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2021 (7) TMI 1346 - HC - VAT and Sales TaxStrict rule of interpretation - additional fixed capital investment of the industrial undertaking as a whole has to be taken into account or item-wise additional fixed capital investment - joint diversification - benefit of clause (d) of Explanation (5) of the Section 4A of UPTT Act - Section 58 (1) of the U.P. Value Added Tax Act - Whether the Tribunal has wrongly relied upon Clause (d) of the above explanation (4) of Section 4A of UPTT Act to hold that the Applicant has himself separately shown the investment in refrigerator and monitor therefore it cannot be considered jointly for the purpose of Section 4A? HELD THAT - After perusal of record the Court has opined in para 26 that in the first place as a rule it cannot be disputed that at the threshold i.e. to determine whether the assessee was eligible to exemption a strict rule of interpretation had to be enforced. However undisputedly the assessee did engage in diversification upon establishing manufacturing facility to manufacture refrigerators and PC monitors. No goods similar to those were being manufactured by it earlier. Therefore a purposive construction has to be made. Reliance had also been placed on para 11 and 12 of the judgment of Hon ble Apex Court in COMMISSIONER OF SALES TAX VERSUS INDUSTRIAL COAL ENTERPRISES 1999 (2) TMI 530 - SUPREME COURT . The Court further observed that it also cannot be disputed that the burden to establish that the assesse had made a single diversification to manufacture refrigerators and PC monitors rested on the assessee. It was a special fact in the knowledge of the assessee. Therefore the burden would remain on the assessee to prove the same and for the revenue authorities to rebut such evidence as the assesse may produce. Now at this stage it is not expected from this Court to take fresh appraisal of the evidences or fact findings recorded by the Tribunal or submitted for consideration by the revenue/revisionist. The trade tax revision could not be dealt with and decided as an appeal by this Court as an appellate authority. If fact finding authority comes to certain conclusion honestly and bona fidely the mere fact that Court may have a different perspective of that question cannot be a ground to interfere with the finding even though another view may be possible. Considering the limited jurisdiction exercisable under the Act such a course is not available. It is apparent that the Tribunal arrived at finding of fact after adducing the evidence produced by the assessee and by the revenue that there was single diversification for carrying out the work to set up manufacturing unit for manufacture of refrigerators and monitors. In any set of circumstances it cannot be said that the order passed by the Tribunal is in any way illegal or erroneous - This Court is of the considered opinion that if the last fact finding authority i.e. the Tribunal has recorded finding of fact the same cannot be interfered with in the revision provided the finding is perverse or it based on consideration of irrelevant material or not consideration of relevant material. The Court does not find any infirmity or illegality in the finding recorded by the Tribunal. The revision fails and is accordingly dismissed.
Issues Involved:
1. Eligibility for tax exemption under the U.P. Value Added Tax Act. 2. Interpretation of diversification and additional fixed capital investment under Section 4A of the U.P. Trade Tax Act. 3. Whether the diversification into manufacturing refrigerators and PC monitors was a single or separate exercise. 4. The burden of proof and the role of evidence in establishing the nature of diversification. 5. The applicability of the Supreme Court's judgment in DSM Group of Industries. Issue-wise Detailed Analysis: 1. Eligibility for Tax Exemption: The revision was filed under Section 58(1) of the U.P. Value Added Tax Act against the order of the Commercial Tax Tribunal. The core issue was whether the assessee's additional fixed capital investment in manufacturing refrigerators and PC monitors should be treated as a joint diversification, thereby qualifying for tax exemption under Section 4A of the U.P. Trade Tax Act. 2. Interpretation of Diversification and Additional Fixed Capital Investment: The Tribunal and the Court had to determine if the investments in refrigerators and PC monitors constituted a single diversification exercise. The Tribunal initially found that the assessee had filed two separate applications for exemptions, which the revenue authorities interpreted as two separate diversification exercises. However, the Tribunal later concluded that filing two applications due to separate notifications for electronic and electrical goods did not necessarily indicate separate diversification efforts. 3. Single or Separate Diversification Exercise: The Tribunal had to decide whether the diversification into manufacturing refrigerators and PC monitors was a single exercise or two separate ones. The assessee argued that the diversification was a single exercise, supported by evidence such as the simultaneous purchase of assembly lines and the close dates of production commencement for both products. The Tribunal initially rejected this claim but was directed by the High Court to reconsider the evidence and the nature of the diversification. 4. Burden of Proof and Role of Evidence: The burden of proof rested on the assessee to demonstrate that the diversification was a single exercise. The Tribunal and the High Court examined various pieces of evidence, including the original approval letters from the Government of India, the company's annual report, and invoices for machinery purchases. The High Court found that the Tribunal had overlooked significant evidence and directed it to reassess the case based on the available evidence. 5. Applicability of Supreme Court's Judgment in DSM Group of Industries: The Tribunal and the High Court referred to the Supreme Court's judgment in DSM Group of Industries, which established that the eligibility for exemption does not depend on the number of applications or units but on the total investment made by the company. The High Court emphasized that the Tribunal should consider the purpose of the exemption, which is to encourage industrial investment and growth, and not be strictly bound by procedural technicalities. Conclusion: The High Court set aside the Tribunal's order, finding that it had misdirected itself by not adequately considering the evidence presented by the assessee. The case was remitted back to the Tribunal to pass a fresh order, taking into account all relevant evidence and the principles laid down by the Supreme Court. The High Court stressed the importance of a purposive construction of tax exemption provisions to promote industrial investment and growth. The Tribunal was directed to complete the reassessment within six months.
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