UP Trade Tax - Government Circular extending exemption even if Commissioner had cancelled certificate - Govt Circular binding on Authorities: Supreme Court
By TIOL News Service
NEW DELHI, JAN 09, 2014: THE question for consideration and decision is whether the respondent-assessee (M/s. Precise Laboratories Ltd) is entitled for an exemption from payment of tax for a period of six years or for a period of five years in view of the location of the industry.
It is an admitted fact that the State of Uttar Pradesh had issued an exemption notification depending on the location of the industry, inter alia, exempting industries situate in the Tehsil of Dadri for a period of six years and for industries located in the Tehsil of Ghaziabad for a period of five years only from payment of trade tax under the Act.
The Uttar Pradesh State Development Corporation had carved out certain plots in Ghaziabad Districts for allotting the same to the industrial units. The Ghaziabad District was divided into two Tehsils, (i) Dadri and (ii) Ghaziabad. The respondent was situated at Ghaziabad. There was some dispute between the parties on that score and that was clarified by the Tehsildar when he issued a certificate indicating that the respondent is situated in Ghaziabad Tehsil alone.
After obtaining an appropriate certificate from the Tehsildar, the respondent made a request before the Divisional Level Committee, who is the authority to grant exemption certificate from extending the certificate of exemption from a period of five years to six years. Taking note of the request so made, the Divisional Level Committee passed an order and also issued a certificate, exempting the respondent from payment of tax from five years to six years.
The assessee had produced the said certificate before the assessing authority while claiming the benefit of exemption from payment of tax for the assessment years, 1994-95 and 1995-96. In the meanwhile, the Commissioner of Trade Tax, U.P . in exercise of his powers under Section 4A (3) of the U.P . Trade Tax Act, 1948, had passed an order cancelling the certificate issued by the Divisional Level Committee. Aggrieved by the said cancellation, the appellant had approached various forums and was successful before all those forums. To put it in the alternative, some of the orders which went against the Department were questioned before various forums and the forums had decided against the Revenue and that is how the Revenue is before the Supreme Court in this appeal.
The Supreme Court observed,
"It is not in dispute nor can it be disputed by the respondent that respondent industry is located in Ghaziabad. Therefore, in view of the notification issued granting exemption to the industries situated in the Tehsil of Ghaziabad the exemption to the respondent would only be for a period of five years. However, the respondent after obtaining appropriate certificate from the Tehsildar had approached the Divisional Level Committee who in turn had granted an eligibility certificate extending the exemption from five years to six years. This order passed by the Divisional Level Committee was taken exception to by the Commissioner of Trade Tax and in his opinion the respondent had wrongly claimed exemption since the respondent is located in the Tehsil Ghaziabad. If the State Government had left it at this stage the assessee could not have sought for relief before any forum. But in order to alleviate the difficulty expressed by the industrial units situated at Ghaziabad and also in the Tehsil of Dadri, the State Government in exercise of its power under Section 4A of the Act had issued a circular dated 26.05.1994.
A reading of the aforesaid circular would indicate that if an industrial unit has obtained an eligibility certificate for exemption from trade tax under the exemption scheme which was in force upto 31.03.1990 and no act of forgery or cheating has been committed in obtaining the certificate or if no conditions of the certificate is violated, then even if the Commissioner has cancelled the certificate in exercise of his powers under Section 4A (3) of the Act, then also the outstanding amount prior to the date of cancellation or modification would be remitted unless the unit has not realized the tax from its customers. The aforesaid circular is binding on the authorities under the Act as noticed by a Constitution Bench of this Court in the case of Collector of Central Excise, Vadodra vs. Dhiren Chemical Industries, (2002- TIOL -83-SC-CX-CB).
In the instant case, the State Government in exercise of its powers has issued a circular which, is binding on the assessing authority. If that is so even after cancellation of the eligibility certificate in the case of the respondent unit, the said unit can certainly claim remission from payment of tax provided it had not realized the same from its customers."
It is brought to notice that the assessing authority in fact, had passed an order granting remission of the tax since the assessee had not collected tax from its customers.
In view of the above, Supreme Court held: the Tribunal as well as the High Court has not committed any error, whatsoever, which would call for interference in exercise of powers under Article 136 of the Constitution of India. The civil appeal is dismissed accordingly.
(See 2014-TIOL-01-SC-CT)
