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TMI Blog1973 (1) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... or commerce. It exports the oils to Nepal, i.e., outside India. Oil-seeds are liable to purchase tax at the rate of 3 per cent under section 3-D of the U.P. Sales Tax Act on the purchases made by the petitioner-firm either from cultivators or from other unregistered dealers. Section 4-B, U.P. Sales Tax Act, provides for special relief to certain manufacturers of notified goods. The relief is given in the form of concessional rate of purchase tax or exemption from tax, as may be notified by the State Government in respect of individual classes of goods. On 10th February, 1969, the State Government issued a notification notifying oils of all kinds and provided for them a rate of tax at 2 per cent. On 21st March, 1969, the petitioner applied in the prescribed form to the Sales Tax Officer, Kanpur, for the grant of a certificate of recognition under sub-section (2) of section 4-13. Although rule 25-A of the Sales Tax Rules contemplated that the certificate of recognition shall ordinarily be issued within 30 days of the making of the application, yet the Sales Tax Officer granted the requisite certificate to the petitioner on 5th December, 1969. Sub-rule (5) of rule 25-A, inter alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B, in so far as it is material for our purposes, provides "4-B. Special relief to certain manufacturers.-(1) Notwithstanding anything contained in sections 3, 3-A, 3-AA and 3-D(a) where any goods liable to tax under section 3-D are purchased by a dealer who is liable to tax on the turnover of his first purchases under that section and the dealer holds a recognition certificate issued under subsection (2) in respect thereof, he shall be liable in respect of these goods to tax at such concessional rate, or be exempt from tax, as may be notified in the Gazette by the State Government in that behalf; (b) where any goods liable to tax under any other section are sold by a dealer to another dealer and such other dealer furnishes to the selling dealer in the prescribed form and manner a certificate to the effect that he holds a recognition certificate issued under sub-section (2) in respect thereof, the selling dealer shall be liable in respect of these goods to tax at such concessional rate, or be exempt from tax, as may be notified in the Gazette by the State Government in this behalf. (2) A dealer who requires any goods referred to in sub-section (1) for use as raw material for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a recognition certificate, the requirements of clause (b) are fully satisfied. In my opinion, the selling dealer would be entitled to the concessional rate in respect of the transactions for which he produced a certificate from the purchasing dealer that the purchasing dealer held a recognition certificate in respect of the goods purchased by him. The scheme of section 4-B is to provide relief in the form of a concessional rate of tax to the classes of dealers mentioned in it. The relief is optional. The dealer has to make his choice. If he wants to avail of the relief, he has to make an application in the prescribed form for the grant of the recognition certificate. The recognition certificate is the document of title entitling him to claim the concessional rate of tax. If he makes his choice of filing the requisite application, he has done all he is required to do by section 4-B. Sub-section (2) of section 4-B directs the assessing authority to grant to the dealer a recognition certificate in the prescribed form and subject to such conditions as may be prescribed, if the applicant satisfies the prescribed requirements and conditions. In my opinion, the phrase "subject to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.. Name and full address of the principal place of business in the State of Uttar Pradesh. 3.. Name(s) and full address(es) of the other place(s) of business in U.P. 4.. Particulars of registration certificate issued under the U.P. Sales Tax Act and the Central Sales Tax Act. 5.. Particulars of the proprietor(s), all persons having any interest in the business in the form on reverse. 6.. Description of notified goods in respect of which recognition certificate is sought. 7.. The date on which the manufacture of the notified goods was started. 8.. Name(s) of goods or classes of goods required for use as raw material for manufacture of the notified goods mentioned in column No. 6. Under sub-rule (4) of rule 25-A, if the Sales Tax Officer is satisfied, after making such enquiry as he thinks necessary, that the particulars contained in the application are correct and complete, the fee of Rs. 10 has been paid and the security, if any, required to be furnished under subsection (3) of section 4-B has been furnished by the dealer, he shall grant a recognition certificate in form XIX for use at the principal place of business and also furnish, free of cost, an attested copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the condition that the certificate shall take effect from the date of its issue does not carry out the object of section 4-B, but is liable to nullify or render it illusory for an indefinite period of time. Under section 4-B the State Government has been given the discretion to notify goods as and when it deems fit. A particular goods may be notified at any time in the course of an assessment year. Section 4-B has obviously been enacted to give incentive to dealers to engage in the manufacture of notified goods by granting them a concessional rate or exemption from tax. The grant of relief is not automatic, but is dependent upon the dealer exercising his choice by making an application for the recognition certificate. Section 4-B does not require the dealer to do anything else if he has made the requisite application and deposited the fee and security. He has no control over the Sales Tax Officer. The Sales Tax Officer can, for reasons of his own, grant the certificate after the expiry of 30 days mentioned in rule 25-A(4) provided he gets the extension from the Assistant Commissioner (Executive). The delay in the completion of the procedural proceedings by the Sales Tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, namely, "such certificate shall take effect from the date of its issue" being ultra vires, could not validly be taken into consideration by the Sales Tax Officer while making the assessment. The assessment order dated 31st May, 1971, is liable to be modified. In the result, the writ petition succeeds and is allowed. The last sentence of sub-rule (5) of rule 25-A of the U.P. Sales Tax Rules is declared to be ultra vires. The assessment order dated 31st May, 1971, is modified. The demand created in it of tax on the purchase of oil-seeds shall stand reduced by Rs. 32,848.61. The Sales Tax Officer is further directed to rectify the recognition certificate granted to the petitioner by inserting in it the date of the application in column No. 1 thereof. The petitioner will be entitled to its costs. GULATI, J.-I agree. OJHA, J.-I have had the privilege of going through the judgment of brother Satish Chandra, J., but regret my inability to agree with the same. The facts of the case and the provisions of the U.P. Sales Tax Act and the Rules framed thereunder (hereinafter referred to as the Act and the Rules respectively) in so far as they are relevant for purposes of deciding the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemplated by rule 25-A. Emphasis in the latter is upon the contingencies subject to which the dealer would be entitled to the benefit of the concession consequent upon the grant of the recognition certificate. The word condition also means contingency. To say that a dealer would be entitled to the benefit of concession envisaged by section 4-B of the Act on the happening of a contingency, namely, on the issue of the recognition certificate, would, in my opinion, be prescribing a condition within the meaning of the said section. The scheme of section 4-B of the Act also supports this view. Subsection (2) speaks of an application by "a dealer who requires any goods referred to in sub-section (1)". Such a dealer is to be granted a recognition certificate on fulfilling the requirements and conditions as may be prescribed. Clauses (a) and (b) of sub-section (1) speak of a dealer who "holds" a recognition certificate "issued" under sub-section (2). It seems to be a contradiction in terms to say that a dealer "holds" a recognition certificate even though it has not been "issued" to him. The earliest date on which it can be said that a dealer "holds" a certificate would be the date on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be found in the case of Mahadeolal v. Administrator General of West BengalA.I.R. 1960 S.C. 936., wherein after laying down at page 939 four principles of interpretation, it was observed at page 940: "As we have already mentioned it is a sound rule of interpretation of beneficent legislation that in cases of ambiguity the construction which advances the beneficent purpose should be accepted in preference to the one which defeats that purpose. In their anxiety to advance the beneficent purpose of legislation courts must not however yield to the temptation of seeking ambiguity when there is none." And so the crucial point is: Is there any ambiguity in the language of section 4-B of the Act? If there is none, the language of the section will have to be looked into as it is and not as it ought to be. As I see section 4-B of the Act I find no ambiguity in it. The purpose of issuing a recognition certificate is to grant a statutory concession subject to prescribed conditions. The grant is to be made by the Sales Tax Officer on being satisfied that the requirements and conditions as are prerequisites to such a grant are fulfilled. These prerequisites are such that satisfaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of the concession from the date of presentation of his application even though the statute granting concession clearly provides that benefit of such concession is to be available only after the certificate has been granted and issued. In Kedarnath Jute Mills Co. Ltd. v. The Commercial Tax Officer(1), referring to section 5(2)(a)(ii) of the Bengal Finance (Sales Tax) Act (6 of 1941), which had the effect of exempting a specified turnover of a dealer from sales tax, it was held: "Section 5(2)(a)(ii) of the Act in effect exempts a specified turnover of a dealer from sales tax. The provision prescribing the exemption shall, therefore, be strictly construed. The substantive clause gives the exemption and the proviso qualifies the substantive clause. In effect the proviso says that part of the turnover of the selling dealer covered by the terms of sub-clause (ii) will be exempted provided a declaration in the form prescribed is furnished. To put it in other words, a dealer cannot get the exemption unless he furnishes the declaration in the prescribed form. It is wellsettled that 'the effect of an excepting or qualifying proviso, according to the ordinary rules of construct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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