2005 (9) TMI 664 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Quashing of the impugned order dated 5.1.2001 and notice dated 6.2.2001.
2. Application for deferment/moratorium of payment of tax under Section 8(2-A) of the U.P. Trade Tax Act.
3. Interpretation and application of Rule 43(8) of the U.P. Trade Tax Rules, 1948.
4. Legal principles for interpreting taxing statutes.

Issue-Wise Detailed Analysis:

1. Quashing of the Impugned Order and Notice:
The petitioner sought a writ to quash the impugned order dated 5.1.2001 and notice dated 6.2.2001, which were issued by the respondents, and to allow the application for deferment/moratorium of payment of tax. The court examined the facts and legal provisions to determine the validity of the impugned order and notice.

2. Application for Deferment/Moratorium of Payment of Tax:
The petitioner, a private limited company, established a new industrial undertaking and applied for an eligibility certificate under Section 4-A of the U.P. Trade Tax Act for exemption from trade tax. The Divisional Level Committee granted an eligibility certificate for eight years. The petitioner contended that it specifically requested the exemption under the deferment scheme and applied for moratorium under Section 8(2-A) read with Rule 43. The Commissioner of Income Tax rejected the claim for moratorium on the grounds that the petitioner had availed the exemption under Section 4-A during the period 15.9.1998 to 19.2.1999 without realizing any tax.

3. Interpretation and Application of Rule 43(8):
The court analyzed Section 8(2-A) of the Act and Rule 43 of the U.P. Trade Tax Rules, 1948. Section 8(2-A) allows for moratorium in lieu of exemption under Section 4-A, subject to prescribed conditions. Rule 43(8) specifically states that a manufacturer who has availed the facility of exemption under Section 4-A is not entitled to the grant of moratorium. The court found that the petitioner had claimed exemption on the sale turnover under Section 4-A for the period September 1998 to January 1999, thus availing the exemption. Consequently, the petitioner was not entitled to the moratorium under Rule 43(8).

4. Legal Principles for Interpreting Taxing Statutes:
The court emphasized the principle of strict construction in interpreting taxing statutes. It cited precedents that a statute should be read in its ordinary, natural, and grammatical sense. The court referred to the principle that if the language of a taxing provision is clear and unambiguous, it should be interpreted strictly without considering arguments of hardship or equity. The court rejected the petitioner's reliance on cases advocating for a liberal interpretation, as Rule 43(8) was found to be clear and unambiguous.

Conclusion:
The court concluded that there was no infirmity in the order passed by the Commissioner of Trade Tax, as the petitioner had availed the exemption under Section 4-A and was thus not entitled to the moratorium under Rule 43(8). The writ petition was dismissed, and no costs were awarded.