1987 (4) TMI 494 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to Sales Tax Officer's order denying exemption under Section 4-A of U. P. Sales Tax Act based on Joint Director's recommendation.

Analysis:
The petition challenged an order by the Sales Tax Officer denying exemption under Section 4-A of the U. P. Sales Tax Act to the petitioner. The Sales Tax Officer concluded that the petitioner was not a new unit entitled to exemption. The petitioner argued that the Joint Director of Industries had issued a recommendation in favor of the petitioner's entitlement to exemption, and the Sales Tax Officer should not have disregarded this recommendation. The court noted that the Sales Tax Officer does not have the authority to review or overturn exemptions granted by the State Government or its authorized officers. In a previous case, it was held that the Sales Tax Officer cannot sit in judgment over such exemptions. The court found that the Joint Director, authorized by the State Government, had recommended the petitioner for exemption, and the Sales Tax Officer was bound to act in accordance with this recommendation. Therefore, the Sales Tax Officer's decision to conduct a fresh inquiry instead of following the recommendation was without jurisdiction.

The standing counsel argued that the Joint Director was only authorized to make a recommendation and not to grant an eligibility certificate. However, the court held that the distinction was immaterial because the Government Order mandated that the Sales Tax Officer must act in accordance with the Joint Director's recommendation, whether it was a recommendation or a certificate. The Sales Tax Officer was not permitted to review or reassess the recommendation independently. Consequently, the Sales Tax Officer's order was deemed to be without jurisdiction and was set aside.

As a result of the court's findings, the petition was allowed, and the Sales Tax Officer's order was quashed. The Sales Tax Officer was prohibited from making any assessment regarding the petitioner's eligibility for the period covered by the eligibility certificate. The court also clarified that if any authority had been authorized to review eligibility certificates, this order would not prevent such a review from taking place.