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TMI Blog2013 (8) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... Mrutunjay Pani v Narmada Bala Saimal [1961 (3) TMI 88 - SUPREME COURT]. The exemption was granted on the fixed capital investment made by the entrepreneur - Further, if any further investment was made by installing new machines then the benefit of exemption to the production of goods from such new machines was not available - It was expected that the petitioners will apply for fresh certificate regarding the installation of the new machines/investment, which resulted into extra production, but the same was not done - Provisions of Section 4A relates to Rule 25 and Form-XLVI, which was statutory form and was to be filled along with requisite documents were to be read in composite and not separate - The aforesaid provision also makes it abundantly clear that while applying for eligibility certificate necessary documents such as loan amount, land and machines were to be disclosed - After the grant of eligibility certificate, production from new machines were not eligible for grant of exemption of goods from payment of trade tax. Nothing was permissible under the garb of the certificate issued under Section 4-A of the Act by hiding the facts like the fixed capital investment from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said extra production. But the same was denied by the Government in view of the impugned circular dated 11.07.2005; and letter dated 12.02.2004 (Annexure-1 & 1A to the writ petition) Being aggrieved, the petitioner has approached this Hon'ble Court by preferring a Writ Petition No. 4896 (MB) of 2005, assailing the said circulars as well as assessment orders for the assessment years 2002-03 & 2003-04 and also the recovery certificate. In the said writ petition, the petitioner has alleged that the eligibility certificate under Section 4A(2)-(d) of the Trade Tax Act was granted by the Divisional Level Committee. So, the tax on the enhanced production is exempted from the payment of Trade Tax. This Hon'ble Court vide order dated 03.08.2005 has dismissed the said writ petition on the ground of alternative remedy available to the petitioner against the assessment orders. Liberty was also granted to challenge the impugned circular of the Commissioner either before this Hon'ble Court or appropriate forum, in accordance with law, if so advised. Being aggrieved, the petitioner has filed the present writ petition with the above-mentioned prayer. With this background, Sri Bharatji Agar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for a period of ten years from 21.02.2001 to 20.02.2011, whichever expires earlier. Whatever tax was assessed in the assessment orders only that has been adjusted/set off from the monetary limit available during the said assessment order. On specific query from the Bench, he admits that the new unit was established to avail an exemption under Section 4A of the Act. Later, new machines were installed for enhancement of the production. The petitioner is entitled for exemption on the entire enhanced production. It has no meaning whether it was produced by the earlier machines or by the new machines. He also submits that necessary direction may be issued to allow an exemption on surplus production. For this purpose, he relied on the ratio laid down in the case of Aditiya Chemical vs. State of U.P., 1988 UPTC 1348 (All.). Learned counsel placed reliance on the notifications issued pursuant to Section 4A of the Act, dated 27th August, 1984 and 08.07.2004. According to the learned counsel, an exemption was granted by the State Government since 1982 and the same is applicable in respect of electronic goods which are produced by the assessee. Thus, the learned counsel submits that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slative intents as clarified by the State Government. Sri N.C. Mishra, Sri Manish Kumar and Sri S.M.K. Chaudhary, learned counsel for remaining petitioners, by adopting above-mentioned arguments, made similar request. Thus, in short the submissions are that the Circular dated 8/11.07.2005 issued by the Commissioner of Trade Tax, Lucknow and the notice for provisional assessment for April, 2006 to December, 2006 and from April, 2007 to July, 2007 for imposition of tax on the turnover of goods manufactured out of the investment made after the date of grant of eligibility certificate, has been issued/proceeded with on totally misconception and misinterpretation of the provision of the Act and notification issued there under which do not prescribe any such limitation as mentioned in the circular. The same are also averred in Paragraphs 19,20,21,22 and 23 of the writ petition and the legal opinion of the Government on the interpretation as mentioned in Annexure-6 to the writ petition is to be taken into account then not only the Circular dated 08/11.07.2005 is contrary to the opinion given by the Government itself but also run counter to the scheme of exemption under Section 4A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication submitted on behalf of the petitioner as a new unit. The fixed capital investment, time period and monitory limit are related to each other. The monetary limit and the time period cannot be violated. The petitioners are not allowed to breach the fixed capital investment, that is to say addition of land/plant and machinery is not allowed for the same monetary limit as mentioned in the eligibility certificate of exemption. Once a monetary limit of exemption is allowed on the basis of declared fixed capital investment by issuing eligibility certificate then declared fixed capital cannot be changed by additions of land/plant, machinery etc., only to get monitory benefit on the basis of same eligibility certificate. Under Section 4-A(6)(2)(c) of the U.P. Trade Tax Act, the 'new unit' does not contemplates any addition to or extension of existing factory within the meaning of clause 5 of the explanation. The existing industrial undertaking who increase their production capacity by making additional fixed capital investment would be entitled for the benefit of tax exemption when the exemption is sought in that behalf by moving appropriate application under Section 4-A(5) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laid down in the case of Nagarjuna Construction Company Limited vs. Union of India and another, (2013) 1 SCC 721. The petitioners have not challenged the decision of the State Government dated 08.06.2005 and without assailing the said Government order, which is binding on the subordinate officers, the circular dated 08/11.07.2005 issued in pursuance thereof cannot be declared to be untenable and the writ petitions filed by the petitioners may kindly be dismissed. We have heard learned counsel for the parties and gone through the material available on the record. Section 4A of the Act was introduced in the Act for the purposes of promoting the development of industry in the State. Under Section 4-A sub-section (1) the State Government may by notification, declare that the turnover of the goods produced thereof be exempted from trade tax for a particular period not exceeding 12 years subject to such conditions as may be specified in the notification. The basis for grant of the exemption or reduction on tax is to be calculated on the fixed capital investment-the quantum of relief being a percentage of such investment. The phrase "fixed capital investment" will have to be read harmo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersification or modernization' means an industrial undertaking- (a) of a dealer who is not a defaulter in payment of any due under this Act, or the Central Sales Tax Act, 1956 or under any loan scheme administered by the Pradeshiya Industrial and Investment Corporation of Uttar Pradesh regarding trade tax on sale or purchase of goods; (b) whose first date of production of goods, (i) Of a nature different from those manufactured earlier by such undertaking in case of units undertaking diversification, and (or) (ii) Manufactured in excess of base production, in such undertaking in case of units undertaking expansion or modernization, falls at any time after March 31, 1990. (c) the production capacity whereof has increased by at least twenty five percent as a result of expansion of modernization or wherein goods of a nature different from these manufactured earlier are manufactured after diversification; (d) Wherein an additional fixed capital investment of at least twenty five percent, of such original fixed capital investment (without providing for depreciation ) is made. It is significant to mention that a distinction is made between 'additional' and 'original' fixed capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1988 ] 3 Supp (SCR) 543 Mukharji, J (as His Lordship then was ) said- "It is well settled that the meaning ascribed by the authority issuing the Notification, is a good guide of a contemporaneous exposition of the position of law. Reference may be made to the observations of this Court in K.P. Varghese v. The Income Tax Officer, Ernakulam [1982]1 SCR 629. It is a well settled principle of interpretation that courts in construing a Statute will give much weight to the interpretation put upon it at the time of its enactment and since, by those whose duty has been to construe, execute and apply the same enactment." (See also in Karnataka SSIDCL Vs. CIT (2002) Supp 4 SCR 453, 460.) From the records, it appears that the petitioners were allowed tax benefit by virtue of certificates issued under Section 4A of the Trade Tax Act, 1948. Section 4A of the Act, on reproduction reads as under:- "Section 4A. Exemption from trade tax in certain cases.-(1) Notwithstanding anything contained in any other provisions except the provisions of section 3H of this Act, where the State Government is of the opinion that it is necessary so to do for increasing the production of any goods or for promot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appropriate authority in accordance with any law for the time being in force relating to licensing or registration of industrial undertakings; (b)(i) which is registered under the Factories Act, 1948, or (ii) an application for registration in respect whereof has been made under that Act, or (iii) after making an application for a Term Loan from any Financial Corporation or Company owned or controlled by the Central or the State Government or any Bank whether such Term Loan is sanctioned and disbursed before or after the undertaking is set up (where the capital investment in the undertaking does not exceed three lakh rupees), (c) on land or building or both owned or taken on lease for a period of not less than seven years by such dealer or allotted to such dealer by any Government company or any corporation owned or controlled by the Central or the State Government, (d) using machinery, accessories or components not already used, or acquired for use, in any other factory or workshop in India; (e) fulfilling all the conditions specified in this Act or rules or notification made thereunder in regard to grant of facility under this section on the date from which such facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or Rules or Notifications made thereunder with regard to such factory or workshop and includes an industrial unit manufacturing the same goods at any other place in the State or an industrial unit manufacturing any other goods on or adjacent to the site of an existing factory or workshop, but does not include- (a) any factory or workshop using machinery, plant, equipment, apparatus, or components already used in other factory or workshop in India other than boilers, generators, moulds and dyes and other than any machinery, plant, equipment, apparatus or components sold to it by any Government Company or any Corporation owned or controlled by the Central or State Government: Provided that the onus of providing that such machinery, plant, equipment, apparatus or components have not been used in or the value thereof have not been included in fixed capital investment for obtaining benefit under this section by any other factory or workshop in India, shall be on the new unit; or (b) any factory or workshop manufacturing the same goods established by a person on or adjacent to the site of an existing factory or workshop manufacturing the same goods wherein such person has interest a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Association, Memorandum of Association and certificate of Incorporation issued under Indian Companies Act). (d) Co-operative Society (Enclose attested copy of by-laws and certificate of registration issued byRegistrar, Co-operative Societies) (e) Government Department or Local Authority. 3. Name and complete address of the Proprietor/Partners/Karta/Directors/ President/ Secretary/head of the officer authorised by the Principal officer. 4. Details of goods manufactured and its by-products and waste products. 5. Licence number/Registration number [Enclose attested copy of the Industrial licence or letter of intent or registration certificate (permanent or otherwise) issued by the appropriate authority in accordance with any law for the time being in force relating to licencing or registration of industrial units or for expansion, diversification or modernization of the units]. 6. In case of unit undertaking programme of expansion, diversification or modernization the details of: (a) Fixed Capital Investment - Particulars Original investment (without giving margin for depreciation) Additional investment in expansion, diversification or modernization on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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