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TMI Blog1999 (7) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... also to lay down the conditions which have to be fulfilled for availing such exemption. The Government, therefore, issued notification to the effect that new industrial units set up during certain specified period will be entitled to exemption on the production of an eligibility certificate granted by the appropriate authority. Subsequently, the Government thought of granting benefits of exemption under section 4-A of the Act to units which undertake expansion, diversification or modernisation. For this purpose, the Government issued Notification No. ST-II-1093/XI-7(42)-68 UP Act-XV/48-Order-91, dated July 27, 1991. The revisionist had established a unit for the manufacture of soft drinks of the brand names of Thumps-up, Limca, Rim Zim, Maaza, etc. Subsequently, it started production of other soft drinks of the brand names of Coca Cola and Fanta, the date of first sale of which was December 15, 1994 and February 13, 1995 respectively. It claimed to have invested Rs. 3,68,68,628 for the manufacturing facility set up for the production of the aforesaid two new drinks. It applied for the grant of an eligibility certificate in terms of the notification dated July 27, 1991 which exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner, however, did not accept these contentions and cancelled the eligibility certificate by an order dated March 27, 1998. The dealer preferred an appeal to the Tribunal. The Tribunal upheld the Commissioner's view that Coca Cola and Fanta were things of the same nature as Thumps-up, Limca, Maaza and Rim Zim all being soft drinks and aerated water. It also upheld the Commissioner's view that the installation of an old bottling machine disentitled the dealer-revisionist to the eligibility certificate. It placed reliance on a judgment of the honourable Supreme Court in State Level Committee v. Morgardshammar India Limited [1996] 101 STC 1; 1996 UPTC 213 in which a new unit had installed some plant and machinery that was acquired by another unit but was sold to the respondent without actual use. The honourable Supreme Court held that the respondent was not entitled to exemption because the plant and machinery had earlier been acquired for use by another industrial unit. The honourable Supreme Court also held that the statutory provisions laying down the conditions for the claim of exemption should be strictly construed. 4.. In the result, the Tribunal has dismissed the dealer's a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of such certificate. The Ordinance has not made any consequential amendment in sub-section (3) of section 4-A of the Act which would be necessary if this provision is assumed to confer a power of review or revision of the eligibility certificate on the Commissioner. It is inconceivable that the Commissioner can interfere with an eligibility certificate granted to a dealer under the orders of the Trade Tax Tribunal by saying that the Tribunal was wrong in granting a certificate and that the dealer was not entitled to the exemption or that having lost an appeal before the Trade Tax Tribunal, the Commissioner can still upset the Tribunal's order." 6.. Now, there has been an amendment in the provisions of section 4-A(3) by U.P. Trade Tax (Amendment) Act, 1998 (U.P. Act No. 26 of 1998), with retrospective effect from September 13, 1985 and as a result of the amendment section 4-A(3) of the Act stands as under: "(3) Where the Commissioner is of the opinion that the facility of exemption from, or reduction in the rate of tax obtained on the basis of an eligibility certificate referred to in clause (d) of sub-section (2) or on the basis of any eligibility certificate issued under a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t different places confer powers on different authority to bring about the same result and that the Commissioner instead of filing an appeal to the Tribunal can himself rectify the mistake of the Tribunal irrespective of the nature of the mistake. In my view such an interpretation of the law is not feasible. As pointed out above, the Divisional Level Committee consists of senior officers and is presided over by an officer of the same rank as the Commissioner and it is inappropriate to assume that under section 4-A(3) of the Act the Legislature intended to vest in the Commissioner the powers of an appellate authority that could correct all mistakes whether of law or of fact in the matter of the grant of an eligibility certificate. If that be the position, the provisions of section 10(2) of the Act in so far as they provide an appeal against an order granting or refusing to grant an eligibility certificate would become redundant and the Commissioner would become a Judge in his own cause. In my view the two provisions have to be given a harmonious interpretation and when the provisions of sub-section (3) confer powers of correcting legal or factual error made by the authority granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an old filling machine used for bottling the product. Admittedly the new products, namely, Coca Cola and Fanta were being produced from before and their first sale took place on December 15, 1994 and March 13, 1995. No doubt, the provisions of section 4-A of the Act provided that the new unit should not use any machinery that was used or acquired for use by any other factory or workshop in India. Admittedly, when the new facility was established and was claimed to have become entitled to the grant of an eligibility certificate the old bottling machine had not been installed, meaning thereby on the date from which the unit claimed to have become entitled to the exemption and on the date from which the facility of exemption was granted by the issue of an eligibility certificate, the revisionist fulfilled the conditions that only new plant and machinery had been installed. It was later that it added the old bottling machine. The investment in respect of which the facility of exemption from sales tax was granted had already been made and the installation of the old machine, i.e., bottling plant did not adversely affect the Revenue in any manner whatsoever. It is not the revenue's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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