2017 (1) TMI 197 - HC - VAT and Sales Tax

Grant of eligibility certificate - project report - delay in receiving machinery - Held that - once the assessee has brought to the notice of the DLSC that certain machines are to be installed in the Industrial Unit and in case machines are received later, there would be a good reason for allowing benefits and such beneficial provisions should not be taken in such a technical manner as has been taken not only by the DLSC but also by the Tax Board. The assessee applied for developing of the area and brought Plant & Machinery with latest technology to develop the industrial area with benefits to all and merely because the application was made after a period of more than six months, in my view, is no reason to reject the claim particularly when both the machines were received within a period of six months from moving the application. In my view even slight delay should have been condoned by the DLSC as well as by the Tax Board - the benefit has to be extended to the two machines which was received later but were found to be part of the project report - petition allowed - decided in favor of petitioner-assessee.

Summary

Issues:
1. Eligibility for exemption of purchase of two machines under Sales Tax Incentive Scheme for Industries, 1987.
2. Time limit for claiming benefits under the scheme.

Analysis:

Issue 1: Eligibility for exemption of purchase of two machines under Sales Tax Incentive Scheme for Industries, 1987
The petitioner, an Industrial Unit, applied for an eligibility certificate under the Sales Tax Incentive Scheme for Industries, 1987. The application included details of eligible fixed capital investment (FCI) and various machines to be installed in the unit. The District Level Screening Committee (DLSC) initially excluded two machines from the eligibility certificate but later rejected the petitioner's claim for including them. The Tax Board also upheld the rejection. The petitioner argued that the machines were integral to the project, mentioned in the project report, and received within six months of the application. The court noted that the machines were received within six months of the application, and the delay in applying for their inclusion should not be a reason for rejection. The court emphasized the importance of the petitioner's investment in developing the industrial area and extended the benefit of exemption for the two machines.

Issue 2: Time limit for claiming benefits under the scheme
The counsel for the revenue contended that the supplementary application for the two machines was filed almost a year later, beyond the prescribed period of 180 days, leading to the rejection by DLSC and the Tax Board. The court acknowledged the time limit but highlighted that the machines were received within six months of the original application and before the expiry of the eligibility certificate issued by DLSC. The court opined that the delay in filing the supplementary application should have been condoned, considering the timely receipt of the machines and the overall investment by the petitioner. The court referred to a previous judgment to support its decision. Consequently, the court allowed the petition, quashing the orders of the Tax Board and DLSC.

In conclusion, the court ruled in favor of the petitioner, emphasizing the importance of considering the timely receipt of machines and the overall investment made by the petitioner in the industrial unit development. The judgment highlighted the need to interpret beneficial provisions leniently and not to reject claims based on technicalities, especially when the essence of the project report was maintained.