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TMI Blog2017 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... well for the reason that Successor Manufacturer when gets eligibility certificate, it is referable to Section 4-A(1) and (2) and said benefit could not have been denied by confining meaning of "discontinuance of business" under Rule 43(4)(a) to principal manufacturer and not to the successor one. In order to support the ground that benefit of deferment under Section 8(2-A) read with Rule 43 would be available to only original manufacturer and not to Successor, who is also held entitled for similar exemption under Section 4-A(1) and (2) of Act, 1948 by virtue of Section 4-A(2-B) inserted with retrospective effect of 1983, learned Standing Counsel could give no satisfactory reply at all. Competent Authority directed to reconsider petitioner's application and pass a reasoned order - petition allowed by way of remand. - Misc. Bench No. 2439 of 2007 - - - Dated:- 25-8-2017 - Hon'ble Sudhir Agarwal And Hon'ble Virendra Kumar-II, JJ. For the Petitioner : N.C. Mishra, Chandra Has Mishra For the Respondent : C.S.C. ORDER ( Delivered by Hon'ble Sudhir Agarwal, J. ) 1. This writ petition under Article 226 of Constitution of India has been filed by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer deferred facility already availed by M/s U.P. Asbestos Ltd. to M/s U.P. Cements Ltd., Lucknow to the successor manufacturer for the unexpired period and it was also directed that the Successor Manufacturer will pay deferred amount from due dates as per Rules. Applications of original manufacturer dated 14.01.1997 and 26.04.2002 as also that of petitioner dated 24.01.2003 were rejected by CTT, U.P. vide order dated 17.06.2004. 6. Petitioner also applied for eligibility certificate for remaining portion of period of exemption granted to original manufacturer under Section 4-A(2-B) to Divisional Level Committee, Agra vide application dated 20.02.2003. 7. DLC granted eligibility certificate under Section 4-A(2-B) for unexpired period of exemption from 23.12.2004 to 30.10.2006, subject to monetary limit of ₹ 35,21,902/-. It was communicated by Additional Director, Industries vide letter dated 22.01.2005. 8. Thereafter, petitioner applied for grant of deferment under Section 8-A(2-B) of Act, 1948 read with Rule 43 of Rules, 1948 vide application dated 15.02.2005. 9. After almost two years, CTT, U.P. issued a show cause notice dated 09.02.2007 to show why applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity certificate dated 16.04.2002. It was granted said certificate dated 22.01.2005 for the remaining period/amount of eligibility certificate dated 16.04.2002. In other words, said benefit was allowed from 23.12.2002 to 30.10.2006 or equivalent to tax liability of ₹ 35,21,902/- Thereafter, petitioner submitted another application dated 15.02.2005 and reminder dated 12.09.2006 making an option for availing benefit of deferment of payment of tax under Section 8(2-A) of Act, 1948. Competent Authority called upon petitioner for personal hearing on 15.02.2007. Petitioner availed said remedy and also filed written reply dated 15.02.2007. Application, ultimately, was rejected by Competent Authority vide order dated 22.02.2007. 12. Real issue is Whether petitioner is entitled for deferment in payment of tax under Section 8(2-A) of Act, 1948 and Rule 43 of Rules, 1948. 13. It would be appropriate to reproduce relevant provisions applicable for adjudication of the matter:- Section 8. Payment and recovery of tax. .... 8(2-A) Notwithstanding anything contained in sub-sections (1), (1-A), (1-B), (1-BB), (1-C) or (2) the Commissioner may, on the application of a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mp 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 4-A, and the amount shall be paid in lump sum within three months of its so becoming payable; (5) the facility shall not be admissible in respect of the amount of tax assessed in excess of the tax admittedly payable by the manufacturer on the turnover admitted by him in the returns filed or in any proceeding under the Act, whichever is greater, whether the excess tax so assessed is due to detection of any evasion of tax made, or disallowance of any exemption claimed, by such manufacturer or for any other reason, and the amount of tax so assessed in excess shall be paid in accordance with the provisions of the Act and the rules; (6) the facility shall be available to the manufacture on creating first or second charge on its property in favour of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve, and in such case no successor unit opting benefit of deferment will be entitled to get benefit of deferment under Section 4-A(2-B) of Act, 1948 read with Rule 43 of Rules, 1948. Explaining the observation about any improbability of calculation of benefit of deferment, it is submitted that original manufacturer is entitled to benefit of exemption to the extent of amount mentioned in eligibility certificate plus 50% of amount of fixed capital investment of original manufacturer. Amount of deferment can be calculated by total amount of deferment available to original manufacturer minus amount availed by original manufacturer. Amount of fixed capital investment of Successor Manufacture can also be computed by adding amount of balance of fixed capital investment mentioned in eligibility certificate of Successor Manufacturer plus 50% of fixed capital investment of original manufacturer. In both situations, amount will be same. 16. Lastly, it is submitted that sub-section (2-B) was inserted in Section 4-A by U.P. Sales Tax (Amendment and Validation) Act, 1991 (hereinafter referred to as Act, 1991 ) retrospectively w.e.f. 12.10.1983, specifically, to grant benefit of deferment of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng eligibility certificate, it applied for moratorium under Section 8(2-A) of Act, 1948 which was rejected vide order dated 24.06.2002 relying on Rule 43(8) of Rules, 1948, which provides that a manufacturer who has availed facility of exemption from or reduction in the rate of tax, whether wholly or in part under Section 4-A, shall not be entitled to grant of moratorium. Since for a small part of period, facility of exemption was already availed by M/s Bindal Bateries Pvt. Ltd., therefore, it was not found eligible for moratorium in view of condition under Rule 43(8). Court said that a taxing statute has to be read as it is and if specifically exemption is not permissible, it cannot be allowed. Aforesaid situation is not available in this case and therefore, that judgment would not help respondents in the case in hand. 22. Next authority relied by learned Standing Counsel is Excel Hi-Tech Pvt. Ltd. through its Director Rajat Maheshwari Vs. State of U.P., The Commissioner of Trade Tax and The Assistant Commissioner (Assessment), Trade Tax (Civil Misc. Writ Petition No. 257 of 2001); decided on 09.09.2005. Here also, petitioner, Excel Hi-Tech Pvt. Ltd., actually availed exemption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax for certain period as prescribed and, thereafter, such dealer would be liable to pay the entire tax for the entire period in such manner as prescribed. The application of section 8 (2-A) is, thus, obviously distinct and operates in a different field. It cannot be controlled in its entirety or in any manner as suggested and argued by the learned counsel for the petitioner, by Section 4-A of the Act for the reason that the deferment of tax provided under Section 8(2-A) is governed by the provisions made thereunder and is not subject to the provision of Section 4-A of the Act. For attracting Section 8 (2-A), obviously only dealer entitled for exemption/concession under Section 4-A, is necessary, but thereafter, the conditions whereupon such deferment under Section 8 (2-A) can be granted must also exist. They cannot be controlled and governed by Section 4-A. Section 8 (2-A) clearly provides that the deferment of tax would be subject to such conditions, as may be prescribed. The applicability of Section 4-A with respect to Section 8 (2-A) 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 eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any future liability of payment of tax to the State and, therefore, nothing is to be said with respect to the future conditions or circumstances, in which the tax is to be collected for the period the incumbent was availing the exemption/concession. However, when he opts for deferment of tax in lieu of exemption/concession in the rates of the tax, the person concerned enters into a contract with the State agreeing to pay tax at some later point of time and that is an agreement between the parties, namely, the State and person concerned. Such agreement, obviously, would be binding upon the parties, who have executed the agreement and if, there is any change in the parties, the agreement would not bound the successor and is liable to come to an end at that stage itself. It is always open to either of the parties to the agreement to provide that in case there is any substantive change in the ownership of the unit concerned, which has entered into the agreement, the option of deferment of tax would seize then on and and the optee has to pay the entire tax. Such condition, by no manner of imagination, goes inconsistent or contrary to the policy of exemption/concession of tax und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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