2008 (7) TMI 883 - HC - VAT and Sales Tax

Grant of eligibility certificate to claim exemption denied - Held that - Whether or not the activities of the petitioner-company are entitled to exemption or not is a matter which is to be left to the technical experts and it is not for this court to opine in the matter, but the fact cannot be lost sight of that the petitioner-company had relied upon certain technical reports to support its claim. In these circumstances, the Appellate Forum could have examined the aforesaid technical reports, and if so required, the departmental authority could have submitted any counter-technical report in the matter. This has not been done. In fact, the technical reports had not at all been adverted to. There appears to be a non-application of mind in this regard. Consequently, the present petition is allowed to the extent that the order dated May 3, 2005, annexure P10, passed by the State Appellate Forum is set aside. The appeal filed by the petitioner-company before the State Appellate Forum is restored to its original number and shall be decided afresh by the State Appellate Forum, in accordance with law, by passing a detailed and speaking order, within a period of six months from the date parties put in their appearance.

Summary

Issues:
1. Eligibility for tax exemption for a new industrial unit in a backward area.
2. Allegation of hostile discrimination against the petitioner.
3. Consideration of technical reports by the State Appellate Forum.
4. Judicial review of the decision by the Appellate Forum.

Analysis:
1. The petitioner-company established a new industrial unit in a backward area and applied for a tax exemption certificate, which was initially declined by the competent authority. The State Level Committee and the State Appellate Forum upheld the decision, leading to the petitioner approaching the High Court through various writ petitions.

2. The petitioner alleged hostile discrimination, arguing that similar establishments had been exempted while they were singled out for different treatment. The petitioner emphasized that their product involved blending of chemicals, not a refining process, and provided technical reports to support their claim. The Government counsel supported the decision of the Appellate Forum, stating that the matter had been thoroughly examined.

3. The High Court observed that the technical reports submitted by the petitioner were not considered by the Appellate Forum, indicating a lack of application of mind. The Court noted that the decision on exemption eligibility should involve technical experts, but the failure to address the submitted reports showed a deficiency in the review process.

4. Consequently, the High Court allowed the petition, setting aside the order of the State Appellate Forum and directing a fresh consideration of the appeal. The Court instructed the State Appellate Forum to review the case, consider all relevant reports and submissions, and provide an opportunity for personal hearings before issuing a detailed and speaking order within six months. The protection granted to the petitioner was to continue until the final decision by the Appellate Forum. Parties were directed to appear before the Forum on a specified date for further proceedings.