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TMI Blog2005 (5) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of turnover from the sale of 13,21,756 metric tonnes of goods. The claim of the revisionist was rejected on the ground that the base production was obtained till 4th January, 1993 and, therefore, the exemption from payment of tax can be granted only after base production is achieved. The admitted tax liability in U.P. was enhanced to Rs. 14,48,125 and in Central sales tax the admitted tax liability of Rs. 4,10,357 was enhanced to Rs. 55,50,712. 2.. The revisionist filed two appeals before the Deputy Commissioner (Appeals) which were allowed by the first appellate authority by order dated February 4, 1997 and declared tax liability was accepted. The department felt aggrieved and filed two appeals being Appeal No. 70 of 1997 for U.P. and Central, which were allowed by the Trade Tax Tribunal, Ghaziabad, by judgment and order dated September 24, 1997. By setting aside the orders passed by the first appellate authority the assessment orders were restored by the Tribunal. The dealer feeling aggrieved by the orders of the Tribunal has filed these two revisions. 3.. The dealer-opposite party in T.T.R. Nos. 682 of 1999, 702 of 1999, 703 of 1999 and 704 of 1999 carried on bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduction in excess of base production shall not be relevant, the calculations for purposes of granting benefit shall be made on turnover of entire year including the production in excess of base production. In Central appeals the dispute related to the sales made against the form C. The assessing authority as well as the Deputy Commissioner of Appeals did not grant benefit. The Tribunal, however, in view of the correction made by the State Government by notification dated July 18, 1998 took the view that the correction in the notification dated July 27, 1991 by the said notification dated July 18, 1998 shall be deemed to be from the date of earlier notification dated July 27, 1991 and the dealer shall be entitled to benefit of sales against form C. 5.. Aggrieved by the orders of the Tribunal in the second appeals the department has filed the aforesaid revisions. 6.. In Trade Tax Revision Nos. 1071 of 1997 and 1072 of 1997 Sri Bharatji Agrawal, learned Senior Counsel assisted by Sri Piyush Agrawal, has been heard for the revisionist and Sri R.D. Gupta, learned Standing Counsel appearing for the Revenue has been heard. In T.T.R. Nos. 682 of 1999, 702 of 1999, 703 of 1999 and 704 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the base production that the dealer is entitled to claim exemption in respect of turnover in excess of the base production. The assessing authority has, therefore, taken a right view that till the base production is not achieved the dealer is not entitled to any exemption. Sri Pandey has vehemently argued that combined reading of clause (1-B) and clause (2)(ii) of the notification dated July 27, 1991 would show that the base production has to be achieved first, and it is only thereafter that the question of exemption on the turnover of production in excess of base production can be considered. To supplement his argument Sri Pandey, has referred to the provisions of section 7(1) read with rule 41(1) and has submitted that the dealer is required to file monthly returns on the basis of actual turnover and not on hypothetical basis. He is also required to deposit the admitted tax at the time of filing of monthly return. He also submits that in case the contention of the assessee is accepted then the provisions of section 7(1) read with rule 41(1) and the notification under consideration cannot be interpreted harmoniously. 8.. In T.T.R. Nos. 1071 and 1072 of 1997 following questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) in respect of any goods manufactured in a unit other than the units of the type mentioned in annexure II, which 'has undertaken expansion, diversification or modernisation' on or after April 1, 1990 but not later than March 31, 1995, in the areas mentioned in column 2 of annexure I, no tax shall be payable or, as the case may be, the tax shall be payable at the reduced rates specified in column 4 of annexure I, by the manufacturer thereof for the period specified in column 3 of the said annexure I, or till the maximum amount of tax relief by such exemption from or reduction in rate of tax as specified in column 5 of annexure I, is achieved, whichever is earlier, on the turnover of sales (a) of the quantity of goods manufactured in excess of the base production in the case of units undertaking expansion or modernisation; and (b) of goods manufactured by the unit which are of a nature different from those manufactured earlier by such unit in the case of units undertaking diversification. (2) The period of such facility shall be reckoned from the first date of production (i) of goods of a nature different from those manufactured earlier by such unit in case of diversifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of each category of goods in which he carries on business: Provided that the dealer may instead of submitting a return as aforesaid, estimate his turnover for the year on the basis of the turnover admitted by him in his return, or disclosed in his account books, whichever is greater, for the immediately preceding year, calculate the amount of tax payable thereon and deposit a sum equal to one twelfth thereof during each of the first two months of every quarter, and deposit the balance of tax due on the turnover admitted by him in his return for the relevant quarter, which shall be prepared and submitted in the manner laid down in this rule." 13.. At the outset it may be pointed out that though several questions of law are framed in the memo of revision but the arguments have been advanced only in respect of the question whether the facility of exemption under clause 6(b) of the notification dated July 27, 1991 could be arrived at only at the end of the assessment year as submitted by Sri Bharat Ji Agrawal or from the date in any assessment year the base production is achieved. Perusal of clause 6(b) as reproduced above would show that benefit of exemption to a unit is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sale of goods in any assessment year in excess of the quantity as provided under sub-clause (a) of clause 6. When assessment year means the period of twelve months, the extent of facility in any assessment year cannot be worked out unless the assessment year is completed. Therefore, it has to be held that the extent of facility of exemption which can be availed by a unit under the notification can be worked out only at the end of the year. 14.. The question is whether a dealer is entitled to estimate his turnover for the whole year at the beginning of the year and can make rational estimate of the turnover in excess of the base production from month to month and file return accordingly. The submission of Shri B.K. Pandey is that section 7(1) and (1-A) read with rule 41(1) as reproduced above prohibit such an exercise being made by the unit. His submission is that the facility of exemption is available only when base production in a particular assessment year is achieved. He submits that it is only after the base production in any assessment year is achieved that the unit is entitled to claim exemption in respect of turnover in excess of the turnover of base production. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to by Sri Pandey provides only as to how the period of facility to be availed by a unit shall be reckoned. If the exemption is granted for nine years according to this subclause (2) of clause (1-B) the period of nine years shall be reckoned from the date of first production of goods manufactured in excess of the base production in case of units undertaking expansion or modernisation. The entire sub-clause (2) has to be read together. Subclause (2)(ii) cannot be read by segregating from the remaining part of sub-clause (2). Therefore, the submission of Sri Pandey that subclause (2) of clause (1-B) of the notification fortified the interpretation made by him is not correct. 16.. There cannot doubt that in view of the provisions contained in section 7(1) and (1-B) read with rule 41(1) a dealer whose turnover is more than Rs. 10 lakhs in an assessment year is required to file monthly returns which according to rule 41(1) shall be filed before the expiry of next succeeding month. Under sub-section (1) of section 7, the dealer is required to submit such return or returns of his turnover at such intervals in such form and verified in such manner as may be prescribed. Along with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of any goods or promoting the development of any industry in the State. As has been seen above the notification dated July 27, 1991 was also issued for the purpose of achieving the objective of promoting the development of certain industries in the State of U.P. This notification has been issued notwithstanding anything contained in the Act and in accordance with the provisions of section 4-A of the Act. Therefore, whenever there is conflict between the provisions of the notification issued under section 4-A of the Act and the provisions of the Act except the provisions of section 4-A, the provision contained in the notification shall prevail provided it is in conformity with the provisions contained in section 4-A. As has been seen above the notification provides that the extent of availability of benefit of exemption in view of the eligibility certificate granted to a dealer can be worked out only at the end of the assessment year. The provisions contained in the notification shall have to be given effect to notwithstanding anything contained in the Act except the provisions contained in section 4-A of the Act under which notification has been issued. 17.. There is another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing incentive for promoting economic growth and development in taxing statutes should be liberally construed and restriction placed on it by way of Reported in [2000] 120 STC 117. exception should be construed in a reasonable and purposive manner so as to advance the objective of the provision. 12.. We find that the object of granting exemption from payment of sales tax has always been for encouraging capital investment and establishment of industrial units for the purpose of increasing production of goods and promoting the development of industry in the State. If the test laid down in Bajaj Tempo Ltd. case [1992] 196 ITR 188 (SC); (1992) 3 SCC 78; 1992 UPTC 857, is applied, there is no doubt whatever that the exemption granted to the respondent from August 9, 1985 when it fulfilled all the prescribed conditions will not cease to operate just because the capital investment exceeded the limit of Rs. 3 lakhs on account of the respondent becoming the owner of land and building to which the unit was shifted. If the construction sought to be placed by the appellant is accepted, the very purpose and object of the grant of exemption will be defeated.' Therefore, the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l not be out of place to mention here that against revisionist, M/s. Modipon Limited in T.T.R. Nos. 1071 and 1072 of 1997, the Commissioner of Trade Tax, U.P., had filed S.T.R. Nos. 433 to 445 of 1994 in which the department's contention was that inspite of the eligibility certificate the dealer was not entitled to any exemption for the months from May, 1992 to November, 1992 on the ground that the base production was not achieved till December, 1992. The dealer, however, estimated his total production for the assessment year and claimed exemption from the commencement of the year on part of the turnover. The authorities below had not accepted the claim of the dealer and had imposed penalty under section 15-A(1) of the Act. It appears that second appeal filed by the dealer was allowed against levy of penalty for the months from May, 1992 to November, 1992. This Court while dismissing the revisions filed by the department which arose from penalty proceedings has held that "actual exemption and the extent thereof will depend on the results of the whole year and a dealer can reasonably estimate that his turnover would exceed the base production and can make a rational estimate and cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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