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TMI Blog2008 (5) TMI 629X X X X Extracts X X X X X X X X Extracts X X X X ..... it petition. - 2362 of 2002 - - - Dated:- 23-5-2008 - SUSHIL HARKAULI AND SUDHIR AGARWAL , JJ. The judgment of the court was delivered by SUDHIR AGARWAL J. Heard Sri Bharat Ji Agrawal, Senior Advocate and Sri Rahul Agarwal for the petitioner and Sri S.P. Kesarwani, learned Standing Counsel for the respondents. The petitioner is challenging the vires of rule 43(4)(a) of the U.P. Trade Tax Rules, 1948 (hereinafter referred to as, the Rules ) and has also sought a writ of certiorari quashing the order dated 19th June, 2002 passed by the Commissioner, Trade Tax, U.P., Lucknow (respondent No. 1) whereby it has directed the petitioner to pay the entire amount of trade tax for the period of December 2, 1999 to February 20, 2001 in view of the discontinuance of business by the petitioner. The facts in brief, giving rise to the present dispute are as under: Section 4A of the U.P. Trade Tax Act, 1948 (hereinafter referred to as, the Act ) empowers the State Government to grant certain exemption/ concession from payment of tax/reduction in tax to certain industrial units by issuing a notification. The notification was issued on March 31, 1995 granting exemption from p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner and for subsequent period when the successor would have continued to operate the same. The said application is said to have been referred to the Secretary, Tax and Registration, U.P., for favourable consideration vide the Executive Director, Udyog Bandhu, U.P.'s letter dated April 6, 2002. In the meantime, the Commissioner, Trade Tax, vide letter dated June 19, 2002 (impugned in this writ petition) has rejected the petitioner's application submitted under section 8(2A) of the Act and has required him to pay the entire trade tax for the period up to February 28, 2001. The learned counsel for the petitioner vehemently contended that the petitioner was admittedly found eligible for exemption under section 4A of the Act. That being so, section 8(2A) of the Act provides for moratorium in lieu of exemption under section 4A. Therefore, no condition which was not available for claiming exemption/concession under section 4A of the Act could have been imposed under section 8(2A) of the Act and such a condition, if imposed, would be ultra vires of the spirit and objective of section 4A read with section 8(2A) of the Act. It is further contended that under section 4A(2)(b) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arts of district in particular, it may on application or otherwise, in any particular case or generally by notification, declare that the turnover of sales in respect of such goods by the manufacturer thereof shall, during such period not exceeding fifteen years from such date on or after the date of starting production as may be specified by the State Government in such, notification, which may be the date of the notification or a date prior or subsequent to the date of such notification, and where no date is so specified from the date of first sale by such manufacturer, if such sale takes place within six months from the date of starting production, and in any other case from the date following the expiration of six months from the date of starting production, and subject to such conditions as may be specified, be exempt from trade tax on sale of goods whether wholly or partly or be liable to tax at such reduced rate as it may fix: Provided that in respect of goods manufactured in a new unit having a fixed capital investment of five crore rupees or more or in an existing unit which may make fixed capital investment of five crore rupees or more in expansion, diversification, mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anner such successor-manufacturer may, subject to the provisions of subsection (3), apply to the officer competent to grant eligibility certificate under clause (d) of sub-section (2), within sixty days of such succession, for the grant, under this section, of exemption from or reduction in rate of tax for the unexpired portion of the period for which exemption from or reduction in the rate of tax was or could be granted to the former manufacturer: Provided that the aforesaid officer may, in its discretion and for adequate and sufficient reasons to be recorded in writing, entertain an application moved within six months of the date of the expiration of the period specified in this sub-section: Provided further that such manufacturer and successor-manufacturer for the purpose of liability of tax shall be treated as the transferror and the transferee under section 3C: Provided also that in computing the unexpired portion of the period, the period during which the production of successor-manufacturer remains closed on account of an order passed by any court or Board for Industrial and Financial Reconstruction or Appellate Authority for Industrial and Financial Reconstruction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the application and not from the relevant date of commencement of the period of facility referred to in sub-section (1) till the end of the period of facility; (c) in relation to a new unit referred to in Explanation (1), where the conditions specified in clauses (a) to (d) of the said Explanation (1) are fulfilled on a date later than the date of commencement of the period of facility notified under sub-section (1), then subject to the provisions of clause (b), only for part of the period, notified under sub-section (1), which shall be computed from the date on which all the conditions referred to in the said clauses (a) to (d), have been fulfilled or 20th July, 1992 whichever is later, till the end of the period of such facility, so however, that a manufacturer who was eligible for such facility under clause (c) as it stood prior to 20th July, 1992 and had applied for the facility prior to the said date, shall be entitled to the facility in accordance with the said clause (c); (d) in relation to a new unit manufacturing same goods established on or adjacent to the site of an existing factory or workshop by a person who has interest in the existing factory or worksho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount up to which exemption from or reduction in rate of tax is admissible according to the eligibility certificate plus fifty per cent of the fixed capital investment mentioned in the eligibility certificate. (3) the moratorium for payment of tax admittedly payable for each of the assessment years may be granted for a period of five years the computation of which shall be done from the last date for furnishing the last return according to sub-rule (1), (2) or (3) of rule 41 for the assessment year concerned. The amount of tax admittedly payable for each assessment year shall be paid by the manufacturer in a lump sum within one month of the expiry of the period of moratorium; (4) the moratorium shall cease and the total amount of the tax admittedly payable shall become payable (a) on the date of discontinuance of business where the manufacturer discontinues business, within the meaning of sub-section (1) of section 18 of the Act; (b) on the date on which the unit becomes ineligible for exemption under section 4A, and the amount shall be paid in lumpsum within three months of its so becoming payable. (5) the facility shall not be admissible in respect of the amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and is not subject to the provision of section 4A of the Act. For attracting section 8(2A), obviously only dealer entitled for exemption/concession under section 4A is necessary, but thereafter the conditions whereupon such deferment under section 8(2A) can be granted must also exist. They cannot be controlled and governed by section 4A. Section 8(2A) clearly provides that the deferment of tax would be subject to such conditions, as may be prescribed. The applicability of section 4A with respect to section 8(2A) is only at the entry point, namely, whether the person, who is exercising option, is eligible to opt or not and not beyond that. Once he is eligible to opt for deferment of tax under section 8(2A), thereafter what conditions he will have to follow and would be abide by are not governed by section 4A. The same, on the contrary, is within the authority of delegated legislation to provide in exercise of powers under section 8(2A) independently. It is not the case of the petitioner that the conditions provided under rule 43(4)(a) are inconsistent or ultra vires of any provision of the Act as such. On the contrary, what he submits is that the spirit of the provision, with whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statute or article 14 of the Constitution or that it has been exercised in bad faith. The limitations which apply to the exercise of administrative or quasi-judicial power conferred by a statute except the requirement of natural justice also apply to the exercise of power of delegated legislation. Rules made under the Constitution do not qualify as legislation in true sense and are treated as subordinate legislation and can be challenged in judicial review like delegated legislation. Compliance with the laying requirement or even approval by a resolution of Parliament does not confer any immunity to the delegated legislation but it may be a circumstance to be taken into account along with other factors to uphold its validity although as earlier seen a laying clause may prevent the enabling Act being declared invalid for excessive delegation. The same has also been quoted with approval in Vasu Dev Singh v. Union of India [2006] 12 SCC 753. As we have already discussed above, the learned counsel for the petitioner could not show that rule 43(4)(a) of the Rules, in any manner, as such, is inconsistent to any provision of the Act. Even otherwise, we find that the entire edi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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