2001 (11) TMI 1031 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Authority of the Commissioner to cancel the eligibility certificate.
2. Applicability of Section 4-A (3) of the Trade Tax Act.
3. Timeliness of the cancellation order.
4. Procedural requirements under Section 4-A (2-B) of the Act after reconstitution of the firm.

Detailed Analysis:

Authority of the Commissioner to Cancel the Eligibility Certificate:
The revisionist argued that the Commissioner does not have the authority to cancel the eligibility certificate granted by the Divisional Level Committee. The appropriate recourse for the Commissioner, if aggrieved, would be to file an appeal under Section 10 (2) of the Act. The Court supported this view, citing the decision in Mansarover Bottling Company Limited v. The Commissioner, Trade Tax, 1999 U.P.T.C. 864, which held that the Commissioner cannot act as a judge in his own cause and should file an appeal instead.

Applicability of Section 4-A (3) of the Trade Tax Act:
The revisionist contended that the powers under Section 4-A (3) of the Act could not be exercised by the Commissioner on debatable questions of fact and law. The Court agreed, referencing Commissioner of Trade Tax v. M/s. R. K. Coal Sales Pvt. Ltd. and others, 1999 U.P.T.C. 1147, which stated that such powers are limited to correcting clerical or arithmetical errors that are patent and apparent from the record, not errors subject to rational debate.

Timeliness of the Cancellation Order:
The revisionist argued that the cancellation order was passed much after the exemption period had expired, making it highly improper. The Court found merit in this argument, noting that the exemption period was from 26th May 1991 to 25th May 1999, and the eligibility certificate was canceled on 27th December 1999. The Court referenced M/s. Janta Dal Mills, Fatehpur v. Commissioner of Trade Tax, 1999 U.P.T.C. 1123, where it was held that initiating cancellation proceedings long after the exemption period had expired was improper.

Procedural Requirements Under Section 4-A (2-B) of the Act:
The Commissioner argued that after the reconstitution of the firm on 1st November 1991, the revisionist was required to apply under Section 4-A (2-B) of the Act within sixty days, which was not done. The Court noted that although the application was not made within sixty days, a circular issued by the Commissioner of Trade Tax on 1st January 1992, stated that reconstitution of the firm would not be treated as dissolution and no new application was required. The Court found that the revisionist could have reasonably believed that no application was needed due to this circular.

Conclusion:
The Court concluded that the Commissioner's order canceling the eligibility certificate and the Tribunal's order dismissing the appeal could not be upheld. The revisionist was entitled to the benefit of the eligibility certificate granted to it. Therefore, the revision was allowed, and the orders passed by the Commissioner and the Tribunal were set aside.