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TMI Blog2007 (2) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover of manufactured goods. The exemption application was processed and thereafter, an eligibility certificate was issued on February 14, 1994 granting exemption for the period of five years from September 1, 1983 to August 31, 1988. The Commissioner of Trade Tax issued a notice under section 4A(3) of the Act purporting to cancel the eligibility certificate granted on February 14, 1994 on the ground that (a) one pouch sealing machine was acquired by M/s. Gorakhpur Grah Udyog Kendra, Gorakhpur, and thereafter, transferred to the applicant, (b) capital investment in the unit is less than Rs. 3 lacs, (c) land and building were not in the name of unit, (d) unit has taken electricity connection on November 17, 1983 and (e) unit was not registered under the Indian Factories Act. The applicant filed reply to the notice. After consideration of the reply to the notice, the Commissioner of Trade Tax vide order dated March 27, 1993 cancelled the eligibility certificate from very beginning on the ground that the unit was not entitled for exemption under section 4A of the Act. The eligibility certificate was cancelled mainly on the ground that the unit had installed one pouch sealing ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee issued an eligibility certificate on February 14, 1994. He submitted that the exemption expired on March 24, 1985 and thereafter, the present notice was issued on January 27, 1991 after expiry of about six years. He further submitted that prior to the impugned notice, one more notice was issued under section 4A(3) of the Act on July 8, 1988 on the grounds that the capital investment for the unit was less than Rs. 3 lacs and the said notice was vacated after accepting the plea that total capital investment was more than Rs. 3 lacs. He submitted that in the said notice, no allegation was made with regard to the pouch sealing machine. According to learned counsel for the applicant, there was no misrepresentation of fact. Therefore, initiation of proceeding under section 4A(3) of the Act was not justified. In support of his contention, he relied upon the decision of this court in the case of Jaidurga Detergents and Chemicals Private Limited v. Commissioner of Sales Tax reported in [1997] 104 STC 620; [1995] UPTC 89; [1999] UPTC 37, Bharat Steel Rolling Mill v. Commissioner of Trade Tax reported in [2002] UPTC 122 and [2005] 41 STR 381. Learned Standing Counsel submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant appears to have disclosed complete details about the purchases of all machines including pouch sealing machine. A certificate dated August 7, 1983 which is referred in the order of the Tribunal is available in the file of DLC, also reveals that at the time of consideration of exemption application, it was very well known to the DLC that the said pouch sealing machine was initially acquired by M/s. Gorakhpur Grah Udyog Kendra, Gorakhpur and thereafter it was transferred to the applicant. Thus, it is not a case of misrepresentation or concealment of fact on the part of the applicant. Now the question for consideration is whether the provision of section 4A(3) of the Act can be invoked in the absence of any case of misrepresentation or concealment of fact on the part of the applicant. Section 4A(3) of the Act as it stood prior to the amendment by U.P. Act No. 28 of 1991 reads as follows: (3) Where the Commissioner of Sales Tax is of the opinion that 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 subsection (2) has been misused in any manner whatsoever, he may, by order in writing, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner to question the certificate itself. The third circumstances, i.e., 'is not entitled to such facility' is ejusdem generis to the preceding two, i.e., misuser and violation of conditions. Therefore, the disentitlement (not entitled to) must arise out of an act of omission or commission by the unit holder. A legal or factual error made by the authority granting the eligibility certificate would not be a cause to bring the unit holder within the words 'not entitled to'. It is not difficult to conceive cases which may not come within the scope of misuse or breach of conditions of grant and yet need withdrawal or modification of the eligibility certificate. An eligibility certificate might have been procured by misrepresentation or concealment of material facts. Such misrepresentation or concealment, if discovered later, can authorise the Commissioner to act under section 4A(3) of the Act. A change in the law is not a circumstance which would entitle the Commissioner to invoke his authority under section 4A(3) of the Act. Learned single Judge further held that the power conferred under section 4A(3) of the Act is discretionary. Legislature has used the word m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner 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 4A(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 an eligibility certificate, this power has to be restricted to clerical or arithmetical errors which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he discretion has to be exercised judiciously only to prevent unscrupulous dealers from claiming exemption to defraud or misuse the facility. It cannot be exercised where there was no default on the part of the dealer and an eligibility certificate was granted after taking a conscious decision on the matter involved. It appears that the decision of this court in the case of Jaidurga Detergents and Chemicals Private Limited v. Commissioner of Sales Tax [1997] 104 STC 620 has been accepted by the department and circular in this regard has been issued as circular letter No. Nayee Ekayee Sa, Ka. Mu. 18/ 87-164/Vyaparkar Karayalaya, Commissioner Vyuapakar, Uttar Pradesh (Nayee Ekayee Anubhag), Lucknow, dated May 10, 1997. In the case of Shah Wire Industries, Varanasi v. Commissioner of Trade Tax, U.P. reported in [2005] 41 STR 381, this court following the decisions of this court in the case of Jaidurga Detergents and Chemicals Private Limited v. Commissioner of Sales Tax [1997] 104 STC 620 and Mansarovar Bottling Company Limited, Bijnor v. Commissioner of Trade Tax [1999] 115 STC 530 (All); [1999] UPTC 864 to hold that the cancellation of the eligibility certificate is unjustifie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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