2013 (11) TMI 1508 - HC - VAT and Sales Tax

Exemption of tax under Section 4-A of the U.P. Trade Tax Act, 1948 - Rejection of review filed under Rule 25(3)(C) - whether the unit is self-financed or it is financed by any financial institution. - Date of application of loan - whether the assessee had applied for a term loan to the Oriental Bank of Commerce on 5.1.2000 as alleged or on 1.5.2000 as held by the authorities - Held that - A bare perusal of the two applications alleged to have been submitted by the assessee for grant of term loan which have been filed by the revenue along with the counter affidavit reveals that the application dated 5.1.2000 is for a term loan of Rs.1,52,000/- and a cash credit limit of Rs.2,00,000/- total Rs.3,52,000/-. It has been submitted by one Smt. Kamal Narang as proprietor of the assessee - The other application for term loan dated 1.5.2000 is only for a term loan of Rs.1,52,000/-. It has been submitted on behalf of Smt. Kamal Narang - A bare perusal of the two applications clearly reveals that they are two different applications and the application dated 5.1.2000 is by the assessee whereas the application dated 1.5.2000 is in the individual capacity of the proprietor of the assessee firm. The financial assistance sought by both the applications are different. No evidence was adduced to establish that no application was filed by the assessee for the grant of term loan on 5.1.2000 - tribunal as well as a Divisional Level Committee have manifestly erred in rejecting the exemption application of the petitioner - assessee is held entitle to grant of exemption under Section 4-A of the Act subject to fulfillment of other conditions - Decided in favour of assessee.

Summary

Issues:
- Rejection of exemption application under Section 4-A of the U.P. Trade Tax Act, 1948.
- Discrepancy in the application date for term loan.
- Interpretation of application details and financial assistance sought.
- Consideration of self-financed status and disclosure requirements.

Analysis:
The judgment by the High Court of Allahabad pertains to the rejection of an exemption application under Section 4-A of the U.P. Trade Tax Act, 1948. The applicant, engaged in manufacturing and sale of "Dissolved Acetylene Gas," had applied for tax exemption, which was initially rejected by the Divisional Level Committee, followed by dismissal of appeal by the tribunal. The primary issue revolved around the date of application for a term loan, crucial for eligibility for tax exemption as per a specific notification.

The crux of the matter lay in determining whether the applicant had indeed applied for a term loan to the Oriental Bank of Commerce on 5.1.2000, as claimed, or on 1.5.2000, as contended by the authorities. The applicant provided documentary evidence, including an application dated 5.1.2000 and a bank certificate confirming the same. However, the department also presented an application dated 1.5.2000, raising doubts regarding the actual application date.

Upon scrutiny, it was evident that the two applications were distinct, with different financial assistance amounts and applicants. The application dated 1.5.2000 was in the individual capacity of the proprietor, not the firm, unlike the application dated 5.1.2000. The court emphasized that the application dated 1.5.2000 could not be considered as the applicant's submission for a term loan, reinforcing the validity of the application dated 5.1.2000.

Furthermore, the court addressed the disclosure requirement in the exemption application regarding self-financed status and financial institution funding. The applicant correctly indicated self-financed status as of the application date, clarifying that no loan had been sanctioned till then. The court dismissed the argument that mentioning the term loan application was necessary, as it was not a prescribed detail in the application form.

Additionally, the court highlighted the authenticity of the bank certificate confirming the application date and noted the absence of evidence disproving the application submission on 5.1.2000. Consequently, the tribunal and the Divisional Level Committee were deemed to have erred in rejecting the exemption application. The court set aside the impugned orders and granted the applicant entitlement to exemption under Section 4-A of the Act, subject to other conditions, ultimately allowing the revision.

In conclusion, the judgment meticulously analyzed the discrepancies in application dates, interpretation of application details, and fulfillment of disclosure requirements, ensuring a fair and just decision in favor of the applicant.