2010 (1) TMI 1141 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for remission of tax u/s 41 of the West Bengal Sales Tax Act, 1994.
2. Validity of the eligibility certificate (E.C.) granted under the 1994 Act.
3. Applicability of the West Bengal Incentive Scheme, 2000.
4. Retrospective cancellation of the eligibility certificate.

Summary:

1. Eligibility for remission of tax u/s 41 of the West Bengal Sales Tax Act, 1994:
The petitioner-company, initially set up as a small-scale industrial unit, applied for an eligibility certificate (E.C.) for remission of tax u/s 41 of the 1994 Act. The Assistant Commissioner granted the E.C. on July 19, 2002, noting that the company was registered as a small-scale unit within the stipulated period. However, the company later registered as a medium-scale unit due to changes in investment limits.

2. Validity of the eligibility certificate (E.C.) granted under the 1994 Act:
The E.C. was granted based on the provisional registration as a small-scale unit. The Deputy Commissioner, in a suo motu revisional order dated July 8, 2008, cancelled the E.C. retrospectively from July 19, 2002. The Tribunal held that an E.C. granted by the competent authority cannot be cancelled with retrospective effect, citing precedents from the Supreme Court and various High Courts.

3. Applicability of the West Bengal Incentive Scheme, 2000:
The petitioner-company was advised to register as a medium-scale unit under the 2000 Scheme after the investment limit for small-scale units was lowered. The company obtained registration as a medium-scale unit and availed benefits like capital investment subsidy and waiver of electricity duty under the 2000 Scheme. The Tribunal noted that the 2000 Scheme did not provide for remission of sales tax, which was available under the 1994 Act.

4. Retrospective cancellation of the eligibility certificate:
The Tribunal emphasized that the retrospective cancellation of the E.C. was contrary to settled law. The Deputy Commissioner's order dated July 8, 2008, cancelling the E.C. from July 19, 2002, was set aside. The Tribunal held that the benefit enjoyed under the E.C. granted under the 1994 Act could not be withdrawn retrospectively by an order passed long after the 1994 Act ceased to operate.

Conclusion:
The Tribunal allowed the application in R.N. 439 of 2008, setting aside the Deputy Commissioner's order dated July 8, 2008. However, it did not interfere with the refusal to grant an eligibility certificate under the VAT Act, 2003. Both R.N. 439 of 2008 and R.N. 114 of 2008 were disposed of without any order as to costs.