9911796707
TMI Blog1996 (6) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... y of manufacturing ice block. For the purpose of establishing its industrial unit, the said company, viz., M/s. Diamond Freezing Complex Private Limited obtained a loan from the West Bengal Financial Corporation (hereinafter referred to as W.B.F.C) and mortgaged the land and building and also hypothecated the plant and machinery installed at that unit in favour of W.B.F.C. Due to failure of the company to comply with the terms and conditions incorporated in the security documents and also due to default in payment of principal, interest, etc., which became due by the said debtor-company to the W.B.F.C., the latter served a notice of demand on the debtor-company calling for the entire loan. On receipt of the said notice from W.B.F.C., the debtor-company filed a writ petition under article 226 of the Constitution of India before the High Court, Calcutta. The writ petition was dismissed by the High Court. Thereafter the company filed a suit praying for, inter alia, a permanent injunction restraining the notices issued by the W.B.F.C. The High Court appointed, in that suit, a receiver of the property of the said company. 3.. During pendency of the said suit, W.B.F.C. obtained number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the application. However, by an order dated June 30, 1993 respondent No. 2 rejected the application on the ground that the first commercial production in the ice plant previously owned by M/s. Diamond Freezing Complex Pvt. Ltd. and now being owned by the applicant was effected on a date much earlier than on June 1, 1990. According to the respondent No. 2, ice plant of the applicant could not be said to be a newly set up small-scale industrial unit in terms of clause (a) to the explanation appended to rule 22(9A) of the West Bengal Sales Tax Rules, 1954. 5.. The applicant filed a revision petition before the respondent No. 3 who by an order dated September 13, 1995 confirmed the order of the respondent No. 2 and held that the applicant acquired an old manufacturing unit and started manufacturing in that old unit and not in a newly set up small-scale industrial unit in so far as the applicability of sales tax provisions is concerned. Being aggrieved by these two orders, the applicant has approached this Tribunal for redressal. 6.. The respondents in their affidavit-in-opposition have stated that the applicant did not individually establish a newly set up small-scale industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration certificate afresh, registration certificate has been granted to him after considering the above facts and circumstances and not considering the fact that the business started by the petitioner is a new one. The Directorate of Cottage and Small Scale Industries has granted registration to the petitioner due to the fact that after the sale of the old unit, the very existence of the said old unit has ceased and with a view to promoting industrial growth in the State, separate registration was granted to the petitioner afresh on consideration of the intention of the petitioner to carry on production afresh. Similarly, the West Bengal State Electricity Board entered into an agreement with the applicant. All these factors do not prove that the applicant individually established a newly set up industrial unit in the name of M/s. Balaji Freezing and Complex Pvt. Ltd. 8.. In their affidavit-in-reply, the applicants have reiterated their case and also submitted that there is no provision in section 8-1 of the West Bengal Sales Tax Act, 1954 read with rule 22(9A) of the West Bengal Sales Tax Rules, 1954 that the industrial unit would not be treated as a newly set up small-scale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant, argued that the documents annexed to the application would show that the applicant had purchased only the assets from W.B.F.C. No liability in respect of any business which might have earlier utilised these assets was transferred to the purchaser under the conditions of the sale from W.B.F.C. It would, therefore, be clear that the applicant did not purchase the business of the previous industrial unit of M/s. Diamond Freezing Complex Pvt. Ltd. as a going concern. What was purchased was the land and building and the plant and machinery of the said industrial unit from W.B.F.C. After purchase of the land and building and the plant and equipment from W.B.F.C. the applicant has also made new investment in plant and machinery and land and building before starting productions. There was no relationship of any nature between the earlier industrial unit, viz., M/s. Diamond Freezing Complex Pvt. Ltd. and the new industrial unit M/s. Balaji Freezing and Complex Pvt. Ltd., set up by the applicant. The fact that it was a new industrial unit is evident from the registration certificate granted by the Directorate of Cottage and Small Scale Industries as well as from the registration cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ier unit had availed of the exemption under section 8-I of the West Bengal Sales Tax Act, 1954. It has never been the case of the Revenue that the earlier unit of M/s. Diamond Freezing Company had availed of any exemption or remission under section 8-I of the West Bengal Sales Tax Act, 1954. Under the circumstances, there cannot be any reason for not treating the unit as a newly set up industrial unit as defined in rule 22(9A) of the West Bengal Sales Tax Rules, 1954. 13.. Mr. M.C. Mukhopadhyay, learned State Representative argued that the unit set up by the applicant was not a newly set up industrial unit under the Rules relating to grant of exemption. The petitioner acquired the existing plant and machinery and land and building of M/s. Diamond Freezing Complex Pvt. Ltd. The said company had started its commercial production much earlier than June 1, 1990. It would be seen from the petition itself that substantial part of the plant and machinery and also land and building was acquired from M/s. Diamond Freezing Complex Pvt. Ltd. The petitioner s unit is nothing but an expansion, addition or modification of an existing industrial unit. The allegedly new unit is located in the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f date in clause (a)(ii) of the Explanation appended to rule 22(9A) of the West Bengal Sales Tax Rules, 1954. According to this sub-rule, any unit which starts commercial production for the first time on or after the 1st June, 1990 only is included in the expression newly set up small-scale industrial unit . From the records it is clear that the earlier production (i.e., production earlier than June 1, 1990) relied upon by the respondents was made by M/s. Diamond Freezing Complex Pvt. Ltd. It is the respondent s case that the applicant s business is only an expansion, addition or modification to the existing industrial unit of M/s. Diamond Freezing Complex Pvt. Ltd. and hence the unit is not entitled to the benefits under section 8-1 of the West Bengal Sales Tax Act, 1954. In support of their contention that this is nothing but an expansion, addition or modification to an existing industrial unit, the respondents have argued that the applicant purchased the business of M/s. Diamond Freezing Complex Pvt. Ltd., and according to them clause (e) of the High Court s order dated August 21, 1991 would establish that the applicant merely purchased the business of the earlier company. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets only were sold to the applicant by the W.B.F.C. Hence it is clear that there was no sale of the unit as a going concern. This is also borne out by the submission of the respondents regarding grant of registration certificate by the commercial tax authorities. According to the respondents such a grant of registration certificate does not mean that the business started by the petitioner is a new one. However, if the business started by the petitioner is not a new one but a mere transfer of ownership in an existing business then it could not have asked for a new registration and grant of such new registration would not have been necessary under section 15 of the West Bengal Sales Tax Act, 1954. 16.. It is quite clear that the West Bengal Financial Corporation sold to the applicant the assets in the shape of land and building and plant and machinery of the earlier defaulter company. Such a sale was by no means a sale of an on-going business and therefore the purchaser-company was distinct from the earlier defaulter company (M/s. Diamond Freezing Complex Pvt. Ltd.). The grant of new registration certificates by the various authorities only supports this position. 17.. The poin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
