2009 (7) TMI 1183 - HC - VAT and Sales Tax

Exemption application rejected under section 4A of the U.P. Trade Tax Act, 1948 - Held that - In the instant case, it is not disputed that the company of the oppositeparty is situated at plot No. D-23, Parshakhera Industrial Area, Bareilly, whereas Vadilal Industries Ltd., is situated at plot No. D-24, Parshakhera Industrial Area, Bareilly, which is owned by U.P.S.I.D.C. In the report of Shri R.B. Yadav, Assistant Commissioner, it has come on record that the companies are maintaining separate production books, account books and excise record. It is also not disputed that the directors in both the units were separate and both the units are manufacturing different varieties of ice-creams bearing different code numbers. The revisionist has failed to establish that the director of the company who owned the existing unit controlled the unit themselves and the unit of opposite-party is nothing, but one man show of the one director. It is settled law that exemption can only be denied when the company, as a whole, has interest in other units, which is missing in the instant case. Revision dismissed.

Summary

Issues:
1. Eligibility for exemption under section 4A of the U.P. Trade Tax Act, 1948.
2. Definition of "new unit" under section 4A(6) of the Act.
3. Jurisdiction of the Divisional Level Committee and the Trade Tax Tribunal.
4. Distinction between separate juristic entities for exemption eligibility.

Detailed Analysis:
1. The case involved a revision filed by the Commissioner, Trade Tax, challenging the rejection of an application for exemption under section 4A of the U.P. Trade Tax Act, 1948 by the Divisional Level Committee. The company, engaged in manufacturing ice cream, applied for exemption for a new unit established in 1997. The Tribunal set aside the rejection, emphasizing the separate nature of the units and different varieties of ice cream produced, overturning the Divisional Level Committee's decision based on the SIB Survey Report.

2. The dispute centered on the interpretation of "new unit" under section 4A(6) of the Act, which includes a factory set up by a dealer after a specified date. The Full Bench of the Trade Tax Tribunal found that the new unit met the conditions for exemption, as it was a separate entity with distinct registrations and licenses. The Tribunal's fact-finding authority confirmed the independence of the units and their separate locations, supporting the eligibility for exemption.

3. The jurisdictional aspect was crucial, with the Commissioner arguing that the Tribunal exceeded its authority by reversing the Divisional Level Committee's decision without legal grounds. However, the Tribunal's detailed analysis of the evidence and legal provisions justified its decision to grant the eligibility certificate, emphasizing the distinct identities of the companies and compliance with registration requirements.

4. The case highlighted the importance of recognizing separate juristic entities for exemption eligibility. Citing precedents, the Tribunal emphasized that unless the company as a whole had interest in other units, exemption could not be denied. The distinct locations, operations, and ownership of the units supported the conclusion that the new unit qualified for exemption, dismissing the revision and upholding the Tribunal's decision based on the legal principles and factual findings presented.