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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 ..... M/s Devyani Foods Ltd., Agra (hereinafter referred to as "DFL, Agra") was granted eligibility certificate for exemption under Section 5(4-A) of U.P. Trade Tax Act, 1948 (hereinafter referred to as "Act, 1948") vide Notification dated 31.03.1995 for a period from 31.10.1996 to 30.10.2006 on a fixed capital investment of Rs. 46,61,085/- subject to monetary limit of Rs. 93,22,170/-. 3. A decision of Divisional Level Committee (hereinafter referred to as "DLC") was communicated to DFL, Agra by Additional Director, Industries, Agra vide letter dated 16.04.2002. DFL, Agra applied for deferment under Section 8(2-A) of Act, 1948 read with Rule 43 of Trade Tax Rules, 1948 (hereinafter referred to as "Rules, 1948") in view of exemption granted under Section 4-A vide letters dated 14.01.1997 and 26.04.2002. 4. No decision was communicated by Commissioner and said application was pending. In the meantime, M/s DFL, Agra sold entire unit to petitioner vide sale agreement dated 23.12.2002. Petitioner as a successor manufacturer and transferree of ice-cream unit, moved application on 24.01.2003 to Additional Director, Industries, Agra with a request to issue fresh eligibility certificate incorpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tested writ petition by filing counter affidavit admitting that M/s DFL, Agra was having a manufacture unit for manufacture of ice-cream at Sikandara, Agra. It undertook an expansion programme in 1996, of the existing ice-cream manufacturer unit, by making additional fixed capital investment of Rs. 46,61,085/-. In view of aforesaid expansion programme, M/s DFL, Agra applied for and obtained eligibility certificate dated 16.04.2002 under Section 4-A of Act, 1948 to avail exemption or reduction in rate of trade tax. Eligibility certificate dated 16.04.2002 shows period of exemption from 31.10.1996 to 30.10.2006 or equivalent to tax liability of Rs. 93,22,170/- M/s DFL opted for deferment scheme under Section 8(2-A) of Act, 1948 read with Rule 43 of Rules, 1948 vide application dated 14.01.1997 followed by letter dated 26.04.2002. Without awaiting any decision of Competent Authority, M/s DFL, Agra stopped production in September, 2002 and ultimately declared closure of business w.e.f. 22.12.2002. Vide sale deed dated 23.12.2002, manufacturing unit of M/s DFL, Agra was sold to petitioner. M/s DFL, Agra's application dated 14.01.1997 for deferment of payment of tax under Section 8(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 4-A, moratorium for payment of the admitted tax and the provision of Rule 43 of the Uttar Pradesh Trade Tax Rules, 1948 as amended by the Uttar Pradesh Trade Tax (Second Amendment) Rules, 1993 shall apply for granting such moratorium. Rule 43. Conditions for grant of moratorium under section 8(2-A). The Commissioner, on application of a manufacturer may, in lieu of exemption under section 4-A grant moratorium for payment of tax admittedly payable by such manufacturer on sale of goods manufactured by him beyond the period prescribed in rule-41 subject to the following conditions, namely,- (1) the facility shall be available only to the manufacturer who is registered under the Act and has been granted an eligibility certificate under Section 4-A and has filed the returns of his turnover as per rules; (2) the facility shall be available:- (a) only for the period for which exemption from or reduction in rate of tax is admissible according to eligibility certificate issued under Section 4-A of the Act; (b) for the 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 fixe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torium.: (emphasis added) 14. Learned counsel for petitioner contended that unit was transferred by M/s DFL, Agra to petitioner and it became "Manufacturer Successor" under Section 4-A(2-B) of Act, 1948 w.e.f. 23.12.2002. In view of order dated 17.06.2004, if petitioner obtained eligibility certificate under Section 4-A it can opt for deferment under Section 8(2-A) read with Rule 43 in lieu of exemption. Section 4-A(2-B) grants benefit of exemption to "Manufacturer Successor" for the unexpired portion of period for which exemption from tax was or could be granted to former manufacturer. He further submits that under Rule 43, a unit shall be entitled to benefit of moratorium/deferment, if unit; (a) is registered under Act, 1948; (b) has been granted eligibility certificate under Section 4-A; and, (c) has filed return of its turnover as per Rules. It is submitted that petitioner fulfills all the above conditions. In view thereof, petitioner could not have been denied benefit of moratorium on the ground that M/s DFL, Agra, original unit has seized its business. 15. It is submitted that Rule 43 nowhere mentions type of unit to whom deferment could be granted. It could be a new unit, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1) has been introduced by inserting sub-section (2-B) with retrospective effect. Therefore, wherever benefit under sub-section (2-B) of Section 4-A is claimed that has to be read with sub-section (1) and (2) of Section 4-A. 20. Section 8(2-B) was inserted by U.P. Act No. 14 of 2004 w.e.f. 11.06.2004. Sub-section (2-A) was already there and it is not in dispute that original manufacturer could have claimed moratorium in lieu of exemption under Sections 4-A and 8(2-A) read with Rule 43 but since it has discontinued its business before a decision could be taken by CTT, U.P., said benefit was denied to original manufacturer, i.e., M/s DFL, Agra and simultaneously by applying Rule 43(4)(a), same has also been denied to petitioner. In our view, Section 8(2-A) read with Rule 43 has to be read with Section 4-A(2-B) as 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. 21. Learned Standing Counsel, however, placed reliance on certain decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.03.1995, issued under Section 4-A for the period from 20.06.1998 to 20.12.2006 vide order dated 10.10.2001. In lieu of exemption/concession in tax under Section 4-A, M/s J.C.L. International Ltd. applied for moratorium under Section 8(2-A) of Act, 1948 but before such certificate could have been granted, M/s J.C.L. International Ltd. sold out its unit to M/s Quality Synthetic Industries Ltd. vide sale deed dated 01.03.2001 and this information was communicated to Trade Tax Commissioner vide letter dated 24.03.2001. Eligibility was also surrendered alongwith request of cancellation thereof. Application of M/s J.C.L. International Ltd. for grant of moratorium under Section 8(2-A) was rejected vide order dated 19.06.2002 and Tax authorities required original manufacturer to pay entire tax. This demand was challenged before this Court but since M/s J.C.L. International Ltd. has closed its business, its application for moratorium was held rightly rejected in view of Rule 43(4)(a) of Rules, 1948. The observations made by Court in paragraphs 10, 14 and 15 are reproduced as under:- "10. A perusal of Section 4-A of the Act shows that the Government by notification may provide for exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislation, which has been made in exercise of statutory powers by competent authority. Such a vague concept of spirit of a provision will not be available to test the validity of statute. No doubt, it is true that a rule (delegated legislation) must be consistence with the provision of the Act (parent legislation) and if it is not so, it would be ultra vires of the Act. However, it does not mean that in order to judge the validity of a delegated legislation, the Court can embark upon such aspects of the principle legislation, which are not expressly legislative but in the words of the petitioners it is spirit of the parent legislation i.e. the inference and conjecture of the individual. Such vague allegations cannot be a basis to challenge a subordinate legislation. It is well settled that rules made on matters permitted by the Act in order to supplement the Act and not to supplant the Act cannot be made in violation of the Act. Like substantive law, a delegated legislation also raises a presumption of constitutionality as well as statutory validity unless shown otherwise. Attempt is made for upholding the same unless it cannot be read harmoniously with the provisions of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, which is admittedly applicable to the case in hand, we are not inclined to hold that the petitioner is entitled for issuance of mandamus directing the respondents to dispense with the requirement of Rule 43(4)(a) of the Rules upon the petitioner as that would amount to make a statutory provision by judicial order inapplicable upon the petitioner, though otherwise by operation of law, it is applicable, binding and cannot be dispensed with. In view thereof, we do not find any error in the order dated 16.9.2002, impugned in this writ petition, passed by respondent no. 1. The petitioner, in our view, thus, is not entitled for any relief as sought in this writ petition." (emphasis added) 24. There was no occasion to consider Section 4-A(2-B) of Act, 1948 alongwith Section 8(2-A) and Rule 43 of Rules, 1948. 25. The other two decisions i.e. Commissioner of Sales Tax Vs. Qureshi Crucible Centre 1993 Supp (3) SCC 495 and; Pepsico India Holdings Limited Vs. Commissioner of Trade Tax, Lucknow, Uttar Pradesh (2011) 13 SCC 68 are in the context of liability of tax under Section 8 and we find that no issue of Section 8(2-A) and Rule 43, vis a vis, Section 4-A(2-B) of Act, 1948 was invo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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