Allahabad High Court
Akross Synthetics Private Limited ... vs Commissioner Of Trade Tax And ... on 29 October, 2007
Equivalent citations: (2008)13VST504(ALL)
Author: Rajes Kumar
Bench: Rajes Kumar
JUDGMENT Rajes Kumar, J.
1. Present revision under Section 11 of U.P. Trade 'lax Act (hereinafter referred to as Act") is directed against the order of Full Bench of the Tribunal dated 24.03.2003
2. Brief facts of the case giving rise to the present revision arc that the applicant is a company incorporated under the Indian Companies Act, 1956, of which Sri Arvind Kumar Bhasin was the Managinu Director. The company was incorporated in the year 1994. It appears that with the intent to establish a new unit for the manufacturing of Synthetics Resins and paints, Shri Arvind Kumar Bhasin applied for the allotment of industrial plot at Greater Noida with the U.P. Stale Industrial Development Corporation Limited hereinafter referred to as "UPSIDC vide letter dated 17.01.1994. After the receipt of the letter dated 17.01.1994, UPSIDC vide letter dated 27.01.1994 asked Shri Arvind Kumar Bhasin to file an application in a requisite form for the allotment of the land. In pursuance thereof, application in the proper form was furnished with the project profile showing the total investment about Rs. 73.50 lacs. On 05.03.1994 UPSIDC allotted 4000 sq. meters of land. On 15.06.1994 Shri Arvind Kumar Bhasin moved an application with the Regional Manager, Pradeshiya Industrial & Investment Corporation of U.P. Limited hereinafter referred to as "PICUP" for the grant of term loan for the purpose of setting up an industrial unit. An application was also moved to the Regional Manager, UPSIDC on 20.04.199 for the term loan. Admitted, applications for the allotment of land and the term loan were moved by Shri Arvind Kumar Bhasin in his individual capacity and not on behalf of the company. It is claimed that on 19.05.1997 Shri Arvirie Kumar Bhasin wrote a letter to the Regional Manager, UPSIDC that he proposed to set up a unit of paint and Synthetic Resins at the allotted plot and requested to inform about the necessary formalities. Shri Arvind Kumar Bhasin had also filed applications with the Director of Industries on 09.07.1997 and 09.10.1997 for the registration as SSI Unit. On 19.11.1997 provisional registration certificate was issued by the Director of Industries for SSI Unit for the manufacturing of Synthetic Resins. The said certificate was issued in the name of Shri Arvind Kumar Bhasin and not in the name of the company. In the registration certificate paint was not mentioned. It is claimed that after full and final payment of Rs. 26.87 lacs, the allotted land was duly registered in favour of the applicant company. Applicant company made investment towards the land, building, plant and machinery and the commercial production was commenced on 30.10.2001 and first sale was made on 16.11.2001. The intimation about fulfilling of the conditions and for the claim of exemption has been given by post on 10.01.2002 under the certificate of posting to the Trade Tax authority. Trade Tax authority denied to has received any such intimation. Since in the registration certificate paint was not mentioned, an application was moved on 28.10.199S for the amendment in the SSI registration certificate with the request to add paints. The amended SSI registration certificate was issued on 13.03.2001/21.03.2002, in which both the Synthetic Resins and paints were mentioned. As per the order of the Tribunal, the application for the change of proprietorship business to Private Limited Company was moved on 27.10.1997, which was allowed only vide letter dated 22.01.2000. On the conversion to the Private Limited Company from the proprietorship business, Shri Arvind Kumar Bhasin became the Managing Director of the company. Thereafter, company applied for the term loan after 26.05.2002. An application was moved for the exemption on the turn over of the manufactured product under Section 4-A of the Act. On the receipt of the application, it was processed and thereafter, show cause notice was issued by Divisional Level Committee raising objections that as per the notification No. Nl-2- 3867/XI-9 (116)/94-U.P. Act-15-48-Order-(74)-2001, dated 22.12.2001, the applicant had not fulfilled the conditions as on 31.03.2000, namely, the unit was not registered with the Director of Industries for paints; the application for the term loan was given to UPFC after 26.05.2000; Intimation letter to the assessing authority was not given within twenty days. Letter dated 10.01.2002 send under the certificate of posting had been denied to have been received. The applicant filed reply to the show cause notice. Divisional Level Committee on the consideration of the reply rejected the application for the three reasons mentioned in the show cause notice dated 04.12.2002 referred herein above. Being aggrieved by the order of the Divisional Level Committee applicant filed appeal before the Tribunal. Tribunal by the impugned order dismissed the appeal. Tribunal has accepted the claim of the applicant about the intimation to the assessing authority claimed to had been given on 10.01.2002. Tribunal however, held that the unit in the name and style "M/s Akross Synthetic Private Limited" came into existence from 22.01.2000 when the merger of proprietorship concern of Shri Arvind Kumar Bhasin with the company was permitted; the unit of the company applied for the term loan after 26.05.2002 much after 31.03.2000;.unit was issued the registration certificate as SSI unit only for Synthetic Resins and the registration for the paint was granted on 21.03.2002 after the cut off date 31.03.2000. For the aforesaid reasons Tribunal rejected the claim of exemption.
3. Heard Sri Bharatji Agrawal, learned Senior Advocate appearing on behalf of the applicant and Sri B.K. Pandey, learned Standing Counsel.
4. Learned counsel for the applicant submitted that the application for the term loan was given on 20.04.1994 with UPFC and 15.06.1 994 with PICUP and therefore, it is the case where the term loan was applied prior to 31.03.2000. He further submitted that in fact, right from very beginning SSI registration certificate was applied for Synthetic Resins as well as paints, which is clear from the project profile but inadvertently in registration certificate only Synthetic Resins was mentioned and paint was inadvertently left. Applicant moved an application on 28.10.1998 for the amendment and the addition of the paint in the registration certificate and thereafter, pursued the matter but the same could be added only on 21.03.2002. The delay was on the part of the Industries department and not on the part of the applicant. He further submitted that as per the notification the unit should be registered with the Director of Industries as on 31.03.2000 and there was no requirement in the notification that the unit should be registered for all the items to become eligible for the grant of exemption. Learned Standing Counsel submitted that the proprietorship business was changed into Private Limited Company on 22.01.2000 when the permission in this regard was granted and in this view of the matter unit was owned by M/s Akross Synthetics Private Limited on 22.01.2000 when merger took place. Admittedly, the application for the term loan with the UPFC was moved by the applicant company after 26.05.2002 and in pursuance of which term loan was grained. He further submitted that as on 31.03.2000 the unit was not registered with SSI in respect of the paints. SSI registration was granted on 26.11.2002 showing the date of production on 30.10.2001. Prior to this date, no certificate was issued to the applicant company. Therefore, as on 31.03.2000 the applicant unit was not registered with SSI.
5. Having heard learned Counsel for the parties, I have perused the order of the Tribunal and the authorities below. Relevant notification Notification No. KA. NI-2-2591/XI- 9 (116)/94-U.P. Act-15-48-Order (28)-200, dated August 24, 2000 and Notification No. KA.NI.-2-3867/XI-9 (l16)/94-U.P. Act-15-48-Order (74)-2001, dated: Lucknow: December 22, 2001 read as follows:
Notification No. KA.NI-2-2591/XI-9 (116)/94-U.P. Act-15-48-Order (28)-200, dated August 24, 2000.
Whereas the Slate Government is of the opinion that for promoting the development of certain industries in the State, it is necessary to grant exemption from, or reudction in rate of tax to new units.
Now Therefore, in exercise of the powers miner Section 4-A and Section 25 of the Uttar Pradesh Trade Tax Act, 1948 (Act No. XV of 1948); the Governor is pleased to declare that in respect of any goods manufactured in a new unit (not being the units which have undertaken expansion, diversification, modernization or backwardintegration) whose date of starting production falls on or after April 1, 200 but not later than December 31, 2001, no tax shall be payable, or as the case may be, the tax shall be payable at the reduced rate by the manufacturer thereof on the turnover of sales of such goods from the date of first sale or the date followign the expiration of six months from the elate of starting of production, whichever is earlier, subject to the conditions and restrictions referred to in Section 4-A of the said Act and in notifications issued from time to time there under and subject to the modification that the unit should also fulfill the following conditions on January 17,2000:
(a) the unit is registered under the said Act;
(b) the unit has applied for a termloan from any Financil Corporation or Company owned or controlled by the centre or State Government or any bank;
(c) the unit has been allotted land for the factory.
Notification No. KA.NI-2-3867/XI-9(116)94-U.P. Act-15-48-Order (74)-2001, dated; Lucknow: December 22, 2001.
Whereas the State Government is of the opinion that for promoting the development of certain industries in the State, it is necessary to grant exemption from, or reduction in rate of, tax to new units and also units, which have undertaken expansion or diversification:
Now, therefore, in exercise of the powers under Section 4-A of the Uttar Pradesh trade Tax Act, 1948 (Act No. XV of 1948), the Governor is pleased to declare that subject to the conditions and restrictions referred to in Section 4-A of the said Act and in notification issued from time to time there under and subject to the fulfillment on March 31, 20000, by the concerned unit the conditions specified in this notification-
(a) in respect of any goods manufactured in a new unit whose date of starting production falls on or after April 1,2000, but not later than December 31, 2001, no tax shall be payable, or as the case may be, the tax shall be payable at the reduced rate, by the manufacturer thereof on the turnover of sales of such goods from the date of first sale or the date following the expiration of six months from the date of starting production, whichever is earlier,
(b) in respect of any goods manufactured in a unit which has undertaken expansion and the date of production in excess of the base production falls on or before March 31, 2000, no tax shall be payable, or as the case may be, the tax shall be payable at the reduced rate, by the manufacturer thereof on the turnover of sales of the quantity of goods manufactured in excess of the base production.
(c) in respect of any goods manufactured in a unit which has undertaken diversification and the date of production of goods of a nature different from those manufactured earlier by such units falls on or before March 33, 2000, no tax shall be payable, or as the case may be, the tax shall be payable' at the reduced rate by the manufacturer thereof on the turnover of sales of goods, which are of a nature different from those, manufactured by the unit earlier:
Provided that the unit intending to claim tax relief under this notification shall intimate in writing accordingly the Assessing Authority within 20 days from the date of this notification.
(a) the unit is registered/licensed under Industry Department or unit has obtained latter of intent or letter or will from Government of India;
(b) the unit has obtained land from any source;
(c) the unit has applied for a term loan from any regular Financial Institution.
The production in the unit was commenced on 30.10.2001 and the first sale was made on 16.11.2001 and, therefore, the relevant notification are notification No. KA.NI-2-2591, dated 24.08.2000 and the notification No. KA-NI-2-3867, dated 22.12.2001.
6. I find substance in the argument of learned Counsel for the Applicant that since the production in the unit had commenced on 30.10.2001 and the first sale was made on 16.11.2001, since both were prior to the notification No. KA-NI-2-3867, dated 22.1 2.206 1, the notification No. KA.NI-2-2591, dated 24.08.2000 is the relevant notification Perusal of the notification No. KA-NI-2-3867, dated 22.12.2001 shows that it had not suspended the earlier notification No. KA.NI-2-2591, dated 24.08.2000. Since there was no condition that the unit should be registered with the Industries Department in the notification dated 24.08.2000, the same can not be said to be the condition for the grant of exemption. Moreover, the notification No. KA-NI-2-3867, dated 22.12.2001 provides for the registration of the unit with the Industries Department. There is no dispute that the unit was registered with the Industries Department. It was not material whether it was registered for only Synthetic Resins and not for paints, therefore, in my opinion, the objection with regard to the registration under the Industries Department is not justified.
7. Perusal of the notification No. KA.NI-2-2591, dated 24.08.2000 and the notification No. KA-NI-2-3867, dated 22.12.2001 reveals that in both the notifications there was a condition that the unit should apply for term loan from any regular financial institution. As per notification dated 24.08.2000 this condition was to be fulfilled on 17.01.2000 and as per notification No. KA.-NI-2-3867, dated 22.12.2001 this condition was to be fulfilled on 31.03.2000. Admittedly, the applicant had not applied for term loan prior to 31.03.2000. The term loan was applied after 26.05.2000 by the applicant company much after 31.03.2U0O. In the circumstances applicant could not fulfill the requirement of the notification for the grant of exemption. It is no body else that the term loan was sanctioned, in pursuance of the applications moved in the year 1994. The term loan was sanctioned in pursuance of the application moved by the company much after 31.03.2000. The 'New Unit' established after 31.03.1990 is defined by the Explanation - II to Section 4-A of the Act, which says that the new unit after 31.03.1990 means a factory of workshop set up by a dealer after such date and satisfying the conditions laid down under this Act or Rules or Notifications made thereunder with regard to such factory or workshop and includes an industrial unit manufacturing the same goods at any other place in the State or an industrial unit manufacturing any other goods on, or adjacent to the site of an existing factory or workshop but does not include.... The above definition provides that only those units which fulfills the conditions laid down in the notifications issued under the Act or Rule is said to be 'New Unit' and eligible for exemption under Section 4-A of the Act. Thus, fulfillment of conditions mentioned in the notifications are mandatory and to be strictly complied with.
8. In the case of Novopan India Ltd. Hyderabad v. Collector of Central Excise and Customs Hyderabad reported in 1994 Suppl. (3) SCC 606, Apex Court held as follows:
16. We are, however, of the opinion that, on principle, the decision of this Court in Mangalore Chemicals and in Union of India v. Wood Papers referred to therein - represents the correct view of law. The principle that in case of ambiguity, a taxing statute should lie construed in favour of the assessee - assuming that the said principle is good ami sound - does not apply to the construction of an exception or an exempting provision; they have to be construed strictly. A person involving an exception or an exemption provision to relieve him of the tax liability must establish clearly that he is covered by the said provision. In case of doubt or ambiguity, benefit of it must go to the State. This is for the reason explained in Mangalore Chemicals and other decisions, viz., each such exception/exemption increases the tax burden on other members of the community correspondingly. Once, of course, the provision is found applicable to him, full effect must be given to it. As observed by a Constitution Bench of this Court in Hansraj Gordhandles v. H.H. Dave , that such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption.
In the case of State Level Committee and Anr. v. Morgardshammar India Ltd. reported in 1996 UPTC 213, Apex Court held that Section 4-A of the Act provides for exemption fro in tax and is to be construed strictly. In the case of Kartar Rolling Mills v. Commissioner of Central Excise New Delhi reported in (2006) 4 SCC 772 Apex Court held that the exemption notification is to be construed strictly. In view of the above, for the claim of exemption it is necessary to comply with the conditions mentioned under the provisions of Section 4-A of the Act and the notifications issued there under. It is on the dealer, who claims the exemption to establish that the conditions of the notifications are fulfilled. If any of the condition is not fulfilled, the exemption can not be allowed. As referred hereinabove, dealer was not able to fulfilled the conditions of the notifications on the day, on which it was required to be fulfilled and, therefore, the exemption has rightly been refused. In the circumstances, no interference is called for. In the result, revision fails and is accordingly, dismissed.