffers from a jurisdictional error which is amenable to revisional powers of the revisional authority under the provisions of section 36 of the Assam General Sales Tax Act, 1993.

Issues Involved:

1. Eligibility for sales tax exemption under the Assam Finance (Sales Tax) Act, 1956 and the Assam Industries (Sales Tax Concessions) Act, 1986.
2. Validity of the authorization certificate issued to the petitioner.
3. Jurisdiction and exercise of revisional powers by the revisional authority under section 36 of the Assam General Sales Tax Act, 1993.

Detailed Analysis:

1. Eligibility for Sales Tax Exemption:

The petitioner, initially a partnership concern, later became a proprietorial concern and set up an industry for manufacturing steel and wooden furniture. The petitioner claimed benefits under the Industrial Policy of 1986, which provided incentives for new units set up on or after 1987 and existing units undertaking expansion, modernization, or diversification. The petitioner was issued an eligibility certificate on September 29, 1990, granting sales tax exemption from March 24, 1990, to March 23, 1995.

The Assam Industries (Sales Tax Concessions) Act, 1986, provided selective sales tax exemptions to new industrial units established after October 15, 1982. Section 2(2) defined a new industrial unit, and section 3 provided exemptions for raw materials to holders of valid authorization certificates. The Concession Rules, 1988, outlined the application and issuance process for these certificates.

2. Validity of the Authorization Certificate:

The petitioner applied for an authorization certificate on January 6, 1992, and it was granted on October 16, 1993. The petitioner had an earlier certificate valid from April 4, 1985, to April 3, 1990. The Superintendent of Taxes granted sales tax exemptions based on this certificate. However, the revisional authority found that the petitioner was not a new industrial unit and had already availed benefits under the 1982 policy. The certificate was issued erroneously, disregarding the provisions of the Concession Act and Rules.

3. Jurisdiction and Exercise of Revisional Powers:

The revisional authority, exercising powers under section 36 of the Assam General Sales Tax Act, 1993, found the assessment order dated February 4, 1994, erroneous and prejudicial to the interest of Revenue. The authority initiated suo motu revision proceedings, questioning the validity of the authorization certificate and the eligibility of the petitioner for tax exemptions.

The revisional authority concluded that:
- The first eligibility certificate was valid until April 3, 1990, and there was no provision for issuing a new certificate to the same unit.
- The second certificate was issued before the expiry of the first, indicating irregularity.
- The petitioner, having availed benefits under the 1982 policy, was not entitled to further exemptions under the Concession Act.

The revisional authority's decision was based on the fact that the assessing authority did not make the requisite enquiries or apply the necessary scrutiny to determine the petitioner's eligibility as a new industrial unit. This constituted a jurisdictional error, making the assessment order amenable to revision.

Conclusion:

The court upheld the revisional authority's decision, stating that the assessing officer's failure to conduct necessary enquiries and the erroneous issuance of the authorization certificate constituted a jurisdictional error. The revisional powers were rightly exercised to correct this error, which was prejudicial to the state's revenue. The writ petition was dismissed, affirming the revisional authority's order.

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