1971 (4) TMI 20 - HC - Income Tax

Tax Credit Certificate (Excise Duty on Excess Clearance) Scheme 1965 (made by the Central Government in exercise of the powers conferred by section 280ZE read with section 280ZD of the Income-tax Act 1961), was made applicable to the cement industry in 1965 to provide an incentive for increased production - Whether tax credit was to be given in respect of special excise duty levied u/s 80 of Finance Act 1965 also

Summary

Issues:
1. Interpretation of Tax Credit Certificate Scheme, 1965 for the cement industry.
2. Calculation of tax credit certificate based on excise duty payable.
3. Consideration of special excise duty under section 80 of the Finance Act, 1965.
4. Timeliness of supplementary application for tax credit certificate.
5. Power of Central authority to condone delay in filing applications.

Detailed Analysis:
1. The judgment concerns three Civil Writ Petitions filed by a company against the Director of Inspection, Customs & Central Excise, challenging the interpretation of the Tax Credit Certificate Scheme, 1965 for the cement industry. The scheme aimed to incentivize increased production by granting tax credit certificates. The petitioner contended that the special excise duty levied under section 80 of the Finance Act, 1965 should be included in the calculation for the tax credit certificate, not just the basic excise duty under the Excise Act. The court examined relevant provisions and held that the special duty under section 80 cannot be considered as duty under the Excise Act for the purpose of the tax credit certificate, as defined in section 280ZD of the Income-tax Act.

2. The dispute also involved the calculation of the tax credit certificate based on excise duty payable. The authority had calculated the rate for the certificate at 25% of the basic excise duty under the Excise Act only, excluding any additional excise duty. The petitioner argued for inclusion of the special excise duty under section 80. The court, however, upheld the authority's calculation method, stating that the tax credit is only applicable to the central excise duty levied under the Excise Act, not any other excise duty under a different enactment.

3. The judgment addressed the consideration of special excise duty under section 80 of the Finance Act, 1965. The petitioner sought inclusion of this duty in the tax credit certificate calculation. The court clarified that the special duty levied by section 80 cannot be treated as duty under the Excise Act for the purpose of granting the tax credit certificate. It emphasized that the scheme was specific in granting credit based on the excise duty payable under the Excise Act, excluding additional duties levied under other enactments.

4. An additional issue arose regarding the timeliness of a supplementary application for a tax credit certificate. The petitioner filed a supplementary application beyond the prescribed deadline. The court noted that the scheme allowed for condonation of delay for up to sixty days if sufficient cause was shown. The Central authority, however, refused to condone the delay beyond the stipulated period. The court upheld this decision, stating that the Central authority lacked the power to entertain claims beyond the specified time limit.

5. Lastly, the judgment discussed the power of the Central authority to condone delays in filing applications for tax credit certificates. It highlighted that the authority could only condone delays for up to sixty days, as per the scheme's provisions. The court found no fault in the Central authority's decision to reject the supplementary application due to the delay exceeding the permissible limit. Consequently, the petitions were dismissed without costs.