9911796707
TMI Blog2004 (11) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... na General Sales Tax Rules, 1975 (for short, "the 1975 Rules"), the petitioner applied for grant of eligibility and exemption certificates. The competent authority issued eligibility certificate for Rs. 393.40 lacs in form ST-72-A. Thereafter, exemption certificate was issued on July 22, 2002. During the period from September 22, 1999 to March 31, 2003, the petitioner effected local and Central sales to the tune of Rs. 11,19,77,082 and availed exemptions to the tune of Rs. 76,77,933. 3.. After the enactment of the VAT Act and framing of the VAT Rules, the petitioner submitted an application in form VAT-A5 for conversion of sales tax exemption to deferment of tax and also made a request for grant of time to furnish the security necessary for grant of the deferment. 4.. The grievance of the petitioner is that even though, it fulfilled the conditions prescribed under the VAT Act and the VAT Rules, the concerned authority, instead of granting time and accepting the security, asked it to submit bank guarantee for conversion of sales tax exemption to full deferment of sales tax. The petitioner has averred that it had already furnished bank guarantee equivalent to 15 per cent and bala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e remaining period and the remaining extent of benefit or for such period and such extent of benefit as may be prescribed but where an industrial unit does not choose to do so, exemption to it from payment of tax shall cease to take effect on and from the appointed day and further,- (I) it shall be liable to maintain production at a level so that its annual turnover does not fall short of the average annual turnover during the period of exemption; and (II) it shall not export out of State any goods produced by it." Rules 69 and 70 of the Rules: "69. (1) An industrial unit, availing the benefit of exemption from payment of tax or the benefit of capital subsidy under the existing rules, may, within fifteen days from the date of coming into force of these Rules, make an application in form VAT-A5 along with documents mentioned therein to the officer in-charge of the district indicating its option to change over to deferment of tax for the remaining period and the remaining extent of benefit. No application shall be entertained if not preferred within time. An application with incomplete or incorrect particulars including the document required to be attached therewith shall be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne year within a month of the beginning of the year or before the end of the remaining period if less than a month and where such security falls short of the amount of tax deferred at any time additional security of the adequate amount shall be furnished within a month. The security shall be fully maintained for the whole of the period till the payment of the deferred tax is fully made. If a unit fails to furnish the security or the additional security, as the case may be, in time, it shall not be entitled to the benefit of deferment of payment of the unsecured amount of tax and such tax shall become recoverable immediately with interest as if the unit was not entitled to the deferment of this tax. (4) While issuing an entitlement or revised entitlement certificate under sub-rule (2), the officer in-charge of the district shall after verification from his record indicate therein the remaining period and the remaining extent of benefit and shall keep a record of such certificates and the benefit availed on the strength of same in a register in form VAT-G16. (5) Where an industrial unit, availing the benefit of exemption from payment of tax or the benefit of capital subsidy under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ways specified in sub-rule (1). (4) The security furnished under sub-section (6) of section 31 shall be forfeited, if the payment of the amount due on account of advance tax, penalty or interest imposed is not made within the time allowed for the payment thereof." 9.. A conjoint reading of the abovequoted provisions shows that sections 13B and 25A of the 1973 Act under which tax exemption could be claimed by the industrial units are to remain in force notwithstanding the repeal of the 1973 Act subject, however, to certain exceptions, restrictions and conditions. An industrial unit which had been granted the benefit of sales tax exemption under the 1973 Act has been given an option for changing the exemption to that of deferment in the payment of tax for the remaining period and the balance amount. An industrial unit desirous of availing the benefit of deferment is required to make an application in form VAT-A5 within 15 days to the officer in-charge of the district indicating its option to change over to deferment of tax for the remaining period and remaining extent of benefit. An option has been given to an industrial unit either to make payment of the deferred tax after fiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anyone of the following securities: (i) 1st charge/pari-passu charge on the assets on which the deferred tax/loan is being secured. (ii) 1st charge on the collateral assets having value equivalent in the loan amount. (iii) 2nd charge in the case the unit is financed by the Central/ State Financial Institutions, National/Scheduled Bank provided sufficient margin is available on the assets. (iv) 15 per cent of the loan amount in the form of bank guarantee and 85 per cent in the form of personal sureties." 10.. In the backdrop of the above, we shall now consider whether the action of the respondents not to entertain the petitioner's application for grant of deferment is legally sustainable. Admittedly, the petitioner had furnished bank guarantee to the extent of 15 per cent and balance 85 per cent in the form of surety bonds to the extent of Rs. 393.40 lakhs, i.e., the amount of exemption of sales tax allowed under the 1973 Act. As observed earlier, this is in consonance with the provisions of the VAT Act and the Rules. The demand of the respondents for 100 per cent bank guarantee for conversion of exemption of sales tax into deferment of tax could not be treated as legal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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