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2013 (10) TMI 640 - HC - VAT and Sales TaxUPVAT - Exemption Notification No.780 - Exemption Based on Fixed Capital Investment Revenue had rejected the application for certificate of entitlement by wrongly interpreting the provisions of section 42(3)(a) of the Act Held that - Section 42 and Section 81 were amended by Amending Act No.11 of 2009 dated 28.2.2009 retrospectively w.e.f. 1.1.2008 and benefit of exemption was converted into benefit of refund by net tax payable by the unit - The Tribunal had committed an error of law in rejecting the application for grant of Certificate of Entitlement under Section 42(3)(a) as not maintainable even though the exemption was based on the fixed capital investment - In the case of electronic industries monetary limit was not in view of the Notification dated 16.11.1995 there but the exemption was based on fixed capital investment Order set aside - The matter was remanded back to the Tribunal to decide the matter expeditiously in view of the preposition of law Decided in favour of Petitioner.
Issues: Interpretation of Section 42(3)(a) of UP VAT Act for granting a certificate of entitlement based on fixed capital investment for exemption continuation.
Analysis: The case involved a dispute regarding the grant of exemption based on fixed capital investment under Notification No.780 dated 31.3.1995. The applicant was granted an eligibility certificate for eight years, starting from 31.12.2001. The Uttar Pradesh VAT Act came into force on 1.1.2008, and under Section 81(1)(b), the applicant was entitled to continue the exemption until 30.12.2009. The Commissioner rejected the application for a certificate of entitlement, leading to an appeal before the Commercial Tax Tribunal, which was dismissed erroneously. The Tribunal misinterpreted Section 42(3)(a)(i) of the UP VAT Act, which requires a certificate of entitlement for units whose exemption is based on fixed capital investment. The section also considers units granted exemption under a notification issued under Section 4A of the U.P. Trade Tax Act. The Tribunal erred in rejecting the application for the certificate of entitlement despite the exemption being tied to fixed capital investment. Furthermore, Section 42 and Section 81 of the Act were retrospectively amended by Amending Act No.11 of 2009, converting the benefit of exemption into a benefit of refund by net tax payable. The Tribunal's decision to reject the application for the certificate of entitlement was based on an incorrect understanding of the law, especially regarding the exemption linked to fixed capital investment. The judgment set aside the Tribunal's order and remanded the matter for expedited reconsideration in light of the correct legal interpretation. The revision petition was allowed, emphasizing the importance of considering fixed capital investment for granting entitlement certificates under the UP VAT Act.
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