Decisions-4A.html

Sale in the course of the export-The Central Sales Tax Act, 1956-Section 5-Export of goods to Nepal- Purchase order received from Nepal party-Goods dispatched to Nepal- Delivery of the goods taken by the Agent/authorized representative of Nepal party at Indo-Nepal border- Copy of Form-B, Cess receipt, Transport receipt and Custom certificates produced by the selling dealer -Custom certificates not found genuine- The movement of the goods up to the Custom Frontier of India and the payment of Cess and issue of Form-B by the Custom Frontier of India not in dispute-Tribunal justified in holding the sale in the course of export to Nepal.

(i) in pursuance of the order received from Nepal party, goods were dispatched and delivery of the goods were taken by the Agent/authorized representative of Nepal party at Indo-Nepal border;

(iii) Copy of Form-B, Cess receipt, Transport receipt, Nepal custom certificates and the books of account etc. were produced before the Assessing Authority by the selling dealer,

whether the Tribunal was justified in treating the sale as sale in the course of export of goods to Nepal especially when Custom certificates, alleged to have been issued by the Custom Department of Nepal, were not found genuine?

Held-Yes, In the case of Commissioner of Trade Tax vs. M/s Bansal Trading Company, Gorakhpur (supra), the Court held as follows:-

“Tribunal further held that the dealer had paid the Cess at the Custom Station, Sanauli and merely because the entry in the record of the Custom Department of Nepal about the payment of Custom duty was not found, which may be with the view to avoid the payment of Custom duty but the movement of the goods to Nepal cannot be disputed and its sale inside the State of U.P. cannot be presumed. Finding of the Tribunal is finding of fact. Perusal of the order shows that in the original proceedings, the Assessing Authority had accepted the movement of goods to Nepal in pursuance of the order of the Nepal parties in the course of export. It is true that on the basis of the information that the Custom Certificate of Nepal was found incorrect, presumption can be drawn that the goods had not reached to Nepal but in the proceedings under Section 21 tax cannot be levied on the basis of the presumption. It is not disputed that there was an order of the purchasing party and sales were made to the Nepal parties. The movement of the goods up to the Custom Frontier of India and the payment of Cess and issue of Form-B by the Custom Frontier of India are not in dispute. In the absence of the any specific material that the goods had been sold inside the State of U.P. and the goods had not gone to Nepal, only on the basis of presumption it cannot be treated as intra-State sales. There may be a possibility, that to avoid the Custom duty, goods may have been transported inside the Nepal through such route where there was no Custom Check Post. In the proceedings under Section 21 of the Act burden lies upon the revenue to prove that the goods had not gone to Nepal and have been sold inside the State of U.P. No such evidence had been produced. Therefore, mere on the ground that the Custom Certificates of Nepal, Custom Authority, was found wrong the presumption that the goods had not gone to Nepal and had been sold inside the State of U.P. could not be drawn and levy of tax is not justified. I do not find any error in the order of the Tribunal which is accordingly upheld.”

The present case is squarely covered by the aforesaid decision in the case of Commissioner of Trade Tax vs. M/s Bansal Trading Company, Gorakhpur (supra). The case of Commissioner of Trade Tax, U.P., Lucknow vs. S/S Ishwari Prasad Moti Lal (supra), is not applicable to the present case. In the said case, it was found that the Nepali buyer had come to the shop of the dealer, purchased the goods, took the delivery and thereafter, claimed to have taken the goods to Nepal.

M/s Indian Packaging, Ghaziabad

Condonation of delay-The U.P. Trade Tax Act, 1948 –Sections 9 & 10 read with Section 5 of the Limitation Act-Delay of 303 days- Ex pate Assessment Order stated to had been given to Advocate for necessary action-Advocate did not file appeal-On recovery proceedings enquiry revealed that appeal was not filed-Application for condonation of delay rejected by the First Appellate Authority and the Tribunal-Rejection of application not sustainable.

Whether the Tribunal was justified in upholding order of rejection of application for condonation of delay passed by the first appellate authority where the appellant had stated that it had given the copy of the order to the Advocate for necessary action but the Advocate did not file appeal and this fact came to the notice of the dealer during recovery proceedings?

Held-No, First Appellate Authority and the Tribunal have taken a pedantic view while dealing with the application under Section 5 of Limitation Act. In the matter of condonation of delay, a pragmatic and liberal view should be taken as held by the Apex Court in various decisions. It has been explained that after receipt of the ex-parte orders, the same were given to earlier Counsel Sri Sohan Lal for necessary action, but no action has been taken, and when recovery proceeding was initiated, steps were taken and appeals were filed. There is no material to disbelieve the aforesaid explanation of the applicant. There is no case that the applicant acted with gross negligence and latches.

The law of limitation is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of Limitation are not meant to destroy the rights of the parties, rather the idea is that every legal remedy must be kept alive for a legislatively fixed period of time.

The Commissioner, Trade Tax, U.P.

(A) Sale-The U.P. Trade Tax Act, 1948-Section 2 (h)-Assessment years 1983-84, 1984-85 & 1985086 –Distribution of coal by cooperative society to its member for consideration-Clause (iv) of Section 2 (h) –Supply amounts to sale.

Whether the Tribunal was legally justified in not treating the distribution of coal by a cooperative society to its members during the assessment years 1983-84, 1984-85 & 1985-86 a sale where the cooperative society had supplied coal to its members for payment?

Held-No, Definition of “sale” under Section 2 (h) of the Act has been amended by U.P. Act No. 25 of 1985 with effect from 2nd February, 1983 and the definition of sale has been enlarged including the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration. Thus, the supply of coal by the opposite party to the members for payment is a sale within the meaning of Section 2 (h) of the Act

(B) Dealer –The U.P. Trade Tax Act, 1948-Section 2 (c) - Cooperative society distributing coal to its member for price-Sub-clause (i) of clause (c) of section 2-Cooperative society is a dealer.

Whether the Tribunal was legally justified in not treating the cooperative society a dealer for the assessment years 1983-84, 1984-85 & 1985-86 where the cooperative society had supplied coal to its members for payment?

Held-No, Under the definition of ‘Dealer’ cooperative society and other society which carries on the business of buying, selling, supplying or distributing goods directly or indirectly, for cash or deferred payment or for commission, remuneration or other valuable consideration are included. Thus, the opposite party being a cooperative society and engaged in the business of buying, selling, supplying and distributing the goods for payment is a dealer.

The Commissioner, Trade Tax, U.P., Lucknow

Condonation of delay-The U.P. Trade Tax Act, 1948 –Section 10 read with Section 5 of the Limitation Act-Appeal by the Commissioner- Delay on account of officers being busy in elections and time taken in seeking approval for filing appeal-Delay to be condoned.

Whether the Tribunal was legally justified in rejecting the application for condonation of delay filed by the department where delay was caused on account of Local Body elections and time taken in seeking approval for filing appeal?

Held-No, Tribunal has taken a pedantic view while considering the application for condonation of delay. Apex Court and this Court have consistently held that in the matter of condonation of delay liberal and pragmatic view should be taken and delay should normally be condoned unless a case of gross negligence is made out. In the case of State of Haryana vs. Chandra Mani and Others, reported in JT 1996 (3) S.C., 371 Apex Court has considered the working of the State in granting the approval for filing of the petition and held that time taken in granting approval for filing the appeal is normal feature and delay caused on account of delay granting approval is liable to be condoned. For the reasons stated above, delay in filing the appeal before the Tribunal is liable to be condoned.

M/s United Stone Crushing Company, Samthar, Dist. Jhansi (U.P.)

Exemption to New Units-The U.P. Trade Tax Act, 1948-Section 4-A [2B]-Exemption to reconstituted firms-Application to be presented within days from the date of reconstitution-Application presented beyond prescribed time- Unit established after purchasing land and machinery by partners of newly constituted firm separately- Unit as a whole with land, building and machineries not transferred by the old partnership firm to the new partnership firm-New firm not entitled for benefit of exemption.

Whether the Tribunal was legally justified in arriving at the conclusion that new partnership firm, not being a reconstituted firm, was not entitled for benefit of exemption in view of section 4-A [2B] of the U.P. Trade Tax Act, 1948 where, after close of old unit, new unit was established after purchasing land and machinery by partners of newly constituted firm separately and application under the said provision too was presented beyond prescribed time?

Held-Yes, the present is not the case of reconstitution of the firm or succession of the unit by a new partnership firm. Admittedly, the unit was closed on 3.11.1987. The land was sold by one of the old partner in favour of two partners of the new firm for Rs. 40,000/- vide registered deed dated 23.12.1987 and the machineries were sold by all the five old partners in favour of the five new partners for Rs. 3 lacs. If it would be a case of reconstitution or succession of a unit the entire unit as a whole with land, building and machineries would have been transferred by the old partnership firm to the new partnership firm, but this has not been done. Thus, it is a case where after purchasing the land and machineries by new partners separately, the new partnership firm was constituted on 6.1.1988 and a unit has been established, using those machineries, which had been acquired by the old partnership firm for their unit. Thus, in view of the Explanation to Section 4-A, the unit run by the new partnership firm cannot be treated as a new unit. Further, though the provision of Section 4-A (2-B) of the Act is not applicable to the present case, but even assuming that it was applicable, the application moved on 23.10.1990 was beyond time as per the applicant’s own case, unit was acquired on 6.1.1988, thus the application was not within time as provided under Section 4-A of the Act.

M/s Ram Swaroop Radha Raman, Kanpur

Assessment-The U.P. Trade Tax Act, 1948-Section 7 (3)-Assessee claiming business of metal scrap-On survey of the business premises of the assessee a diary containing business transactions of metal scrap and utensils recovered-Name of dealer found in diary-Diary revealed an undisclosed godown on rent-On survey of godown utensils and scrap found in stock-In diary, separate amounts in the name of dealer and another person found deposited-Dealer denying diary and godown relating to its business but did not did not discharge the burden of proving that diary and godown belonged to some other person-Best judgment assessment made by assessing authority after rejecting the version of the assessee-First appellate authority accepted the version of the assessee and allowed appeal-Tribunal allowed the appeal filed by the Commissioner-Order of the Tribunal legally justified.

Whether the Tribunal was legally justified in allowing the appeal filed by the Commissioner where the assessee failed to discharge the burden of proving that the diary recovered at the time of survey of the business premises of the assessee, the godown referred in the diary and the goods found in such godown did not belong to him?

Dismissing the revisions relating to assessment years to which transactions in the diary were related, the Hon’ble Court has observed as under:-

“I have perused the order of the Tribunal and the authorities below. I do not find any substance in the argument of the learned Counsel for the applicant that the alleged diary found at the time of survey did not belong to the applicant. Admittedly, the alleged diary was found from the business premises of the applicant, therefore, burden lies upon the applicant to prove that the said diary did not belong to him. No evidence has been adduced to prove that it did not relate to the applicant while in the diary, the name of the applicant was found. The deposit of Rs. 49,000/- was found in the name of Ram Swaroop. Further in the diary, there was an entry relating to the payment of rent at Rs. 75/- for premises situated at 67/73, Daulatganj, Kanpur which was related to Dr. P.D. Agrawal and on enquiry from Dr. P.D. Agrawal, it was found that the said premises was given on rent to the applicant and at the time of survey stock of old utensils and scrap were also found. The finding of the Tribunal and the Assessing Authority that the alleged diary belongs to the applicant and relate to the business of the applicant cannot be said to be unjustified. First Appellate Authority has illegally, on the basis of deposits in the name of Ram Swaroop and Ram Ashrey held that the business of utensils was carried on in partnership of Ram Swaroop and Ram Ashrey. While it was not the case of the applicant that any business in partnership had been carried on in the name of ram Ashrey and Ram Swaroop. Further merely on the basis of deposits of the amount in the name of Ram Ashrey and Ram Swaroop, it could not be inferred that the business in partnership by Ram Ashrey and Ram Swaroop had been carried on. The Tribunal has rightly set aside the finding recorded by the First Appellate Authority in this regard.”

M/s Santoshi Enterprises, Noida

Writs under the Constitution-The Central Sales Tax Act, 1956 read with Rule 12 (7) of the Central Sales Tax (Registration & Turnover) Rules, 1957-Extension of time for filing Form of Declaration or Certificates after passing of assessment order-Earlier Division Bench dismissing the writ petition in limini-Provision for extension of time not brought to the Notice of the Division Bench- Decision per incuriam- No need to refer the matter to a larger Bench-Time can be extended in view of Rule 12 (7) of the Central Sales Tax (Registration &Turnover) Rules 1957.

(A) Whether it is required to refer the matter to a larger Bench where the earlier Division Bench has dismissed the writ in limini due to the reason that provision for extension of time was not brought to the Notice of the Division Bench?

Held-No, Obviously, what the Judgment meant was that no such provision has been brought to the notice of the Bench and to that extent, the decision dated 22.7.2004 becomes per incuriam so far as the Central Act is concerned. Thus, it is not necessary to refer the matter to a larger Bench.

Whether under the Central Sales Tax Act the ‘assessing authority’, which is also the ‘prescribed authority’ by virtue of Section 9 (2) of that Act, can grant extension of time for filing declaration form beyond the date of the assessment order?

“The question to be considered here is whether under the Central Sales Tax Act the ‘assessing authority’, which is also the ‘prescribed authority’ by virtue of Section 9 (2) of that Act, can grant extension of time for filing declaration form beyond the date of the assessment order or not. In our considered opinion it can. We are frequently coming across assessment orders where total tax liability is assessed upon failure to furnish the declaration forms, and a rider is mentioned in the assessment order itself that if the declaration forms are furnished within the further time fixed in the assessment order, the corresponding part of the tax liability will stand reduced. We have not been shown any good reason as to why the said time granted by the assessment order cannot be enlarged upon sufficient cause being shown. There appears to be no prohibition, either by express words of the Act and Rules or by necessary implication. Procedure is but a handmaid to justice, and all that is not prohibited either expressly or by necessary implication is permissible procedure if it advances the cause of justice.

The Standing Counsel has opposed the argument from the petitioner’s side saying that under the proviso to Rule 12 (7), the extension of time can be granted only up to the date of assessment order. The argument is not sustainable, for the simple reason that up to the date of assessment order, the main Rule 12 (7) itself permits furnishing of the declaration forms. Therefore, till that stage of the date of the assessment order, there would be no requirement of any extension of time by any authority. In such circumstances, the proviso to Rule 12 (7) can only refer to extension beyond the date of the assessment order. It must, therefore, be held that the prescribed authority under Rule 12 (7) proviso has the power to extend time for filing declaration form or certificate even beyond the date of assessment order.”

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Entries in Schedule-The U.P. Trade Tax Act, 1948-Section 3-A & Section 4 –“Crushed Horns and Hoofs”-Taxability-Notifications granting exemption from levy of tax on “Bones including horns and hoofs but not including crushed bones” and “Horn comb and all other articles made from horns”-Horns and hoofs whether fertiliser?-Crushed horns and hoofs being crushed bones are excluded from exemption notification.

Whether the Tribunal was legally justified in holding that “crushed horns and hoofs” are exempt from levy of tax under the entry “Horns, comb and all other articles made from horns?

Whether the Tribunal was justified in holding that “crushed horns and hoofs” being fertilizer, are exempt from levy of tax?

Whether the Tribunal was justified in holding that Horns and Hoofs are also not liable to tax under the entry “Bones including horns and hoofs but not including crushed bones.”?

Under the entry 32 “Horn combs and all other articles made from horn” only horn combs and articles made from horn is covered. Crushed Horns cannot be said to be article made from Horn and therefore, it is not covered under the aforesaid entry. Under the Notification No. ST-II-7038/X-7(23)-U.P. Act-XV-48-Order-85, dated January 31, 1985. Bones including Horn and Hoof is exempted but crushed bones has been excluded and made taxable. When horns and hoofs are included in the bones then in the exclusion part also crushed bone include crushed Horn and Hoof. In common parlance also. Horns and Hoofs are considered as Bones. Thus inclusion of Horns and Hoofs in Bones in the notification appears to be clarificatory only. Since crushed bone is excluded from the entry “Bone including Horn and Hoof”, in my view the crushed horns and hoofs being crushed bones are also deemed to be excluded. Tribunal has also committed an error in treating crushed Horns and Hoofs as fertilizer. In the case of M/s Hindustan Bone Mills Pvt. Ltd. vs. Commissioner of Trade Tax reported in 2005 UPTC 886 this Court held that crushed bone is not a fertilizer. In this view of the matter, the order of the Tribunal is liable to be set aside and the appeal filed by the Commissioner of Trade Tax before the Tribunal is liable to be allowed.

Trade Tax Revision against the order dated 15.06.2005 passed by Trade Tax Tribunal, U.P. Lucknow (Full Bench) in Appeal No. 34 of 2004.

New Unit-The U.P. Trade Tax Act, 1948-Section 4-A-Grant of Eligibility Certificate-Application rejected by DLC -Matter remanded to DLC three times by the Tribunal-Against third remand order revision filed by the dealer-The Hon’ble Court remanded the case to the Tribunal with a direction to decide the matter on the basis of material on record-Tribunal considered the material and expressed its view that there was no material for rejecting the application But case remanded to DLC-No justification for remand.

Whether the Tribunal was legally justified in remanding back the matter to the DLC for making further enquiry even after dealing with each and every objections raised by the DLC and holding that such objections are not justified and even after coming to the conclusion that the evidences adduced by the applicant supports the case of the applicant to the effect that plant and machinery installed in the unit were new one and were neither used nor acquired for use in any unit other than the applicant unit?

Held-No, Various objections taken by the DLC for disputing the machines as new have been considered by the Tribunal and have found insufficient. Tribunal on consideration of the material also arrived to the conclusion that the evidence establishes that the machines were new one and have not been used by factory or workshop. In my opinion, after coming to the aforesaid conclusion, there was no justification for asking further enquiry and remanding back the matter to the DLC. On the facts and circumstances of the case, I am of the view that the unit has discharged its burden in proving that the installed machines have not been used in any factory or workshop and there is no need of remanding back the matter to the DLC for further enquiry. In the circumstances, I direct the DLC to treat the unit as new unit and issue eligibility certificate under Section 4-A of the Act.

Import of goods-The U.P. Trade Tax Act, 1948-Section 28-A- Outside U.P. dealer claiming that goods, dispatched from Hardwar (Uttranchal) were being returned to three parties outside the State of U.P. -Three challans were prepared-One bilty for Ghaziabad (U.P.) was obtained-Transit Authorisation (Form-34) not obtained-Seizure of goods on the ground that goods were being imported with a view to evade tax-Application under sectioned 13–A(6) rejected-In appeal before the Tribunal amount of security reduced but seizure of goods confirmed-No illegality in the order of the Tribunal.

Facts of the case: Appllicant is carrying on the business at Haridwar and is registered under the Uttaranchal Trade Tax Act. It had claimed that certain items were purchased from M/s Dow Corning India Pvt. Limited, Bhivandi, Thane (Maharashtra), M/s Hindustan Lever Private Limited, Pondicherry and M/s Anil Chemicals Industries Limited, Aurangabad (Maharashtra). Since the goods were not in a good condition, they were rejected and being returned to the aforesaid three parties, in respect of which, three Challan Nos. 190, 191 and 192 were prepared for 160 Kg. Seal Quite Mixture in the name of M/s Dow Corning India Pvt. Ltd., Thane (Mah.), 300 Kg. Star Cat in the name of M/s Hindustan Lever Ltd., Pondicherry and 11880 pieces of Ponds Tube in the name of M/s Anil Chemicals India Limited, Aurangabad respectively. The goods were despatched through the Transport Company M/s Om Sai Transport Company. However, only one bilty No. 123 dated 14.6.2005, was prepared for the entire goods and as per Builty goods was to be delivered at Rajshree Road Lines, Ghaziabad. On 15.6.2005 Vehicle was intercepted by the Asstt. Commissioner, Trade Tax (Mobile Squad), (II) Unit, Ghaziabad, in which, 12 bags of Chemical Powder, 8 Cane Liquid and 54 Plastic Cartoon were found. In the Challans and builties, a seal of Check Post were found affixed which were without any signature of the Officer. Goods was detained on the ground that along with the goods, there was no declaration Form and goods have been imported inside the State of U.P. without proper declaration at the Check Post, Bhorahari.

Whether, in the facts and circumstances of the case, the Tribunal was legally justified in upholding seizure of goods under section 28-A of the Act?

Held-Yes, Merely because, three Challans have been issued in the name of three different parties for Ahmedabad, Pondicherry and Bhivandi (Maharashtra), it does not establish actual movement of goods to outside the State of U.P. Admittedly builty No. 123 was meant for delivery of goods at Ghaziabad, therefore, it has rightly been presumed that the goods was intended for import at Ghaziabad. Builty does not show that the goods would be transferred in another Vehicle for further transportation of the goods to three destinations. If the goods was meant for outside the State of U.P. then Form-34 would have been applied at the Entry Check Post, Bhorahari, but no Form 34 was applied. In these circumstances, prima facie I am of the view that the movement of goods was meant for import inside the State of U.P. and was not supported by any declaration. Thus, the seizure of the goods and demand of security cannot be said to be illegal and arbitrary.

Incentives to industrial prestigious units - Section 5 of the Jammu & Kashmir General Sales Tax Act, 1962 read with sub-section (5) of Section 8 of the Central Sales Tax Act, 1956, - Notification No. SOR 247 of August 20, 1998-Conditions prescribed in the notification relaxed by the decision of the State Cabinet in the case of the assessee-Decision of the Cabinet not notified but Memorandum of Understanding signed in between the Assessee and the Industries Department-Assessee’s industrial unit entitled for incentives.

Whether the industrial unit of the assessee was entitled for availing tax incentives when there was nothing in the Policy or in the Notifications issued pursuant thereto, prescribing any date for the capital investment and the assessee had fulfilled the condition of capital investment as per subsequent decision of the State Cabinet in its case and the Industry Department of the State had signed a Memorandum of Understanding with the assessee?

Having regard to the Industrial Policy announced by the Government of Jammu and Kashmir, the appellant, whose unit was registered as a medium scale industry, applied to the Government making a proposal for investment of Rs.25 crore or more pursuant to the Industrial Policy of the Government so that it could acquire the status of a "prestigious unit" and be entitled to all the incentives provided in the Industrial Policy for such a unit. The proposal was discussed in a meeting attended by the Chief Minister, Finance Minister, the Minister for Industries and Commerce, Chief Secretary, Principal Secretary, Managing Director SIDCO, and the Chairman of the appellant - Company. The revised proposal was considered and it was observed that no departure from the new industrial policy was involved if the investment materialized concurrently with the availment of incentives. However, it was felt that a liberal view needed to be taken of the policy to the extent that if the investment of Rs.25 crores or more materializes within the maximum period of six months from the date of commercial production, the company should be given the benefit of incentives. A Memorandum of Understanding (for short 'MOU') for this purpose had to be executed by and between J&K SIDCO and the appellant Company. The proposal had the concurrence of the Finance Minister where after a Memorandum was submitted to the Cabinet which was approved vide Cabinet decision No.7/2 dated January 19, 2000.

Accordingly, SIDCO respondent No.7, signed a MOU with the appellant Company on the above lines.

A reading of the Memorandum of Understanding leaves no manner of doubt that the industrial unit to be set up involved a minimum capital investment of Rs.27.50 and was an industrial unit for the manufacture and bottling of Soft Beverages. It was also clearly understood that the commercial production was to start by end of March 2000 and the minimum investment of Rs.25 crores must be made within a period of six months i.e. by end of September 2000. In the event of the failure of the appellant to make investment as agreed, the appellant undertook to refund the incentive, if any availed of, as a "prestigious unit" together with interest. It was also clearly understood that the appellant shall become eligible to avail and be entitled to all incentives and subsidies currently applicable to "prestigious units" in pursuance of the Industrial Policy as published on May 27, 1998 from the date of the commercial production.

It would thus appear from the Notifications, Orders and Certificates noticed above that the appellant signed a MOU with SIDCO pursuant to a Cabinet decision to set up an industry with a capital investment of more than Rs. 25 crores for the manufacture and bottling of soft beverages. As between the parties, it was clearly understood that the unit to be set up by the appellant shall be entitled to avail of the package of incentives offered by the Industrial Policy to the "prestigious units". The commercial production was to commence by March 30, 2000 and the investment of Rs. 25 crores or more was to be made on or before September 30, 2000. The certificates issued by the authorities establish that commercial production had commenced as agreed and that investment of over Rs.27 crores by way of capital investment had been made by September 30, 2000.

Thus it would appear that the Government took a conscious decision to permit the appellant to complete the minimum capital investment of Rs. 25 crores latest by September 30, 2000. It also appears from the letter of the Industries and Commerce Department dated April 25, 2000 that while discussing the proposal of the appellant it was felt that a liberal view needs to be taken of the policy to the extent that if the investment of Rs. 25 cores or more materializes within the maximum period of 6 months from the date of commercial production, the appellant should be given the benefits of the incentives. This proposal had the approval of the Finance department as also the approval of the Cabinet, which did not consider it as a departure from the policy announced.

All these facts, therefore, lead to the only conclusion that having considered its new Industrial Policy, and having considered the proposal made by the appellant, the Government took a conscious decision to grant the package of incentives to the industrial unit being set up by the appellant provided it went into commercial production by the end of March 2000 and made the necessary investment of Rs. 25 crores or more on or before September 30, 2000. The documents and material on record disclose that the Government took this decision after full discussion on all aspects of the matter, and in particular by reference to the date by which the appellant was required to invest Rs.25 crores in the industrial unit being set up by it. The State cannot be permitted to ignore its own conscious decision to permit the appellant to invest a sum of Rs. 25 crores or more by September 30, 2000. The appellant acted on the basis of the decision taken by the State Government and incorporated in the Memorandum of Understanding. The fact that Rs.25 crores was invested by September 30, 2000 was not disputed in the several counter-affidavits filed before the High Court. In view of the voluminous evidence on record the State cannot dispute the fact that over Rs. 27 crores was invested by the prescribed date i.e. by September 30, 2000. In this background, the State cannot be allowed to say that the incentives cannot be extended to the industrial unit set up by the appellant because the amount of Rs. 25 crores or more was not invested by the date the unit went into commercial production, though the amount of Rs. 27 crores was invested within the period prescribed by the Government as incorporated in the Memorandum of Understanding.

(B) Industrial Policy provided a negative list of certain Medium / Large scale industrial units for tax incentives-No such negative list in case of prestigious units having capital investment of Rs. 25 crore or above-Denial of tax incentives to prestigious units on the basis of negative list for Medium / Large scale industrial units not justified.

Whether negative list, of industries prescribed under the new Industrial Policy of the State for denying tax incentives to medium/ large scale industrial units, would also apply to prestigious units having capital investment of Rs. 25 crore or above, where the provision in the Policy relating to tax incentives to prestigious units did not provide any negative list?

Held-No, Having perused Annexure 'B' to G.O. No. 202 of 1988 of May 27, 1998; SRO 247 and SRO 249 issued on August 20, 1998, we are of the view that the negative list concept is not applicable to "prestigious units". Paragraph 10 of Annexure 'B' to G.O. No. 202 of May 27, 1998 in terms provides a special package of incentives for "prestigious units" and begins with the words "notwithstanding anything contained in paragraphs 7, 8 and 9" above. In paragraphs 8 (i), (ii) and (iii) certain benefits are conferred on small scale units, medium scale units and large scale units in the matter of payment of General Sales Tax, except on items brought in the negative list. There is no mention of the negative list in paragraph 10 of the G.O., which clearly brings out the intention of the Government to treat "prestigious units" on a different footing altogether. Similarly, SRO 247 which grants exemption to "prestigious units" from payment of General Sales Tax and Central Sales Tax does not refer to the negative list.

Even SRO 249 to which the negative list is appended as a Schedule, only refers to finished goods manufactured by newly established, "medium and large scale" industrial units but does not refer to "prestigious units" which are treated as a separate class altogether.

2006 NTN (Vol. 30)

Penalty-The Central Sales Tax Act, 1956-Section 10-A clause (b) –False representation that items being purchased were covered by registration certificate-Dealer engaged in the business of manufacture and whole sale and bulk distribution of all type of Petroleum products, lubricants and greases such as motor spirit, HSD, CDO Kerosene, lubricants, grease, furnace oil, liquefied petroleum gas (Indane), Naphtha, Aviation Turbine fuel, aviation gasoline, MTO Petroleum cape, waxes - Purchase of LPG Cylinder, Safety Boots, Wooden Sleeper, Mica Brick, Ladder, RCC Pipe, Kambal (Blanket), Vessels, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush, Rassi, Sticker, Aguigay, Puller Earth, Welding Pipe Fitting, Electrode, Aluminium, Bearing- Such items not mentioned in the registration certificate Dealer claiming purchases made under bonafide belief-No valid explanation.

(A) Whether in the facts and circumstances of the case LPG Gas Cylinders can be treated to be covered by the registration certificate under the entry of empty packages?

Held-No, under the registration certificate empty packages is mentioned for resale and not for use in the manufacturing. Gas were sold filled in cylinder. Cylinders were never sold. It is not the case of the applicant that the gas has been sold along with cylinders. Thus cylinder was not resold. It is also not intended for use in the manufacturing because the filling of gas in the cylinder is after manufacturing of gas and is required for delivery of the manufactured goods and not for the manufacturing. It has also been stated by the Tribunal that in the registration certificate LPG Cylinder was added in the registration certificate. The dispute relates to the purchases of LPG cylinders prior to 12.08.1982 when the LPG cylinder was not mentioned in the registration certificate. For the aforesaid reasons, in my view the issue of Form C for the purchase of LPG cylinders prior to 12.08.1982 was not proper and the inference drawn by the authorities below that while issuing Form C for the purchase of LPG cylinder applicant had made false representation that it was registered for the said item, is correct.

(B) Whether in the facts and circumstances of the case, purchase of Safety Boot, Wooden Sleeper, Mica Brick, Ladder, R.C.C., Pipe, Kambal, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush can be treated to be covered under the goods required for use in the manufacture or processing of goods for sale?

Held-No, Safety Boot, Wooden Sleeper, Mica Brick, Ladder, R.C.C., Pipe, Kambal, Cement, Yarn, Trailer, Hospital Equipment, Transmitter, Fire Fighting Pump, Cement Paint, Film, G.I. Wireness, Seal, Brush were not intended for the use in the manufacturing and they have not been used in the manufacturing. They were not required in the manufacturing process directly or indirectly. Vessels is required for filling LPG tank, which is not part of the manufacturing process. Thus, it is also not required for use in the manufacturing. The claim that it is covered under steel plate cannot be accepted by any stretch of imagination.

Thus, for the reasons stated above, the applicant while making the purchases and issuing Form C made false representation that it was registered in respect of the aforesaid goods under Central Sales Tax Act while fact was otherwise. In fact, the applicant was not entitled for the benefit of concessional rate of tax because goods were not intended for use in the manufacturing under Section 8 (3) (b) of the Act and Rule 13. Tribunal has rightly sustained the penalty under Section 10-A of the Act.

M/s Navyug Supplies, Chandausi, Moradabad

Issuance of false Declaration or Certificate-The U.P. Trade Tax Act, 1948-Section3-B- Levy of amount for furnishing of wrongful or false certificate- Furnishing of wrongful or false certificate, a condition precedent for initiating any proceedings under Section 3-B -Assessee, a recognition certificate holder, making purchase of goods against Form 3-B pertaining to concessional rate of tax-Selling dealer claiming exemption on sales-Section 3-B not attracted.

Whether the Tribunal was legally justified in holding levy of amount under section 3-B of the Act valid where the dealer, holding recognition certificate entitling him to make purchase after payment of tax at concessional rate of tax, had made purchase of goods covered by such certificate and after furnishing Form 3-B of concessional rate of tax to the selling dealer?

“From the aforesaid provisions it is apparently clear that furnishing of wrongful or false certificate is a condition precedent by the person concerned before any proceedings under Section 3-B can be initiated and liability fastened thereupon the person concerned.

From the facts of the present case, it is apparently clear that the Assessee-firm had not furnished any false or wrong certificate/declaration. The order passed by the authorities under the Trade Tax Act, giving rise to the present Trade Tax Revision, do not record any fact about a false or wrongful declaration/certificate having been furnished by the Assessee-firm to the Steel Authority of India Ltd. As a matter of fact it is apparently clear from the records of the present case that the Assessee had submitted documents which clearly disclosed that under Registration certificate issued under Section 4-B of the Act, Assessee is entitled to concessional rate of tax on purchase of iron and steel.

In such circumstances it cannot be said that the Assessee-firm created a situation were under the realization of the tax on the transaction of purchase or sale has been avoided or not short levied. This Court has no hesitation to record that the Assessee-firm has not furnished any false or wrong certificate or declaration to the Steel Authority of India Ltd. and therefore, the fault for non-levy of tax (in the facts of the present case on concessional rate), lies upon the Steel Authority of India Ltd. alone. It is therefore, open to the Department to proceed against the manufacturing sellers in accordance with law.”