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2019 (10) TMI 880 - HC - VAT and Sales TaxLevy of trade tax - Grant of exemption - Eligibility Certificate dated 05.02.1998, issued under section 4-A of the U.P. Trade Tax Act, 1948 - rate of tax payable in each Assessment years during the period of exemption - HELD THAT - Clearly, in the facts of the case, since the original exemption application filed by the assessee had been allowed (and not rejected), by the Divisional Level Committee, by its order dated 05.02.1998, there never arose any remedy to the assessee to apply for review in terms of Rule 25(3)(c) of the Rules. Therefore, the application that came to be filed by the assessee after grant of Eligibility Certificate was wholly non est. It did not confer jurisdiction on the Divisional Level Committee to review or to re-examine or modify the entitlement to exemption, already granted. The only power that may have remained with the revenue would have been under Section 4-A(3) of the Act, whereunder the Commissioner may have modified the Eligibility Certificate issued by the Divisional Level Committee vide its order dated 05.02.1998. That power having not been exercised, it was neither for the assessing authority nor for the first appellate authority to sit in judgement over the same or to deprive the assessee of any part of the exemption already granted by the Divisional Level Committee. In that context and regard, the assessing authority as also the first appellate authority, were purely executing authorities, that had to give full effect to the Eligibility Certificate duly granted by the competent authority namely Divisional Level Committee - answered in the negative i.e. completely in favour of the assessee and against the revenue. Whether the Trade Tax Tribunal is legally justified in law in confirming the orders passed by Authorities below rejecting the books of account of revisionist without any incriminating material available to him? - HELD THAT - Plainly, the books of account had been rejected for varied reasons that have been noted and considered by the Tribunal as well. That being a question of fact and findings recorded thereon being based on material and evidence on record, it does not call for any interference by this Court in exercise of revisory jurisdiction - answered in the affirmative i.e. in favour of the revenue and against the assessee. Revision application allowed in part.
Issues Involved:
1. Justification of ignoring the Eligibility Certificate issued to the assessee. 2. Justification of rejecting the books of account of the assessee without incriminating material. Detailed Analysis: Issue 1: Justification of Ignoring the Eligibility Certificate The assessee, a manufacturer of black & white and color television sets, set up a "new unit" under Section 4-A of the U.P. Trade Tax Act, 1948, and was granted an Eligibility Certificate by the Divisional Level Committee on 05.02.1998. This certificate granted the assessee tax exemptions for eight years starting from 14.06.1996. The exemption rates were structured as full exemption for the first two years, 75% for the third and fourth years, 50% for the fifth and sixth years, and 25% for the seventh and eighth years. During the assessment for A.Y. 1999-2000, the Assessing Authority misinterpreted the certificate, treating it as the fourth/fifth year of exemption instead of the third/fourth year, thus allowing only 50% exemption. The First Appellate Authority further altered the exemption entitlement by categorizing the assessee under Part-II of the exemption notifications, which was for electronic goods manufacturers, instead of Part-I, as initially considered by the Divisional Level Committee. This reclassification reduced the monetary limit of exemption and altered the exemption percentages. The Tribunal upheld the First Appellate Authority’s decision, reasoning that the exemption notification, not the Eligibility Certificate, governed entitlement. The Tribunal cited a decision in Mentha Oil and Allied Product Vs. State of U.P., asserting that amendments to the exemption notification would automatically amend the Eligibility Certificate. The High Court, however, emphasized that the right to exemption arose upon the issuance of the Eligibility Certificate, and the Assessing Authority was bound to comply with it. The court cited precedents indicating that once an Eligibility Certificate is granted, it cannot be altered by the Assessing Authority or the First Appellate Authority. The Divisional Level Committee's subsequent order dated 20.02.2003, which clarified the exemption under Part-II, was deemed without jurisdiction and a nullity, as it was passed without inherent jurisdiction and could not modify the already granted certificate. The court concluded that the Tribunal erred in relying on the Mentha Oil case, as the statutory schemes under Sections 4-B and 4-A of the Act were different. The only authority to modify the certificate was the Commissioner under Section 4-A(3), which was not exercised. Issue 2: Justification of Rejecting the Books of Account The Tribunal affirmed the rejection of the assessee's books of account by the First Appellate Authority. The High Court noted that the rejection was based on varied reasons supported by material and evidence on record. This being a factual determination, the High Court found no grounds for interference under its revisory jurisdiction. Conclusion: The High Court partially allowed the revisions. It ruled in favor of the assessee regarding the first issue, holding that the Eligibility Certificate should have been fully complied with by the Assessing Authority and the First Appellate Authority. However, it upheld the rejection of the books of account, siding with the revenue on the second issue.
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