2010 (4) TMI 1001 - HC - VAT and Sales Tax

Whether the order of the Trade Tax Tribunal is not bad in law because the Tribunal had wrongly disallowed the relief claimed by the revisionist under section 4A of the U.P. Trade Tax Act 1948? Held that -The Trade Tax Tribunal Lucknow had decided the appeal as they had also filed revision against this order before this honourable High Court. The revisionist has submitted that instead of granting the exemption separately to Mansurpur Sugar Mills it may be granted in this very revision to the Dhampur Sugar Mills who is the dealer for the sales effected at Mansurpur. The revisionist-company is entitled for this benefit. The revisionist has drawn attention of the court that already 10 years from the date of notification had expired and three different rounds of litigation have taken place in this matter. The period of relief is already over on May 24 2000 and it is also submitted that during the period the eligibility certificate was not granted to the revisionist erroneous assessments were made and huge demands were created and the said demanded amounts have also been realized from the revisionist by adopting the coercive measure. In view of the above discussion this court is of the opinion that the order dated March 26 2008 deserves to be set aside and the revision deserves to be allowed.

Issues Involved:
1. Denial of relief under section 4A of the U.P. Trade Tax Act, 1948.
2. Compliance with section 4A of the U.P. Trade Tax Act, 1948 by the appellate authority and Divisional Level Committee.
3. Denial of benefits on all types of alcohols.
4. Denial of benefits on waste products and power.
5. Consideration of Asmoli unit as a new unit.
6. Calculation of base production for Asmoli unit.
7. Denial of benefits to Mansurpur factory.
8. Time-barred claim of Mansurpur Sugar Factory.
9. Rejection of benefits on additional investment certified by a chartered accountant.
10. Ignorance of chartered accountant's certificate.
11. Denial of benefits despite eligibility.
12. Application of the Kazaria Ceramics case.
13. Denial of investment in power plant and leasing.

Detailed Analysis:

1. Denial of Relief Under Section 4A:
The court found that the Trade Tax Tribunal wrongly disallowed the relief claimed by the revisionist under section 4A. The Tribunal's decision did not align with the provisions of the U.P. Trade Tax Act, 1948.

2. Compliance with Section 4A:
The appellate authority and the Divisional Level Committee did not act in consonance with section 4A while passing the impugned order. The Supreme Court had clarified that the company is considered an industrial undertaking and a dealer for all its factories within Uttar Pradesh. The rejection of the application on the grounds of a joint application being impermissible was incorrect.

3. Denial of Benefits on All Types of Alcohols:
The Divisional Level Committee erroneously restricted the benefits on all types of alcohols. The expansion of alcohol production was acknowledged in the joint inspection report, and the revisionist was entitled to these benefits.

4. Denial of Benefits on Waste Products and Power:
The Tribunal's order denying benefits on waste products and power was against the spirit of the notification dated February 21, 1997. The court held that the benefits should be granted on all goods manufactured, including waste products and power.

5. Consideration of Asmoli Unit as a New Unit:
The Tribunal incorrectly denied the benefit of the Asmoli unit as a new unit. The investment in Asmoli was shown separately and met the criteria of more than Rs. 50 crores, qualifying it for benefits under the notification.

6. Calculation of Base Production for Asmoli Unit:
The Tribunal did not follow its principles for calculating the base production of sugar and molasses for the Asmoli unit. The court held that the base production should be calculated correctly to grant the benefits.

7. Denial of Benefits to Mansurpur Factory:
The Tribunal wrongly denied benefits to the Mansurpur factory. The factory was accepted as a branch of Dhampur Sugar Mills Ltd. for tax assessment purposes, and no appeal was filed against this acceptance.

8. Time-Barred Claim of Mansurpur Sugar Factory:
The court found that the claim of the Mansurpur Sugar Factory was not time-barred. The Supreme Court had directed that the application could not be treated as time-barred.

9. Rejection of Benefits on Additional Investment Certified by a Chartered Accountant:
The Divisional Level Committee and the appellate authority erred in rejecting the benefits on additional investment certified by a chartered accountant. The investment was duly certified and should have been considered.

10. Ignorance of Chartered Accountant's Certificate:
The chartered accountant's certificate was not given due consideration. The court held that the certificate should not have been ignored and was crucial for determining the additional fixed capital investment.

11. Denial of Benefits Despite Eligibility:
The court found that the benefits claimed under the notification dated February 21, 1997, should not have been denied despite the company's eligibility being accepted.

12. Application of the Kazaria Ceramics Case:
The court held that the Kazaria Ceramics case was not relevant to the revisionist's case. The facts and notifications in both cases were different, and the observations in the revisionist's case were binding.

13. Denial of Investment in Power Plant and Leasing:
The denial of investment in the power plant and on investment through leasing was against the provisions of section 4A. The court held that the investment in the power plant should be considered, and the benefits granted accordingly.

Conclusion:
The court allowed the revision, set aside the orders of the Trade Tax Tribunal and the Divisional Level Committee, and directed the issuance of an eligibility certificate under section 4A of the Act. The revisionist was entitled to the benefits of tax rebate on all goods manufactured, waste products, and by-products as per the notification dated February 21, 1997. All necessary consequences were to follow.

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