2023 (8) TMI 787 - HC - VAT and Sales Tax

Date of commencement of production of the unit - initial date of production of the commencement of service of the petitioner s unit has been recorded as 12.06.2012 instead of actual date of production, i.e., 28.03.2012 - Grievance projected by the writ petitioner is that the petitioner has although submitted the documentary evidence of having commenced the production of the unit on 28.03.2012, the final decision for grant of DOP (date of production) has not been taken by the Director Industries and Commerce HELD THAT - As on account of inaction on part of the respondents by not taking the decision timely regarding the date of production, the benefits which have been availed by the petitioner under the provision of Section 80IB of the Income Tax Act which have been duly accepted by the department at the relevant point of time by accepting the returns are being withdrawn. The record reveals that although the petitioner continued to carry out the production of biscuits with effect from 28.03.2012 and have been filing the returns with the Income Tax Department and the assessment proceedings u/s 153(A)/143(3) of the Income Tax Act for the annual years, 2014-15, 2015-16 and 2016-17 were initiated because of the date of production shown as 12.06.2012 and the deductions claimed by the petitioner were being withdrawn. Since the respondents have failed to take a decision for grant of date of production as on 28.03.2012 in conformity with the interim direction passed by this Court coupled with the observation of the Director Industries and Commerce, the learned senior counsel appearing on behalf of the petitioner-unit submitted that he would be satisfied at this stage in case if a direction is issued to the respondents to accord consideration to the unit of the petitioner within some reasonable time in the light of the observations of the concerned Director, i.e., respondent No. 2 and to the aforesaid preposition, the learned counsel appearing on behalf of the respondents have no objection. The present petition is disposed of with the direction to the respondents to accord consideration to the case of the petitioner to have commenced the production of the unit on 28.03.2012 instead of 12.06.2012 by granting final DOP in conformity with the observations of the Director Industries and Commerce, which find mention in communication dated 14.06.2012 addressed to the General Manager District Centre, Jammu within a period of six weeks from the date copy of the order along with writ petition and the annexures appended thereto, are made available to the respondents.

Issues Involved:
1. Quashment of communication regarding the date of production.
2. Grant of date of commencement of production as 28.03.2012.
3. Consideration of documentary evidence submitted by the petitioner.
4. Impact on Income Tax benefits under Section 80 IB of the Income Tax Act.
5. Respondents' failure to take timely decision and its consequences.

Summary:

Issue 1: Quashment of Communication Regarding the Date of Production
The petitioner sought the quashment of a communication issued in Form No. 11772 dated 14.06.2012, which recorded the initial date of production as 12.06.2012 instead of 28.03.2012. The petitioner argued that the actual date of production was 28.03.2012, supported by documentary evidence such as stock registers and invoices.

Issue 2: Grant of Date of Commencement of Production as 28.03.2012
The petitioner requested a writ of Mandamus to command the respondents to recognize the commencement date as 28.03.2012. The petitioner's unit, registered under various tax regulations, started manufacturing biscuits from 28.03.2012. Despite submitting the requisite documents, the respondents recorded the date as 12.06.2012, causing prejudice to the petitioner.

Issue 3: Consideration of Documentary Evidence Submitted by the Petitioner
The petitioner provided substantial documentary evidence, including stock registers, procurement records, and tax returns, to prove the commencement of production on 28.03.2012. The court noted that the respondents had admitted the correctness of the petitioner's claims but failed to inspect the unit on the claimed date.

Issue 4: Impact on Income Tax Benefits under Section 80 IB of the Income Tax Act
The incorrect recording of the production date affected the petitioner's entitlement to benefits under Section 80 IB of the Income Tax Act. The petitioner had been filing returns and claiming deductions based on the actual commencement date. The delay in recognizing the correct date led to the reopening of Income Tax Returns and potential withdrawal of benefits.

Issue 5: Respondents' Failure to Take Timely Decision and Its Consequences
The court found that the respondents had delayed taking a decision on the actual date of production despite an interim order dated 30.11.2018 directing them to consider the correct date if there were no legal impediments. The inaction over ten years caused significant prejudice to the petitioner, including the incorrect categorization under medium scale and the subsequent tax implications.

Conclusion:
The court directed the respondents to reconsider the petitioner's case and grant the date of production as 28.03.2012 within six weeks, quashing the impugned communication dated 14.06.2012. The respondents were also instructed to accept any additional documentary evidence if required. The writ petition was disposed of accordingly.

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